Foundations of Economics Quiz: Test Your Scarcity & Choice Knowledge

📚 Quick Study Guide

• scarcity means that resources are limited relative to wants.
• 💰 Opportunity Cost: The value of the next best alternative forgone.
• ⚖️ Trade-offs: Giving up one thing to gain another due to scarcity.
• 🚀 Production Possibilities Frontier (PPF): A curve showing the maximum attainable combinations of two goods that can be produced with available resources and technology.
• 🎯 Efficiency: Using resources in such a way as to maximize the production of goods and services.
• 💡 Economic Systems: Different ways societies organize the production and distribution of goods and services (e.g., market economy, command economy).
• ➕ Marginal Analysis: Comparing the additional benefit of an activity to the additional cost of the activity.

🤔 Practice Quiz

1. Which of the following best describes the concept of scarcity?
   1. A) Having unlimited resources to satisfy wants.
   2. B) Having limited resources to satisfy wants.
   3. C) Having more wants than resources.
   4. D) Having more resources than wants.
2. What is the opportunity cost of going to a concert?
   1. A) The price of the concert ticket.
   2. B) The time spent at the concert.
   3. C) The next best alternative use of the time and money spent on the concert.
   4. D) All of the above.
3. Which of the following is NOT a factor of production?
   1. A) Land.
   2. B) Labor.
   3. C) Capital.
   4. D) Money.
4. What does the Production Possibilities Frontier (PPF) represent?
   1. A) The minimum amount of goods that can be produced.
   2. B) The maximum amount of goods that can be produced with unlimited resources.
   3. C) The maximum attainable combinations of two goods that can be produced with available resources and technology.
   4. D) The different prices of goods in the market.
5. What is efficiency in economics?
   1. A) Producing goods at the lowest possible cost, regardless of demand.
   2. B) Using resources in such a way as to maximize the production of goods and services.
   3. C) Distributing goods equally among all members of society.
   4. D) Minimizing the use of natural resources.
6. In a market economy, how are resources allocated?
   1. A) By the government.
   2. B) By a central planning committee.
   3. C) By the interaction of buyers and sellers.
   4. D) By tradition.
7. What is marginal analysis?
   1. A) Analyzing the overall economy.
   2. B) Comparing the total benefit of an activity to the total cost of the activity.
   3. C) Comparing the additional benefit of an activity to the additional cost of the activity.
   4. D) Ignoring costs and focusing only on benefits.