Scarcity, choice and opportunity cost

An individual has a meeting scheduled with his bank manager. He can either go to the meeting in his car, or keep the car at home and make the journey by bus followed by train. The journey costs are shown below. $ bus fare 2 train fare 3 car parking charge 4 petrol 2 car wear and tear costs 1 Using this information, what is the opportunity cost to the individual of going by car instead of by bus and train?

Feb/March 2016

What proves that scarcity exists?

Feb/March 2016

This diagram comes from the Economics textbook chapter titled ‘The Economic Problem’. It needs the terms opportunity cost, scarcity and choice to be placed in the sequence that shows the economic problem. In which order should the terms be arranged in the diagram?

Feb/March 2017

A farmer can produce three crops, X, Y and Z, on his land. He decides to cultivate no more than two crops in any one year. The table shows six possible combinations of output units for the three crops. What is the opportunity cost of 1 unit of X?

Feb/March 2018

A teacher is paid $30 000 at present but would still be prepared to carry on in the role if her pay were at least $25 000. She would rather remain in her teaching position than move to her next best alternative job as an accountant, in which she could receive $40 000. Which statement is correct?

Feb/March 2018

A student purchases a flute for $80 but then cannot learn to play it. Its resale value is $50, whereas the shop retail price of the same type of flute has increased to $95. What is the current opportunity cost to the student of keeping the flute?

Feb/March 2019

A worker is paid $40 per hour. Instead of working, she chooses to spend three hours at a museum. The trip has a total cost of $40. What is the opportunity cost of going to the museum?

Feb/March 2020

An American family must decide between four holiday destinations in Europe, and all four cost the same. The table gives the family’s preference ranking (Barcelona 1st; London = 3rd; Paris 2nd; Venice = 3rd). If the family chooses Barcelona, what is the opportunity cost of this decision?

Feb/March 2021

Why does the basic economic problem of scarcity apply to people who are wealthy as well as those who are not?

Feb/March 2023

A cost-benefit analysis of a proposed government road-building project shows a positive net social benefit of $50 million. Why could the government still decide not to carry out the project?

Feb/March 2023

Which combination best characterises the fundamental economic problem?

Feb/March 2024

What is the opportunity cost for a person of using $20 to purchase a new pair of sports shoes?

Feb/March 2024

The diagram illustrates the production possibilities for barley and wheat in countries Q and R. What conclusion can be drawn?

Feb/March 2025

Using a production possibility curve (PPC) diagram, explain scarcity and choice, and judge the extent to which every choice has an equal opportunity cost.

Feb/March 2025

A teacher is now paid $30000. She would be prepared to keep working in that teaching job if she were paid at least $25000. In addition, she would prefer to stay as a teacher rather than switch to her next best alternative occupation as an accountant, where she could earn $40000. Which statement is correct?

Feb/March 2025

Explain the three economic questions that all economies face because of the basic economic problem.

May/June 2008

The diagram illustrates production possibility curves for two countries, X and Y. What can be inferred from it?

May/June 2010

The diagrams illustrate how a country’s production possibility curve changes from Year 1 to Year 2. What can be deduced from the diagrams?

May/June 2010

A worker is able to produce 10 hats or 5 pairs of shoes each day. In the market, the selling price of 3 hats is the same as that of 2 pairs of shoes. The worker should make

May/June 2010

A worker is able to produce 10 hats or 5 pairs of shoes in one day. In the market, the selling price of three hats is the same as that of two pairs of shoes. The worker should make

May/June 2010

Using examples, explain why different economic decision makers encounter the problem of scarcity.

May/June 2010

Global stocks of cod are now being endangered by over-fishing, whereas supplies of the less favoured Alaskan pollock remain abundant. How may the price mechanism work to reduce the depletion of fish stocks?

May/June 2011

What is the opportunity cost for an economy at full employment of raising capital investment?

May/June 2012

Rising demand for water from households, agriculture and industry is causing a global water shortage. Which change would lessen this problem of water scarcity?

