Question

“What goods to produce” is the question answered to determine ______.

a.	efficiency	b.	the division of labor
c.	opportunity cost	d.	entrepreneurship

Capital includes all the productive inputs created by people, including which of the following?

a.	Tangible items, such as tools and machinery	b.	Tangible items, such as structures
c.	Machinery, tools, structures, and computer software	d.	Intangible items

Efficiency in production means producing in which of the following ways?

a.	You can increase production of both goods.	b.	You can increase production of one good while maintaining the output of the other good.
c.	You cannot increase production of either good.	d.	You must decrease production of one good to increase production of the other good.

Which of the following is considered a natural resource in the factors of production?

a.	Capital	b.	Farmland and mineral deposits
c.	Farmland, Mineral Deposits, Forests, and Building Sites	d.	Forests and building sites

Answer 1

Question 1

Option C is correct - opportunity cost

Since there is a scarcity of resources in any country, there is a question of employing these scare resources for producing various goods and services in a country. Thus comes the concept of opportunity cost. The opportunity cost of something is the cost of giving something up for getting something else in return. Hence, the decision of what to produce is based on the opportunity cost since a country cannot produce all that it wants since it has a constraint of limited resources.

Question 2

Option C is correct - Machinery, tools, structures, and computer software

Capital includes everything a company or firm needs to supply the goods and services to the consumers. Thus all tangible goods like machinery, tools, structures, and all the intangible goods like Softwares are a part of capital goods.

Question 3

Option D is correct - You must decrease the production of one good to increase the production of the other good.

A production possibility curve is a good example in which all the points on the curve shows different combinations of two goods that can be produced efficiently. On a PPC, production of one good can be increased only by reducing the amount produced of others, then only the efficiency in production can be achieved since there are scarce or limited resources within a country.

Question 4

Option B is correct - Farmland and mineral deposits

Natural resources are those that we get naturally from nature and it does not involve any manpower. Thus out of all the options, only farmland and mineral deposits are available naturally to us.