Microeconomics Quiz

What is the fundamental problem in economics?

• Unlimited wants and unlimited resources

• Limited wants and limited resources

• Unlimited wants and limited resources

• Unlimited resources and limited wants

What does scarcity refer to in economics?

• The abundance of resources

• The efficient allocation of resources

• The limited supply of resources

• The infinite wants of society

What does the Production Possibilities Curve (PPC) represent?

• The maximum combinations of two goods that can be produced

• The minimum combinations of two goods that can be produced

• The average combinations of two goods that can be produced

• The total resources available in an economy

What does a point inside the PPC indicate?

• Maximum production capacity

• Unattainable production levels

• Underemployment or unemployment of resources

• Full employment of resources

What causes the PPC to shift outward?

• Increase in unemployment

• Reduction in production capacity

• Technological advancements

• Decrease in resource quality

What is opportunity cost?

• The cost of producing goods

• The value of the best alternative forgone

• The total cost of resources used

• The price of goods in the market

Which of the following is an example of opportunity cost?

• Saving money in a bank

• Buying a new car

• Choosing to study instead of working

• Investing in stocks

What does a point outside the PPC represent?

• Underutilization of resources

• Efficient production levels

• Unattainable production combinations

• Optimal resource allocation

What is the shape of the Production Possibilities Curve?

• Concave

• Circular

• Straight line

• Convex

What does the downward slope of the PPC indicate?

• No trade-offs are necessary

• Resources are unlimited

• More of good X can be produced by sacrificing good Y

• More of good Y can be produced by sacrificing good X