May/June 2012

What opportunity cost does a fully employed economy face when capital investment is increased?

May/June 2012

An economist works out that a firm has gone through the following costs during one year. By how much does total cost, as defined by an economist, exceed total cost, as defined by an accountant?

May/June 2012

A cost-benefit analysis suggests that a nuclear power station project could be socially worthwhile, even though it would take 10 years to become operational. Why might a government choose not to carry out the project?

May/June 2013

By 2030, as the human population increases, the world will require at least 50% more food, 45% more energy and 30% more water from the same resources. What does this statement directly suggest?

May/June 2014

A key idea in economics is that resources are limited. What follows with certainty from this?

May/June 2014

Calculate the food price inflation rate(s) from Table 1.

May/June 2014

It is frequently claimed that the current pace of economic growth will soon cause reserves of material resources, such as minerals and oil, to be used up. What does this argument overlook?

May/June 2014

Which combination of events would increase the level of scarcity in an economy?

May/June 2015

A government is thinking about constructing a high-speed rail link. Why might it decide not to go ahead with the project?

May/June 2015

A worker can produce 10 hats or 5 pairs of shoes in a day. In the market, the selling price of three hats is the same as that of two pairs of shoes. The worker should make

May/June 2015

In 2013, a government plan to construct a new high-speed rail connection between two cities drew a great deal of criticism. What was the most likely reason for abandoning such a project?

May/June 2015

What is the basic assumption behind the economic problem?

May/June 2015

A country engaged in trade is able to make two goods, X and Y. It fully specialises in producing good Y. What is the opportunity cost to the country of consuming more imports of good X?

May/June 2015

A driver uses the following estimates when deciding whether to buy a car that she plans to use only in situations where she would otherwise have travelled by public transport. (listed values omitted here) What will be the opportunity cost in monetary terms to the driver over the year of travelling by car rather than by public transport?

May/June 2016

The diagram illustrates alternative production possibilities for a bakery. It wants to raise cake output from 15 units to 25 units. What is the opportunity cost?

May/June 2016

What is implied when scarcity exists?

May/June 2017

Scarcity means that goods have to be allocated among competing consumers. Which basis for rationing is most likely to produce the most equal distribution of goods?

May/June 2017

The table sets out the capability of two countries, P and Q, to make two goods, Y and Z. Which statement is correct?

May/June 2017

Kenya grows some of the highest-quality teas, much of which is exported. Its climate is not as suitable for growing olives, but olives can be sold for a higher price per sack. What would certainly happen if a Kenyan company used some of the land on which tea is grown to plant olive trees?

May/June 2017

The table sets out the projected costs and benefits for four government projects. The government can fund only one project. Which project should be selected?

May/June 2017

What could count as an opportunity cost of economic growth in an economy?

May/June 2018

The basic economic problem is how unlimited wants can be satisfied with scarce resources. State one example of scarce resources.

May/June 2019

What opportunity cost does a person face by spending $20 on a new pair of sports shoes?

May/June 2019

Economics students are required to complete the missing words in the passage below. ‘The three fundamental questions that come from the economic problem of scarcity are ......1...... to produce, ......2...... to produce, and ......3...... to produce.’ Which option gives the correct combination?

May/June 2022

What is measured by opportunity cost?

May/June 2022

A hospital management board chooses to transfer $800 000 from its $1.2m budget for new buildings to cancer care. What opportunity cost does this decision involve?

May/June 2023

A government rules that all non-essential businesses must shut down for three months because of a disease pandemic. What opportunity cost does this policy create?

May/June 2023

Country X and country Y each devote half of their resources to producing shoes and half to producing t-shirts. With half of the resources in each case, the outputs are: X shoes 4000 t-shirts 12000; Y shoes 2000 t-shirts 8000. What can be concluded from the data?

May/June 2023

A worker is paid $40 per hour. Instead of working, she spends three hours at a museum. The museum trip costs $40 in all. What is the opportunity cost of the museum visit?

