Opportunity Cost in Economics
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Questions and Answers

What is the concept that economic agents must consider when making decisions due to limited resources?

  • Division of labor
  • Specialization
  • Consumer goods
  • Opportunity cost (correct)
  • In the context of the text, which factor of production involves managerial ability and taking risks?

  • Capital
  • Entrepreneurship (correct)
  • Land
  • Labour
  • Which type of resource includes oil, coal, and water?

  • Non-renewable resources
  • Human capital
  • Natural resources (correct)
  • Renewable resources
  • What do producers have to choose between in the example provided in the text?

    <p>Hiring extra staff or investing in new machines</p> Signup and view all the answers

    Which term describes finished or semi-finished consumer goods in the production process?

    <p>Working capital</p> Signup and view all the answers

    Which factor of production involves the physical goods used in the production process?

    <p>Capital</p> Signup and view all the answers

    What happens when an economy experiences an increase in the quantity or quality of resources?

    <p>The productive potential of the economy increases</p> Signup and view all the answers

    How does moving along the PPF differ from shifting the PPF?

    <p>Moving along the PPF involves a change in the state of resources</p> Signup and view all the answers

    Which type of goods can be used to produce other goods?

    <p>Capital goods</p> Signup and view all the answers

    What is a common reason for a country's PPF curve to shift inwards?

    <p>Brain drain or natural disasters</p> Signup and view all the answers

    In the context of PPF, what does specialization refer to?

    <p>Completing specific tasks in production</p> Signup and view all the answers

    How does shifting the PPF curve outwards affect the opportunity cost of producing goods?

    <p>Reduces the opportunity cost</p> Signup and view all the answers

    Why did Karl Marx view the free market as unstable?

    <p>He believed profits were created through the exploitation of labor.</p> Signup and view all the answers

    In a command economy, who determines 'what to produce'?

    <p>The government</p> Signup and view all the answers

    What is one advantage of a command economy over a free market economy?

    <p>Easier coordination of resources during crises</p> Signup and view all the answers

    What is a key disadvantage of a command economy according to the text?

    <p>Governments may not be fully informed on what to produce.</p> Signup and view all the answers

    Which economic system combines features of both command and free economies?

    <p>Mixed economy</p> Signup and view all the answers

    How does a mixed economy differ from a command economy?

    <p>'What to produce' decisions are shared between government and market forces.</p> Signup and view all the answers

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