Podcast
Questions and Answers
Which of the following best defines scarcity?
Which of the following best defines scarcity?
- The availability of free goods
- The unlimited wants and needs of society (correct)
- The efficient allocation of resources
- The abundance of resources
What is the opportunity cost of a decision?
What is the opportunity cost of a decision?
- The value of the next best alternative foregone (correct)
- The benefits gained from the decision
- The total cost of all alternatives
- The monetary value of the decision
What does a Production Possibility Curve (PPC) represent?
What does a Production Possibility Curve (PPC) represent?
- The demand and supply of goods in an economy
- The level of economic growth in an economy
- The distribution of resources in an economy
- The maximum production capacity of an economy (correct)
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Study Notes
Scarcity and Opportunity Cost
- Scarcity refers to the fundamental economic problem of unlimited wants and needs, but limited resources to satisfy them.
Opportunity Cost
- Opportunity cost is the value of the next best alternative that is given up when a choice is made.
Production Possibility Curve (PPC)
- A Production Possibility Curve (PPC) is a graph that shows the various combinations of two goods that can be produced given a set of resources and technology.
- The PPC represents the possible output combinations of two goods that can be produced efficiently, with scarce resources.
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