May/June 2024

Why is the idea of scarcity relevant to the use of fossil fuels?

May/June 2024

What is necessary in order to remove scarcity?

May/June 2024

Farmers aim to harvest wild honey from beehives. They locate the beehives by tracking birds called honeyguide birds, which are attracted by the beeswax that is also present in the beehives. What does this suggest?

May/June 2025

The diagram comes from a chapter on 'The Fundamental Economic Problem'. It ought to include the terms opportunity cost, scarcity and choice in the sequence that shows the fundamental economic problem. In what order should the terms be placed in the diagram?

May/June 2025

Using a fixed quantity of resources, a business produces 100 units of good Y and 200 units of good X. It then plans to raise output of good Y to 120 units, and because of this it can produce only 170 units of good X. What is the opportunity cost of making the additional 20 units of good Y?

May/June 2025

A country has a climate that is ideal for tea, so tea is produced very cheaply and then exported. Fruit is also cultivated, but this is more expensive because the climate is less suitable. Since fruit can be sold for a higher price than tea, some of the land previously used for tea is changed over to fruit. What will certainly happen as a result?

Oct/Nov 2009

A country can produce tea at low cost and sell it abroad; fruit is more expensive to grow, but it commands a higher selling price, so some land is changed from tea to fruit. What will certainly occur as a result?

Oct/Nov 2009

What is the main problem facing an economy?

Oct/Nov 2010

The table sets out the expected costs and benefits of four government projects. The government can afford just one project. Which project should the government select?

Oct/Nov 2010

What is the main problem faced by an economy?

Oct/Nov 2010

The table sets out the anticipated costs and benefits of four government projects. The government can finance just one project. Which project should the government select?

Oct/Nov 2010

What is the main problem facing an economy?

Oct/Nov 2010

Suggest the likely opportunity cost to Ghanaian children of time spent fetching water. Explain your answer.

Oct/Nov 2010

If the production possibility curve stays unchanged, what is the most likely explanation for the shift from point X to point Y?

Oct/Nov 2011

What opportunity cost does an unemployed worker face when they take up employment?

Oct/Nov 2011

An individual has a meeting with his bank manager. He can either drive to the meeting in a car, or leave the car at home and make the journey by bus and then by train. The journey costs are shown below. Using this information, what is the opportunity cost to the individual of travelling by car instead of by bus and train?

Oct/Nov 2011

In Economics, choices are usually made ‘at the margin’. What is meant by this?

Oct/Nov 2011

What is the opportunity cost for an unemployed worker when they take up employment?

Oct/Nov 2011

Show how production possibility curves may be used to explain any two economic ideas.

Oct/Nov 2011

An international oil company said that it would end oil exploration off the coast of Namibia. This was because the oil found would only be enough to supply a local power station in Namibia and would not be sufficient for oil exports. What could be one benefit and one drawback for Namibia from this decision?

Oct/Nov 2012

A government conducts a cost-benefit analysis for the construction of a new airport. It works out that the costs of building and operating the airport will be lower than the income the airport will earn. It also predicts that the benefits to third parties will exceed the costs to third parties. Which reason could the government give for choosing not to build this airport?

Oct/Nov 2012

In the economy shown, the production possibility curve between capital goods and consumer goods is the line PQ. What is the opportunity cost when OS of consumer goods are produced?

Oct/Nov 2012

A consumer wanted to buy a new camera and a new armchair. She was willing to pay $500 for either item. She found that the camera was priced at $450 and the armchair at $500. She chose the camera. What were her opportunity cost and her consumer surplus?

Oct/Nov 2013

The table sets out the anticipated costs and benefits for four government projects. The government can afford just one project. Which project should the government select?

Oct/Nov 2013

Which sequence places these economic concepts in the correct order? (The options present different arrangements of inevitability of choices, opportunity costs, and scarce resources.)

Oct/Nov 2013

A farmer is able to produce both beef and lamb. The opportunity cost of producing 1 kilo of beef is 3 kilos of lamb. A kilo of beef sells for twice the price of a kilo of lamb. What should he do if his aim is to maximise his revenue?

