Practise economic-problem questions by defining scarcity, applying opportunity cost and using PPC diagrams to show trade-offs or growth.
Describe one reason why infinite wants lead to scarcity.
A firm has decided to purchase a new delivery vehicle.
Explain one possible opportunity cost for the firm of this decision.
In the box below, draw a production possibility curve (PPC) for a firm that can produce shampoo and/or toothpaste. On your PPC, draw and label what would happen if production of toothpaste was increased.
Figure 4
Which one of the following does a point on a production possibility curve (PPC) represent?
Where capital goods should be produced
How the production of all goods can be increased
Government revenue from production
A given amount of resources being fully employed
Andreas is a plumber. Unlike his competitors, he is prepared to work at the weekend. However, he charges customers 50% more for his services at the weekend.
Figure 3 shows a long-run average cost (LRAC) curve diagram.
Figure 3
Which one of the following is the most likely cause of economic growth?
An increase in taxation
An improvement in efficiency
Fewer advances in technology
An increase in unemployment