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 human wants.

Question 2

A society can produce either 200 candy bars or 100 broccoli. What is the opportunity cost of producing one broccoli?

Accepted Answer

$2$ candy bars

Question 3

Which point on a Production Possibilities Frontier (PPF) represents productive efficiency?

Accepted Answer

Any point on the PPF

Question 4

If Ford shifts production from gasoline-powered trucks to electric vehicles, what does the opportunity cost represent?

Accepted Answer

The number of gasoline-powered trucks forgone

Question 5

Why is the Production Possibilities Frontier (PPF) typically bowed outward?

Accepted Answer

Because increasing production of one good requires giving up increasingly larger amounts of the other good

Question 6

Which of the following would cause an outward shift of the PPF?

Accepted Answer

A technological improvement in both sectors

Question 7

In the context of the market system, what are 'factors of production'?

Accepted Answer

Inputs such as labor, capital, natural resources, and entrepreneurial ability

Question 8

Which of the following best illustrates the role of an entrepreneur in the market system?

Accepted Answer

An entrepreneur brings together labor, capital, and natural resources to create new goods and services.

Question 9

Suppose Sevi can produce 15 lbs of berries or 30 fish per day, while Eylem can produce 10 lbs of berries or 10 fish per day. Who has the absolute advantage in fish production?

Accepted Answer

Sevi

Question 10

Using the same scenario, who has the comparative advantage in berry production?

Accepted Answer

Eylem

Question 11

If Sevi specializes in fish and Eylem specializes in berries, and they trade, what is the likely outcome compared to self-sufficiency?

Accepted Answer

Total production of both goods will increase

Question 12

Which of the following is NOT a question that all societies must answer due to scarcity?

Accepted Answer

Where to produce?

Question 13

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

Accepted Answer

Resources are being underutilized

Question 14

Which of the following best defines comparative advantage?

Accepted Answer

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

Question 15

If the opportunity cost of producing one candy bar is $\frac{1}{2}$ broccoli, what is the opportunity cost of producing one broccoli?

Accepted Answer

$2$ candy bars

Question 16

Which of the following is a result of poorly enforced property rights in a market system?

Accepted Answer

Reduced economic efficiency and output below the PPF

Question 17

If a country experiences technological improvement only in the production of military goods, how will its PPF change?

Accepted Answer

The PPF will shift outward only along the axis for military goods

Question 18

Which of the following is an example of a factor market?

Accepted Answer

A company hiring workers for its factory

Question 19

What is the main benefit of specialization and trade according to the principle of comparative advantage?

Accepted Answer

It increases total output and allows both parties to consume beyond their individual PPFs

Question 20

If the opportunity cost of producing more civilian goods increases as more are produced, what does this illustrate?

Accepted Answer

Increasing marginal opportunity cost

Chapter 2: Trade-offs, Comparative Advantage, and The Market System – Microeconomics Study Notes

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