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Questions and Answers
What is the fundamental economic problem of scarcity?
What is the fundamental economic problem of scarcity?
What is the opportunity cost of choosing one option over another?
What is the opportunity cost of choosing one option over another?
What is the typical shape of a Production Possibility Curve (PPC)?
What is the typical shape of a Production Possibility Curve (PPC)?
What is allocation of resources in economics?
What is allocation of resources in economics?
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What is the result of division of labor?
What is the result of division of labor?
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What characterizes a mixed economic system?
What characterizes a mixed economic system?
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What is the shape of the demand curve faced by a firm in a perfectly competitive market?
What is the shape of the demand curve faced by a firm in a perfectly competitive market?
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What is total revenue equal to?
What is total revenue equal to?
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What is the relationship between the marginal revenue curve and the demand curve in a perfectly competitive market?
What is the relationship between the marginal revenue curve and the demand curve in a perfectly competitive market?
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What are explicit costs?
What are explicit costs?
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Study Notes
Scarcity and Opportunity Cost
- Scarcity is defined as limited resources and unlimited wants.
- Opportunity cost is the value of the next best alternative foregone.
Production Possibility Curve (PPC)
- The shape of the PPC is typically concave to the origin.
Resource Allocation
- Allocation of resources refers to the utilization of resources to produce goods and services.
Division of Labor
- Division of labor leads to increased efficiency.
Economic Systems
- A mixed economic system has both private and government-controlled resources.
Perfectly Competitive Market
- In a perfectly competitive market, the demand curve faced by a firm is perfectly elastic.
- The marginal revenue curve under perfect competition coincides with the demand curve and is horizontal at the market price.
- Total revenue is equal to price multiplied by quantity sold.
Cost Concepts
- Explicit costs include costs of raw materials, excluding opportunity costs.
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Description
Test your knowledge of economics concepts, including scarcity, opportunity cost, and production possibilities.
