Unit 1 Quiz: Scarcity

Combinations of goods outside the production-possibilities curve (PPC) have which of the following characteristics?

They are only attainable if we increase our resources, technology or institutions

Suppose that the alternative uses of three hours of your time in the evening, ranked from best to worst, are (1) study economics, (2) watch three hours of a Netflix show, (3) play pool, and (4) jog around town. You can only choose one activity. What is the opportunity cost of studying economics for one hour, given this information?

Watching Netflix

If an economy can produce various combinations of food and housing along a production possibilities curve (PPC), then if we increase the production of housing along the PPC, which of the following is correct?

We must decrease the production of food. This foregone food production represents the opportunity cost of the increase in the shelter.

Which of the following best describes the three fundamental economic questions?

What to produce, how to produce, and for whom to produce?

The expression, "There's no such thing as a free lunch" implies that

costs are incurred when resources are used to produce goods and services

Economics is the study of

how choices are made because of scarcity

When an economy produces a combination of goods that lies on the production possibilities curve

resources are being used fully and efficiently

Which of the following is the best definition of opportunity costs?

the amount of one good that must be given up in order to produce one more unit of another good

The opportunity cost of an action is

the value of the opportunity or opportunities that must be sacrificed in order to take the action.

A production possibilities curve shows the various combinations of output:

An economy can produce

Which of the following reasons might explain why an economy would be operating inside its production possibilities curve (PPC)?

Because of unemployment or underemployment of labor, perhaps due to discrimination against employing workers of a certain race or gender.

During the time when she took this quiz, Susannah could instead have practiced her violin or done her French homework. She thinks that if she hadn't taken the quiz, she would have done her French homework. Her opportunity cost of taking the quiz is the value of

Doing her French homework

TRUE OR FALSE: Inward shifts in the production-possibilities curve represents economic growth.

FALSE

What you give up to pursue another alternative is known as

Opportunity cost

A production possibilities curve is drawn based on which of the following set of assumptions?

Resources are fixed and fully employed, and technology advances at the rate of growth of the economy overall.