Practice Test 5

Given the resource limitation described, a small bakery has 40 labor-hours available today and must use them to bake either bread loaves or custom cakes. The bakery wants to produce 200 loaves and 80 cakes, but with 40 labor-hours it cannot produce both desired quantities. The situation best demonstrates that…

Given the resource limitation described, a household has a $120 weekly discretionary budget to allocate between groceries and gasoline. The household wants to spend $90 on groceries and $60 on gasoline, but only $120 is available. Which fundamental economic problem is illustrated?