1)Which of the following is true about opportunity cost?

a)Opportunity cost is inversely correlated to productivity.

b)Opportunity cost of a decision is the value of what the individual would have done otherwise.

c)Opportunity cost is offset by scarcity.

d)Opportunity cost is the inverse of diminishing returns.

1)Why is the term scarcity so critical to Macroeconomics?

a)Because scarcity is the opposite of wealth.

b)Because a society must decide what goods it will produce.It cannot produce everything.

c)Because opportunity cost is defined as the benefit not received as a result of not selecting the next best option.

d)Because the income level from employment is so low that basic human needs can't be met.

1)What could one reasonably expect from a production possibilities curve showing one factory producing either N-95 masks or smart phones?

a)The graph is likely to show a straight line.

b)The graph is likely to be bowed inward.

c)The graph is likely to be bowed outward.

d)Not enough information to determine.

1)What is the theory behind the Big Mac index?

a)Purchasing power parity between countries is reflected in the currency cross rate.

b)Prices at McDonalds worldwide are determined by local feelings about the US.

c)The inputs of a Big Mac reflect a basket of goods in every country that can be compared, thereby testing the purchasing power parity theory.

d)The higher the cost of a Big Mac, the larger the financial account deficit.