Oct/Nov 2013

A consumer had saved $700 and chose to use the money on a new television instead of a new washing machine. On visiting the shop, she found that the television cost $500 and the washing machine cost $400. She purchased the television. What were the consumer surplus and the opportunity cost?

Oct/Nov 2013

If George and Zaheer each devote a full working day to producing just one product, they can make the amounts shown below. They first set aside the 6 units of food they require to stay alive. After that, they specialise in the product for which each of them has a comparative advantage. What is the combined output of clothing and shoes, as well as the 12 units of food, produced in one working day?

Oct/Nov 2013

Which statement correctly describes the problem of scarcity?

Oct/Nov 2014

A firm is deciding whether to purchase a piece of capital equipment costing $2000. It expects that this equipment will be usable for two years. As an alternative, the money could be lent to a finance company at a compound rate of interest of 5%. What minimum rise in revenue must the firm expect for buying the equipment to be worthwhile?

Oct/Nov 2014

A farmer is able to grow both wheat and barley at constant production costs. The opportunity cost of 1 kilo of wheat is 1.5 kilos of barley. A kilo of wheat sells for twice the price of a kilo of barley. What should the farmer choose in order to maximise revenue?

Oct/Nov 2014

Show how the economic problem may be illustrated using a production possibility curve.

Oct/Nov 2014

What is the opportunity cost to society when unemployment rises?

Oct/Nov 2014

A government has enough funds to finance two transport projects. It must choose from four projects, each of which has a social cost of $200 million. The table lists the benefits of the projects. Which two projects should the government select?

Oct/Nov 2015

Which question does not make direct reference to the basic economic problem?

Oct/Nov 2015

In 2014, the Hong Kong Housing Authority reported that the waiting period for public sector housing had become longer, and that it would complete only 8900 flats out of the 15 000 planned for the year. The causes were a shortage of workers because they were required for other public sector projects, the difficulty of securing land, and government regulations. Which economic concepts are shown by this information?

Oct/Nov 2016

Why does choice lie at the heart of the economic problem?

Oct/Nov 2016

Explain with a diagram why production possibility curves are normally shown with increasing opportunity costs, and show how they can be used to illustrate scarcity.

Oct/Nov 2016

The government must decide on the most suitable of four routes for constructing a new railway line. The advantages and costs of each route are given in $m in the table. Which route should be selected?

Oct/Nov 2016

A cost-benefit analysis finds that a nuclear power station project may be socially beneficial, even though it would take 10 years to become operational. Why could a government choose not to carry out the project?

Oct/Nov 2017

In recent years, many countries have encountered economic problems. In such circumstances, finding the most effective way to allocate scarce resources becomes even more important. Assess whether the study of economics has anything to offer in achieving an efficient allocation of resources within a country.

Oct/Nov 2017

The diagram illustrates an economy’s production possibility curve for goods X and Y. What opportunity cost is involved in shifting from point R to point S on the production possibility curve?

Oct/Nov 2018

An international oil company said that it would end its search for oil off the coast of Namibia. The reason was that the amount of oil available was only sufficient to supply a local power station for Namibia, and not enough to make exports of oil possible. What could be one possible advantage and one disadvantage to Namibia of this decision?

Oct/Nov 2018

The table indicates the quantity of good X or the quantity of good Y that country R and country T can produce when each country uses all its resources. What conclusion can be drawn from the table?

Oct/Nov 2019

Which statement about scarcity is correct?

Oct/Nov 2019

An individual has a dental appointment. He can either drive there by car, or leave the car at home and go by bus followed by train. The journey costs are shown below. Using this information, what is the opportunity cost to the individual of going by car instead of by bus and train?

Oct/Nov 2019

A fashion model earns $500 000 a year. If the best alternative job he could obtain is as a teacher earning $100 000 a year, what are his transfer earnings and his economic rent?

Oct/Nov 2019