Question 1

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

Accepted Answer

Scarcity means that resources are insufficient to satisfy all human wants.

Question 2

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

Accepted Answer

Money

Question 3

A city government must decide between investing in new traffic sensors or hiring more police officers. What economic concept does this scenario illustrate?

Accepted Answer

Opportunity cost

Question 4

If a student spends more time studying economics and less time on mathematics, what does the movement along the production possibilities curve (PPC) represent?

Accepted Answer

A trade-off between two goods

Question 5

Which of the following best defines opportunity cost?

Accepted Answer

The next-best alternative that is given up when a choice is made

Question 6

Why does the production possibilities curve (PPC) typically have a bowed shape?

Accepted Answer

The law of increasing additional cost due to resource specialization

Question 7

Suppose a country decides to produce more capital goods and fewer consumer goods. What is the likely long-term effect?

Accepted Answer

The rate of economic growth will increase.

Question 8

Which of the following is an example of productive efficiency?

Accepted Answer

Producing the maximum output with given resources and technology

Question 9

If an economy increases investment in education and worker training, what will likely happen to its production possibilities curve?

Accepted Answer

It will shift outward

Question 10

Which of the following best describes comparative advantage?

Accepted Answer

The ability to produce a good or service at a lower opportunity cost than others

Question 11

A factory can produce either 100 smartphones or 50 tablets per day. If the factory chooses to produce 100 smartphones, what is the opportunity cost?

Accepted Answer

The 50 tablets that could have been produced

Question 12

Which of the following is NOT an assumption underlying the production possibilities curve?

Accepted Answer

Resources can be increased at any time

Question 13

If Alberta specializes in grain production and Ontario in automobile manufacturing, what economic principle is being applied?

Accepted Answer

Comparative advantage and specialization

Question 14

Why do nations trade based on comparative advantage rather than absolute advantage?

Accepted Answer

Because comparative advantage allows for more efficient resource allocation and mutual gains from trade

Question 15

Which of the following is an example of a capital good?

Accepted Answer

A machine used in a factory to produce other goods

Question 16

If a city adds more bicycle lanes by reducing parking spaces, what economic law does this illustrate?

Accepted Answer

Law of increasing additional cost

Question 17

Suppose a country can produce 10 units of good A or 20 units of good B with the same resources. What is the opportunity cost of producing one unit of good A?

Accepted Answer

$$ \frac{20}{10} = 2 $$ units of good B

Question 18

Which of the following statements about specialization is correct?

Accepted Answer

Specialization allows individuals and regions to focus on activities where they have a comparative advantage.

Question 19

If a nation chooses to allocate more resources to capital goods today, what is the expected impact on future production possibilities?

Accepted Answer

Future production possibilities will increase.

Question 20

Which of the following best describes the law of increasing additional cost?

Accepted Answer

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

Scarcity and the World of Trade-Offs: Microeconomics Study Notes

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