Q: Which equation represents the marginal cost of producing pizza when moving from 2 to 3 pizzas, given the PPF?

$$\text{Marginal Cost} = \frac{\text{Change in resources for pizza}}{\text{Change in quantity of pizza}}$$

Q: Which formula correctly expresses opportunity cost?

$$\text{Opportunity Cost} = \frac{\text{Loss in Good B}}{\text{Gain in Good A}}$$

Question 1

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

Accepted Answer

Scarcity refers to the limited nature of society's resources, given unlimited wants.

Question 2

Suppose a country can produce either 10 units of wheat or 20 units of rice with its available resources. What is the opportunity cost of producing 1 unit of wheat?

Accepted Answer

$$2$$ units of rice

Question 3

The Production Possibilities Frontier (PPF) is bowed outward because:

Accepted Answer

The opportunity cost of producing a good increases as more of it is produced.

Question 4

If a point lies inside the PPF, what does this indicate about resource use?

Accepted Answer

Resources are being underutilized.

Question 5

Which equation represents the marginal cost of producing pizza when moving from 2 to 3 pizzas, given the PPF?

Accepted Answer

$$	ext{Marginal Cost} = \frac{	ext{Change in resources for pizza}}{	ext{Change in quantity of pizza}}$$

Question 6

A country can produce 4 cars or 8 trucks. If it specializes in cars, what is the opportunity cost of producing 1 car?

Accepted Answer

$$2$$ trucks

Question 7

Which of the following statements about comparative advantage is correct?

Accepted Answer

A country has a comparative advantage in producing a good if it has a lower opportunity cost than another country.

Question 8

If Country A can produce 10 units of wine or 5 units of cheese, and Country B can produce 6 units of wine or 6 units of cheese, which country has the comparative advantage in cheese?

Accepted Answer

Country B

Question 9

Specialization and trade allow countries to:

Accepted Answer

Consume beyond their individual PPFs.

Question 10

Which of the following best illustrates the law of increasing opportunity cost?

Accepted Answer

As more resources are devoted to producing pizza, the opportunity cost of each additional pizza increases.

Question 11

If the marginal benefit of producing a third pizza is less than its marginal cost, what should a rational producer do?

Accepted Answer

Not produce the third pizza.

Question 12

Which formula correctly expresses opportunity cost?

Accepted Answer

$$	ext{Opportunity Cost} = \frac{	ext{Loss in Good B}}{	ext{Gain in Good A}}$$

Question 13

Which of the following is NOT a reason for the PPF to shift outward?

Accepted Answer

Decrease in labor force

Question 14

If a country has an absolute advantage in producing both goods, should it still trade?

Accepted Answer

Yes, if it has a comparative advantage in at least one good.

Question 15

Which of the following best describes the marginal benefit curve for pizza?

Accepted Answer

It is downward sloping, showing decreasing benefit with each additional pizza.

Question 16

A point outside the PPF represents:

Accepted Answer

An unattainable combination of goods with current resources.

Question 17

If the opportunity cost of producing 1 more unit of Good A increases as more of Good A is produced, this is an example of:

Accepted Answer

Increasing opportunity cost

Question 18

Which of the following is a direct result of specialization?

Accepted Answer

Higher living standards

Question 19

If two countries specialize according to their comparative advantage and trade, what is the likely outcome?

Accepted Answer

Both countries can consume at points beyond their PPFs.

Question 20

Which of the following is a source of comparative advantage?

Accepted Answer

Differences in opportunity cost

Introduction to Economics: Scarcity, Opportunity Cost, and Production Possibilities

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