Scarcity

What is the opportunity cost to a person of spending $20 on a new pair of sports shoes?

• A all the other things the person could have bought

• B the cost of getting to the sports shop

• C the current value of the person’s old pair of shoes

• D the next best thing that could have been bought with the $20

What will help solve the basic economic problem?

• A the control of the market system

• B the efficient allocation of scarce resources

• C the preservation of a healthy environment

• D the elimination of hunger

A hospital management board decides to reallocate $800000 from its $1.2m new buildings budget to spend on cancer care. What is the opportunity cost of this decision?

• A a cost of $400 000

• B a cost of $800 000

• C the cost of healthcare for cancer patients

• D the loss of some new buildings

A government decides that all non-essential businesses must close for three months due to a disease pandemic. What is an opportunity cost of this policy?

• A increased leisure time for employees

• B lives that are saved due to reduced disease levels

• C the production of goods by essential businesses

• D the loss of goods from the closed businesses

What does opportunity cost measure?

• A the benefits of a good compared with the next choice

• B the benefits given up by not consuming the next best alternative

• C the costs of any good not chosen

• D the financial costs of consuming a good

An American family is choosing between four holiday destinations in Europe, each at the same price. The table shows the family’s order of preference for these holiday destinations.

If the family goes to Barcelona, what is the opportunity cost of this choice?

• A Barcelona

• B London and Venice

• C Paris

• D London, Paris and Venice

A worker earns $40 per hour. Rather than work, she decides to visit a museum for three hours. The visit costs a total of $40. What is the opportunity cost of visiting the museum?

• A $40

• B $80

• C $120

• D $160

What is correct about scarcity?

• A Scarcity affects low income earners only.

• B Scarcity forces individuals to make choices.

• C Scarcity is removed by periods of falling prices.

• D Scarcity will be abolished by advances in technology.

An individual has an appointment with his dentist. He has a choice between travelling to the appointment by car, or leaving the car at home and travelling by bus and then by train. The costs of the journey are given below.

Given this information, what is the opportunity cost to the individual of travelling by car rather than by bus and train?

• A $2

• B $4

• C $7

• D $12

The fundamental economic question is how to meet unlimited wants with limited resources. What is an example of limited resources?

• A insufficient consumer goods in the local shops

• B insufficient jobs to allow full employment

• C insufficient machinery to produce electrical goods

• D insufficient tax revenue to finance building a school