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Question 1
What causes economic agents to make choices?
A. limited needs and wants
B. the existence of finite resources
C. the existence of free goods
D. the market mechanism
[1 mark]

Question 2
What is the basic economic problem?
A. excess supply of goods and services
B. lack of profits
C. recession
D. scarcity of resources
[1 mark]

Question 3
Why do consumers have to make choices when spending their income?
A. Advertising encourages consumer spending.
B. Consumers have unlimited incomes.
C. Consumer wants cannot all be satisfied with their income.
D. Not all products will be attractive to consumers.
[1 mark]

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Question 4
What identifies a finite resource?
A. The resource does not renew itself.
B. The supply of the resource is greater than demand.
C. There is no opportunity cost for the resource.
D. There is unlimited supply of the resource.
[1 mark]

Question 5
What is the basic problem facing all economies?
A. how to achieve a stable balance of payments
B. how to maximise tax revenues
C. how to reach full employment
D. how to use scarce resources
[1 mark]

Question 6
What do economies aim to achieve in tackling the economic problem of scarcity?
A. equal balance between public and private sectors
B. equal reward for equal effort
C. increased competition in the use of resources
D. optimum allocation of finite resources
[1 mark]

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Question 7
Hospital services are provided by the government and paid for through taxation. People cannot always get the treatment
they require because of long waiting lists.
Of what is this an example?
A. external cost
B. market system
C. perfectly inelastic supply
D. scarcity
[1 mark]

Question 8
What is the cause of the economic problem facing all countries?
A. climate change and global warming
B. significant quantities of unemployed resources
C. uneven distribution of income and wealth
D. unlimited wants in relation to limited resources
[1 mark]

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Question 1
Which pair of economic institutions can be found in a market economy?
A. local government and charities
B. monopolies and commercial banks
C. nationalised industries and partnerships
D. stock exchange and public corporations
[1 mark]

10

Question 2
What can be found in a market economy?
A. externalities and monopolies
B. interest rates and public goods
C. public corporations and market prices
D. tax rates and commercial banks
[1 mark]

Question
11 3
Cuba is implementing free market reforms.
What is a likely advantage of this?
A. a wider variety of goods and services produced
B. greater equality between the different groups in society
C. increased provision of public goods
D. less consumption of goods with external costs
[1 mark]

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Question 4
What is a disadvantage of a market economic system?
A. Entrepreneurs lack incentives to produce what consumers want.
B. Government intervention will reduce the efficiency of firms.
C. Market dominance by firms can lead to higher prices.
D. There is underproduction of demerit goods.
[1 mark]

Question
13 5
Which pair of economic institutions can be found in a market economy?
A. local government and charities
B. monopolies and commercial banks
C. nationalised industries and partnerships
D. stock exchange and public corporations
[1 mark]

14
Question 6
An economy operates entirely as a market system.
Which type of service would not be provided in such an economy?
A. commercial banking services
B. free government health services
C. private educational services
D. profitable retail services
[1 mark]

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Question 1
Reena makes a living by selling paintings of the town in which she lives. She sells them in an open-air market once a week.
In order to be able to sell more pictures in a week she decides to buy a studio, pay someone to help in the studio and try to
increase demand by advertising in the local paper.
Which factors of production were changed?
A. capital only
B. labour and capital
C. labour and land
D. labour only
[1 mark]

Question
16 2
Which combination of a factor of production and its factor income is not correct?

factor of production factor income

A capital interest
B enterprise profit
C labour dividends
D land rent
[1 mark]

17
Question 3
Which statement about factors of production is correct?
A. Capital is the amount of money borrowed from a bank.
B. Labour is output made by an employee.
C. Land includes commercially grown rice crops.
D. Profit is the reward for enterprise.
[1 mark]

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Question 7
What is the key role of an entrepreneur?
A. inventor
B. risk taker
C. shareholder
D. worker
[1 mark]

19
Question 8
What is classified as one of the four economic resources?
A. consumption
B. enterprise
C. production
D. trade
[1 mark]

20
Question 9
What is most likely to increase the occupational mobility of labour?
A. building more houses
B. increased spending on re-training schemes
C. increased total government spending
D. increasing the information on job availability
[1 mark]

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Question 10
In farming, what is an example of what economists call capital?
A. savings the farmer has in the bank
B. shares in a farming company
C. the money the farmer set aside to pay taxes
D. the tractor owned by the farmer
[1 mark]

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Question 11
What would an economist regard as an example of the factor of production capital?
A. an individual’s purchase of stocks and shares
B. borrowing by a firm to pay for electricity
C. the building by a firm of a new factory
D. total savings by individuals in a country
[1 mark]

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Question 12
Which factor of production involves risk-taking?
A. capital
B. enterprise
C. labour
D. land
[1 mark]

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Question 13
Which factor of production is not represented in the list shown?

bananas           a factory          goats               a risk taking investor

A. capital
B. enterprise
C. labour
D. land
[1 mark]

Question 14
25

Which example of a factor of production in the fishing industry is correct?

factor example
A capital charges on loan for fishing boat
B enterprise salaries of fish warehouse managers
C labour profits of fish shop owners
D land fish in the sea

[1 mark]

Question 15
What would be classified by an economist as the factor of production known as land?
A. a discovery of oil in the South China sea
B. an oil rig bought by an oil company
C. money held by the oil companies in their bank accounts
D. the productivity of oil workers
[1 mark]

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PART 2

QESTION 2

NAME 3 ECONOMIC SYSTEMS

2.B

GIVE 3 ADVANTAGES OF A MARKET ECONOMY

2.C

GIVE 3 DISADVATAGES OF PLANNED/COMMAND ECONOMY

3. DEFINE DEMAND

3.A WHAT ARE THE FACTORS THAT DETERMINE DEMAND

3.C DRAW THE DEMAND AND SUPPLY CURVE USING THE TABLE GIVEN BELOW

PRICE- $ DEMAND SUPPLY

10 500 100
20 400 200
30 300 300
40 200 400
50 100 500

4. WHAT IS A MARKET FAILURE

This is when the private sector firms fails to achieve the objectives of the society.

GIVE 3 EXTERNAL COSTS

All kinds of pollution, soil erosion, unemployment

5. DEFINE RESOURCES

AND CLASSIFY THEM IN TO ECONOMIC AND FREE RESOURCES. YOU SHOULD PROVIDE EXAMPLES