#1
What does economic scarcity imply?
Unlimited wants and limited resources
ExplanationDescribes the imbalance between unlimited human desires and finite resources.
#2
In economics, what is a trade-off?
The sacrifice of one good or service to purchase or produce another
ExplanationNecessitates sacrificing one option for another due to limited resources.
#3
Which of the following is NOT a factor of production?
Money
ExplanationContrary to land, labor, and capital, money is a medium of exchange.
#4
Which of the following is a key function of money in an economy?
Facilitating exchange and trade
ExplanationServes as a universally accepted medium of exchange.
#5
What is the term for the total value of all final goods and services produced within a country's borders in a specific time period?
Gross Domestic Product (GDP)
ExplanationMeasurement of a nation's economic output.
#6
In the context of international trade, what does the term 'tariff' refer to?
A tax on imports or exports
ExplanationGovernment-imposed duty on goods traded internationally.
#7
Which concept describes the idea of giving up the next best choice when making a decision?
Opportunity cost
ExplanationThe value of the best alternative forgone when a choice is made.
#8
Which of the following best exemplifies the concept of 'guns or butter'?
Choosing between manufacturing consumer goods or military weapons
ExplanationRepresents the dilemma between allocating resources for defense or civilian needs.
#9
What principle does the law of increasing opportunity costs illustrate?
As production of a good increases, the opportunity cost of producing an additional unit rises.
ExplanationIndicates that producing more of one good leads to sacrificing increasing amounts of another.
#10
Economic efficiency occurs when:
Every resource is allocated to serve each individual without any waste.
ExplanationOptimal allocation of resources to maximize societal welfare.
#11
Marginal cost is defined as:
The cost of producing one more unit of a good.
ExplanationThe additional cost incurred by producing one more unit of a product.
#12
Which economic system is characterized by government ownership of most resources and central planning?
Communism
ExplanationEconomic system where the state controls production and distribution.
#13
What does the production possibilities frontier (PPF) illustrate?
The maximum attainable combinations of two goods that can be produced with available resources and technology
ExplanationDemonstrates the limits of production with given resources and technology.
#14
The concept of comparative advantage suggests that countries should:
Produce goods for which they have the lowest opportunity cost.
ExplanationEncourages nations to specialize in products where they have the least foregone alternatives.
#15
What is the relationship between inflation and purchasing power?
Inflation decreases purchasing power.
ExplanationAs prices rise, the value of money decreases, reducing what it can buy.
#16
The Phillips Curve illustrates the trade-off between which two economic variables?
Inflation and unemployment
ExplanationGraphical representation showing inverse relationship between inflation and unemployment.
#17
What is 'deadweight loss'?
Both b and c
ExplanationOccurs when market inefficiencies lead to lost economic activity.