Opportunity Cost in Economics

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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?

Hiring extra staff or investing in new machines Signup and view all the answers

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

Working capital Signup and view all the answers

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

Capital Signup and view all the answers

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

The productive potential of the economy increases Signup and view all the answers

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

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

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

Capital goods Signup and view all the answers

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

Brain drain or natural disasters Signup and view all the answers

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

Completing specific tasks in production Signup and view all the answers

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

Reduces the opportunity cost Signup and view all the answers

Why did Karl Marx view the free market as unstable?

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

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

The government Signup and view all the answers

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

Easier coordination of resources during crises Signup and view all the answers

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

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

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

Mixed economy Signup and view all the answers

How does a mixed economy differ from a command economy?

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