Question 1

Which of the following best describes the concept of scarcity in economics?

Accepted Answer

Scarcity arises because wants always exceed what can be produced with available resources.

Question 2

Which of the following is NOT considered a factor of production?

Accepted Answer

Consumer goods

Question 3

Suppose Canada can produce either 50 million smartphones or 60 million tablets per year. If Canada is currently producing 40 million smartphones and 30 million tablets, what is the opportunity cost of increasing tablet production from 30 million to 40 million?

Accepted Answer

$$7$$ million smartphones$$\ (40 - 33)$$

Question 4

Which statement about the Production Possibilities Curve (PPC) is correct?

Accepted Answer

Points on the PPC represent full and efficient employment of resources.

Question 5

If a student spends more time studying economics and less time on mathematics, what does the PPC illustrate about their grades?

Accepted Answer

Increasing the grade in economics requires sacrificing some grade in mathematics.

Question 6

Which of the following best explains the law of increasing relative cost?

Accepted Answer

As more of a good is produced, the opportunity cost of producing additional units increases.

Question 7

Which of the following is an example of a service in economics?

Accepted Answer

A dentist performing a tooth extraction

Question 8

Suppose a neurosurgeon earns $$\1000$ per hour performing surgery and can change her own car oil in 1 hour, saving $$\$$50 in $$mechanic fees. What is her opportunity cost of changing her own oil?

Accepted Answer

$$\1000$, the forgone income from not performing surgery

Question 9

Which of the following would cause the PPC to shift outward?

Accepted Answer

An improvement in technology

Question 10

If Canada has an absolute advantage in producing both smartphones and tablets compared to the US, what should Canada do according to the theory of comparative advantage?

Accepted Answer

Specialize in the good for which it has the lowest opportunity cost and trade with the US

Question 11

Which income type is earned by the factor of production 'land'?

Accepted Answer

Rent

Question 12

What is the opportunity cost of attending an economics class for one hour if you could have worked and earned $$\20$ during that time?

Accepted Answer

$$\20$, the forgone wage

Question 13

Which of the following best describes productive efficiency?

Accepted Answer

Producing the maximum output with given resources and technology

Question 14

If a nation devotes more resources to producing capital goods rather than consumer goods, what is the likely long-term effect?

Accepted Answer

Economic growth and higher future production possibilities

Question 15

Which of the following is NOT a result of specialization according to microeconomic theory?

Accepted Answer

Reduced need for trade between individuals or nations

Question 16

If the PPC is bowed outward, what does this indicate about opportunity costs?

Accepted Answer

Opportunity costs increase as more of one good is produced.

Question 17

Which of the following is an example of a trade-off faced by a nation?

Accepted Answer

Choosing between producing more consumer goods or more capital goods

Question 18

Which of the following best describes comparative advantage?

Accepted Answer

The ability to produce a good at a lower opportunity cost than another entity

Question 19

If a country is operating inside its PPC, what does this indicate?

Accepted Answer

The country is experiencing unemployment or inefficiency.

Question 20

Which of the following is a direct result of the scarcity problem?

Accepted Answer

Individuals and societies must make choices among competing alternatives.

Scarcity, Trade-Offs, and Production Possibilities in Microeconomics

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