Eco Systems
In a command economy, who makes the decisions about what to produce?
a) Consumers
b) Businesses
c) The government
d) The market
c) The government
A student can either spend 4 hours studying or working a part-time job earning $40. If the student chooses to study, what is the opportunity cost?
a) $10
b) $40
c) 4 hours
d) $4
b) $40
What does a Production Possibilities Curve show?
a) The relationship between price and quantity.
b) The maximum combinations of two goods that can be produced with available resources.
c) The amount of profit a company makes.
d) The relationship between supply and demand.
b) The maximum combinations of two goods that can be produced with available resources.
If an economy is producing on the PPC, what does it imply?
a) The economy is using all of its resources efficiently.
b) The economy is wasting resources.
c) The economy is experiencing a recession.
d) The economy is growing.
a) The economy is using all of its resources efficiently.
A straight-line PPC indicates:
a) Increasing opportunity cost.
b) Constant opportunity cost.
c) Decreasing opportunity cost.
d) No opportunity cost.
b) Constant opportunity cost.
What is a market economy?
a) An economy where all decisions are made by the government.
b) An economy where decisions are based on tradition.
c) An economy where supply and demand guide production.
d) An economy with no private ownership
c) An economy where supply and demand guide production.
An individual has the option to spend $100 on a concert ticket or save the money for a future vacation. If the person buys the concert ticket, what is the opportunity cost?
a) $100
b) The future vacation
c) The concert ticket
d) $50
b) The future vacation
What does a point inside the PPC represent?
a) Efficient use of resources.
b) Impossible production.
c) Inefficient use of resources.
d) Economic growth.
c) Inefficient use of resources
The concept of opportunity cost is best illustrated by:
a) Moving along the PPC.
b) A shift in the PPC.
c) A point inside the PPC.
d) A point outside the PPC
a) Moving along the PPC.
A bowed-outward PPC indicates:
a) Increasing opportunity cost.
b) Constant opportunity cost.
c) Decreasing opportunity cost.
d) No opportunity cost
a) Increasing opportunity cost.
Which type of economic system is most likely to produce on the PPC curve with maximum efficiency?
a) Traditional economy
b) Command economy
c) Market economy
d) Mixed economy
c) Market economy
A country can either produce 500 tons of wheat or 300 tons of rice. If it chooses to produce 100 tons of rice instead of wheat, it sacrifices the production of 200 tons of wheat. What is the opportunity cost of producing 100 tons of rice?
a) 100 tons of rice
b) 200 tons of wheat
c) 300 tons of rice
d) 500 tons of wheat
b) 200 tons of wheat
What does a point on the PPC represent?
a) Inefficiency.
b) Unemployment.
c) Maximum efficiency.
d) Economic contraction.
c) Maximum efficiency.
Which of the following would cause a PPC to shift inward?
a) New technology improves production.
b) A natural disaster reduces the availability of resources.
c) The labor force increases.
d) Improved education increases worker productivity
b) A natural disaster reduces the availability of resources.
a) A decrease in the workforce.
b) A decrease in the supply of raw materials.
c) Improved technology or more capital investment.
d) Higher taxes on businesses.
c) Improved technology or more capital investment.
How would a command economy shift its PPC outward?
a) By increasing private investment.
b) By government-directed investments in technology and resources.
c) By letting supply and demand control production.
d) By reducing taxes on businesses.
b) By government-directed investments in technology and resources.
The opportunity cost of choosing to build more roads in a country is:
a) The loss of land for other uses.
b) The decrease in the price of roads.
c) The reduced time in traffic.
d) The enjoyment of driving
a) The loss of land for other uses.
What does a point outside the PPC represent?
a) Attainable with current resources.
b) Unattainable with current resources.
c) Economic stability.
d) Inefficiency.
b) Unattainable with current resources.
What causes a movement along the PPC?
a) A change in technology.
b) A change in resource availability.
c) A trade-off between the production of two goods.
d) A shift in consumer preferences.
c) A trade-off between the production of two goods.
The opportunity cost of producing more of one good is:
a) Zero.
b) The loss of producing more of another good.
c) The total amount of resources available.
d) Equal to the price of the good.
b) The loss of producing more of another good.
In a market economy, the PPC can shift outward through:
a) Government decisions.
b) Innovation and entrepreneurship driven by private businesses.
c) Following traditional production methods.
d) Increasing regulations
b) Innovation and entrepreneurship driven by private businesses.
If a country produces 10 cars and 5 trucks, and it decides to produce 2 more trucks by giving up the production of 3 cars, what is the opportunity cost of producing those additional trucks?
a) 2 trucks
b) 3 cars
c) 5 trucks
d) 10 cars
b) 3 cars
What can cause the PPC to shift outward?
a) Decrease in technology.
b) Increase in resources or technology.
c) Decrease in population.
d) Decrease in government spending.
b) Increase in resources or technology.
When the PPC shifts outward, what does it indicate?
a) A decrease in production capacity.
b) Economic growth.
c) Inefficiency in production.
d) Economic contraction
b) Economic growth.
If an economy is producing two goods, and one good’s production increases while the other stays constant, this means:
a) Resources are not fully utilized.
b) Opportunity cost is zero.
c) The economy is inside the PPC.
d) The economy is at a point outside the PPC.
c) The economy is inside the PPC.