Economics and Decision Making

What is one thing the PPF does not tell us?

• Which allocation of resources is the best

• if the opportunity cost is increasing or decreasing

• the tradeoff

• none of the above (it tells us all these things)

Scarcity is a situation in which:

• Something is being wasted.

• Something is on the verge of running out.

• Some people are poor and others are rich.

• We are unable to satisfy all our wants.

• All of the above.

Economics is a model of:

• Money.

• Buying and selling.

• How people make choices.

• How people should behave.

Opportunity cost refers to:

• The monetary price of a good or service.

• The highest-valued alternative that is given up when a choice is made.

• The cost of producing a good or service.

• The total benefits received from a choice.

• The difference between supply and demand.

Which of the following best illustrates a tradeoff?

• A government must decide whether to spend more on healthcare or education.

• A business hires more workers and increases productivity.

• A family decides to save more money and, as a result, takes fewer vacations.

• A person exercises regularly and improves their health.

• Both a and c.

Based on the table, if the country is currently producing at point B and decides to produce at point C, the opportunity cost for the additional pair of shoes is ____ pizzas.

• 1 pizza

• 2 pizzas

• 3 pizzas

• 4 pizzas

Refer to the table showing Possibility, Pairs of shoes, and Pizza. What is the number of pairs of shoes produced in Possibility D?

• 26

• 3

• 23

• 2

What is the production possibilities curve?

• a graph that shows how much an economy can produce between 2 goods

• how much money something is

• the opportunity one has to give up in order to gain something else

• land, labor, capital, entrepreneurs

The opportunity cost of increasing production from 7 to 9 trucks is

• Scarcity

• 2 boats

• 2 trucks

• 3 boats

The PPF bows outward. Which of the following concepts does this illustrate?

• The law of increasing scarcity

• The law of economic growth

• The law of decreasing efficiency

• The law of increasing opportunity cost