Q: Which equation correctly represents the opportunity cost of producing one additional car if the PPF is linear?

$$Opportunity\ Cost = \frac{\text{Amount\ of\ Computers\ Given\ Up}}{\text{Amount\ of\ Cars\ Gained}}$$

Question 1

Which of the following best describes the concept of opportunity cost?

Accepted Answer

The value of the next best alternative forgone when a choice is made.

Question 2

A country can produce either 1,000 cars or 2,000 computers with its available resources. If it chooses to produce 600 cars, how many computers can it produce if all resources are fully utilized?

Accepted Answer

1,000 computers

Question 3

Which equation correctly represents the opportunity cost of producing one additional car if the PPF is linear?

Accepted Answer

$$Opportunity\ Cost = \frac{	ext{Amount\ of\ Computers\ Given\ Up}}{	ext{Amount\ of\ Cars\ Gained}}$$

Question 4

Which of the following is NOT a basic economic question every society must answer?

Accepted Answer

How to maximize profits?

Question 5

In a planned (socialist) economy, who decides what goods and services are produced?

Accepted Answer

The government or central authority

Question 6

Which of the following is a characteristic of a mixed economy?

Accepted Answer

Both the private and public sectors play a role in economic decision-making.

Question 7

If a country is operating inside its production possibilities frontier (PPF), what does this indicate?

Accepted Answer

The country is not utilizing all its resources efficiently.

Question 8

Which of the following would cause a rightward shift in the production possibilities frontier (PPF)?

Accepted Answer

A technological advancement

Question 9

Which of the following best describes the difference between microeconomics and macroeconomics?

Accepted Answer

Microeconomics focuses on individual economic units, while macroeconomics studies the economy as a whole.

Question 10

Which of the following is an example of a normative economic statement?

Accepted Answer

"The government should lower gasoline prices to make transportation more affordable for consumers."

Question 11

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

Accepted Answer

Money

Question 12

If the opportunity cost of producing one more car is 2 computers, what is the opportunity cost of producing one more computer?

Accepted Answer

$$0.5$$ cars

Question 13

Which of the following scenarios best illustrates the concept of scarcity?

Accepted Answer

A country has to choose between building more schools or more hospitals due to limited resources.

Question 14

In a market economy, how are goods and services allocated?

Accepted Answer

By the price system based on supply and demand

Question 15

Which of the following would NOT be a reason to study economics?

Accepted Answer

To become an uninformed citizen

Question 16

If a country moves from point D (inside the PPF) to point B (on the PPF), what does this represent?

Accepted Answer

An increase in efficiency and full utilization of resources

Question 17

Which of the following is an example of a positive economic statement?

Accepted Answer

"An increase in the minimum wage will lead to higher unemployment among teenagers."

Question 18

Which of the following best explains why the PPF is typically bowed outward (concave to the origin)?

Accepted Answer

Resources are not perfectly adaptable to the production of both goods.

Question 19

If a technological improvement occurs in the production of computers but not cars, what will happen to the PPF?

Accepted Answer

The PPF will shift outward more along the computers axis.

Question 20

Which of the following is a real-world example of opportunity cost?

Accepted Answer

A government spends money on building a new highway instead of funding education.

Economic Issues and Concepts: Foundations of Macroeconomics

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