Scarcity, Choice and Opportunity Cost
54 questions· page 1 of 6
The diagram is from a chapter on ‘The Fundamental Economic Problem’ in an Economics textbook. It should contain the terms opportunity cost, scarcity and choice in the order that identifies the fundamental economic problem.
What is the correct order for the terms to appear in the diagram?
Options
A choice → opportunity cost → scarcity
B choice → scarcity → opportunity cost
C scarcity → choice → opportunity cost
D scarcity → opportunity cost → choice
A firm produces 100 units of good Y and 200 units of good X with a fixed amount of resources. This firm wants to increase production of good Y to 120 units and as a result it can now only produce 170 units of good X.
What is the opportunity cost of producing the extra 20 units of good Y?
Options
A 20 units of good X
B 30 units of good X
C 120 units of good X
D 170 units of good X
A trading country can produce two goods, X and Y. It specialises completely in the production of good Y.
What will be the opportunity cost to the country of consuming additional imports of good X?
Options
A the additional imports of good X
B the increase in the resources required to produce good X
C the reduction in the domestic consumption of good Y
D the reduction in the resources available to produce good Y
The graph shows the total economic welfare derived by citizens from a government’s expenditure on health and education services.
If the government has $60 billion of its budget to allocate between health and education services, which allocation will give its citizens the highest level of welfare?
Options
| health spending ($ billions) | education spending ($ billions) | |
|---|---|---|
| A | 0 | 60 |
| B | 20 | 40 |
| C | 40 | 20 |
| D | 60 | 0 |
A student chooses to study for a degree in engineering at university rather than take a job working as an apprentice engineer. The apprenticeship lasts five years and involves training while working.
What will decrease the opportunity cost of this choice?
Options
A a decrease in the wages paid to apprentice engineers
B a decrease in the number of students studying engineering degrees
C a decrease in the number of top grade engineering degrees awarded
D a decrease in the length of an engineering apprenticeship to four years
What would be an opportunity cost of growth in an economy?
Options
A the faster growth of services than of manufacturing
B the need for an increased level of imported raw materials
C the need for greater government intervention
D the reduction of consumption if growth requires investment
Which combination best describes the basic economic problem?
Options
| resources | wants | |
|---|---|---|
| A | limited | limited |
| B | limited | unlimited |
| C | unlimited | limited |
| D | unlimited | unlimited |
What is the opportunity cost to a person of spending $20 on a new pair of sports shoes?
Options
A all the other things the person could have bought
B the cost of getting to the sports shop
C the current value of the person’s old pair of shoes
D the next best thing that could have been bought with the $20
A worker earns $40 per hour. Rather than work, she decides to visit a museum for three hours. The visit costs a total of $40.
What is the opportunity cost of visiting the museum?
Options
A $40
B $80
C $120
D $160
Why does the concept of scarcity apply to the use of fossil fuels?
Options
A Demand fluctuates according to price changes.
B Supply is insufficient to meet demand.
C Their use is restricted because of harmful pollution.
D They are being replaced by renewable energy sources.