18 Questions
What is the main reason why scarcity leads to a need for choices to be made in an economy?
Because wants and needs are unlimited, but resources are scarce
What does the production possibility frontier (PPF) show?
The maximum output that can be produced in an economy
What is the opportunity cost of attending university?
The salary you could have earned if you didn't attend university
What is allocative efficiency?
Producing more of what people want and less of what people don't want
What is the difference between microeconomics and macroeconomics?
Microeconomics studies individual economic units, while macroeconomics studies the economy as a whole
What is the term for using our limited resources to produce TOO MUCH or TOO LITTLE of a particular good or service?
Allocative inefficiency
What is the definition of productive efficiency?
Producing a combination of goods that lies on the production possibility frontier
What can cause an outward shift of the production possibility frontier?
Improvements in technology and an increase in the population size of the working population
What is the opportunity cost of five more units of B in an economy at point C?
The amount of A that could have been produced
Why is it possible to consume outside the production possibility frontier?
Through international trade
What is the consequence of shifting resources from consumption goods to capital goods in the short run?
A decrease in consumption goods production
What is the result of trading two units of A abroad for 12 units of B?
A gain of 12 units of B
What is the opportunity cost of a decision?
The value of the next best alternative given up
Which of the following is a microeconomic issue?
The price of DVDs
What is the primary difference between microeconomics and macroeconomics?
Microeconomics studies individual economic units, while macroeconomics studies the economy as a whole
What is the Production Possibility Frontier (PPF)?
A graph that shows the various combinations of two goods that can be produced given the available resources and technology
What is the implication of scarcity in economic decision making?
Choices must be made because wants are unlimited but resources are limited
Why do all decisions involve opportunity costs?
Because all decisions require a sacrifice of the next best alternative
This quiz covers the basics of economics, including opportunity cost, microeconomics vs macroeconomics, and the production possibility frontier. Test your understanding of these concepts and learn to distinguish between macroeconomic and microeconomic topics.
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