Section 1:

Chapter 1: The nature of the economic problem

1. What is economics the study of?
2. What is the difference between a need and a want?
3. What is meant by the basic economic problem?
4. What is meant by economic agents?
5. What are the three fundamental questions that all
economies face?
6. What is the difference between goods and services?
7. What is the difference between the private and public
sector?
8. How do economic goods differ from free goods?
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Chapter 2: The factors of production
1. What is meant by the term ‘factors of production’?
2. What are the four factors of production?
3. What are the various rewards for the factors of
production?
4. What is the collective name for the four returns on the
factors of production?
5. What is meant by the mobility of factors of
production?
6. How does geographical mobility of factor resources
differ from occupational
mobility?
7. What are the various causes of changes in the quantity
and quality of factors
of production?
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Chapter 3: Opportunity cost
1. How is the term ‘opportunity cost’ defined?
2. What might be the opportunity cost of a student
studying IGCSE Economics?
3. Why do consumers face opportunity costs in decision
making?
4. Why do workers face opportunity costs in decision
making?
5. Using an example, explain why producers (fi rms) face
opportunity costs in decision
making.
6. Using an example, explain why governments face
opportunity costs in decision
making.
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Chapter 4: Production possibility curve (PPC)
1. What is meant by productive capacity?
2. What does a production possibility curve diagram
show?
3. How is the concept of opportunity cost shown on a
PPC diagram?
4. Which two conditions must hold for an economy to be
operating on its PPC?
5. What are the causes of a shift of the PPC?
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Section 2:
Chapter 5: Microeconomics and Macroeconomics
1. What is meant by microeconomics?
2. What is meant by macroeconomics?
3. Who are the main decision makers in microeconomics
and how does this differ from the decision makers in
macroeconomics?
4. Who are the decision makers affected by
microeconomics?
5. Who are the decision makers affected by
macroeconomics?
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Chapter 6: The role of markets allocating resources
1.
2.
3.
4.
5.
6.
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Chapter 7: Demand
1.
2.
3.
4.l
5.
6.
7.
8.
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Chapter 8: Supply
1.
2.
3.
4.
5.
6.
7.
8.
Chapter-Review questions: Chapter 15:

1. It is a combination of both market and planned economy.

2. Advantages: Promoting more productivity since there is greater profit motive in the private
sector, the government will put rules and regulations on the monopoly and the government will
do check-ups on the firms. The government encourages the firms to produce merit goods by
subsidizing the production of merit goods. The government will also do direct provision of merit
goods and public goods. Merit goods will benefit the economy. However, the government
discourages the firms and consumers from the sale and purchase of demerit goods. The
government will put indirect taxes on the demerit goods and will advertise, showing people that
demerit goods are bad for the health such as alcohol, cigarettes, and wrong usage of drugs.

Disadvantages: Customers pay high prices of high motivation; public sector activities must also
be funded by taxes and other government fees and charges.

3. A maximum price is a price control system that sets the price below the market equilibrium
price to make products cheaper.

4. A minimum price is the imposition of a price guarantee set above the

market price to encourage supply of a certain good or service.

5. Since the wage is very high the people who are hiring will only choose skilled people and
there will be a limit of labor which is employed due to the high national wages. The supply is
higher than the demand and there is a surplus. A surplus will cause unemployment to happen.
 National minimum wage

Market equllibrium

6. An indirect tax causes costs of production to increase, which shifts the supply curve of
demerit goods to the left. This results in a higher equilibrium price and a contraction in demand.

7. Subsidies can be used to lower the cost of providing merit goods and services. This helps to
cut prices and encourage demand for such socially beneficial products.

8. Rules and regulations limit the access of products which have negative externalities such as
smoking, alcohol, drugs.

9. The schools can teach students that smoking is bad for your health and will cause lung
cancer. Advertisements can show smokers with images about recent deaths from lung cancer
and mouth cancer, which are caused by smoking.

10. Privatization means that the ownership is transferred to the private sector. This will help to
allocate resources more efficiently as the private sector has profit motive and is more
competitive. Nationalization is when the ownership is transferred to the public sector. This will
help to protect employment and promote economic stability in strategic industries.

Chapter 16 Activity 2; Question 2-

2a)

Durability Acceptabilit Scarcity Portability Uniformity Divisibility

y
Milk No Yes Yes No Yes Yes
Cloth Yes Yes No Yes No Yes
Fish No Yes No No No No
Cigarettes Yes No Yes Yes Yes Yes
Cigarettes Cloth Milk Fish
2A. The Zimbabwean currency lose its value over the years. There was hyperinflation and a loaf of bread
cost billions of Zimbabwean dollars. The Zimbabwean currency could not keep its value over time. The
currency was not accepted as a medium of exchange, so people could not use the currency to purchase
goods and services. If a good is priced for a lot of dollars, then people would need to carry so many
dollars that it would not be portable. The currency was not accepted as a measure of value.
Rapidly losing value person price a good change
everyday hyperinflation no one could use to quote price making
it lose the function of measure of value.

2B. The Zimbabweans still prefer to use other currencies such as US dollar because they are more stable
than their own Zimbabwean currency, which once rapidly lost value, might still not be stable.

Exam – Style Question: Ch. 17 ; Pg. 94

1. The function of commercial bank is to accept deposits. HSBC or ISBC accept deposits from the
customers; from public and private sector. The accept sight and time deposits. Businesses also deposit
their cash in commercial banks for financial operations.

2.