Answer all questions

1. What is the cause of economic scarcity?

A limited wants with limited resources

B limited wants with unlimited resources
C unlimited wants with limited resources
D unlimited wants with unlimited resources

2. What is a factor of production?

A a semi-skilled, young worker

B direct taxes received by a government
C shares in a manufacturing company
D stocks of money held a bank

3. A person bought a shop and stocked it with fresh fruit. He employed one member of his
family to help in the shop.

Which factors of production have been used?

A labour and capital only

B labour, capital and enterprise only
C land and labour only
D land, labour, capital and enterprise

4. The diagram shows the choices for an individual between leisure and earnings. He
currently earns $25 a day.

What is the opportunity cost for the person if he accepts more work and earns $75 a day?

A $25
B $50
C 6 hours of leisure a day
D 12 hours of leisure a day

5. The high volume of goods sold by large supermarkets enables them to reduce prices,
but the most important advantage that these businesses have is that they can sell non-
food items as well as food.
Which economic results does the statement suggest are available to large supermarkets?

A economies of scale and diversification

B external benefits and specialisation
C horizontal integration and optimum output
D increased sales and diminishing returns

6. A firm produces five units of output at an average cost of $20 per unit. The cost of the
sixth unit is $26.

What is the average cost of six units?

A. $4.33 B. $6 C. $8.33 D. $21

7. What is likely to require the greatest use of the factor enterprise?

A a carpenter making wooden articles in his leisure time for sale at a monthly market
B a corn farmer negotiating with other farmers to hire expensive machinery
C a food shop owner sometimes selling flowers in the shop
D a householder harvesting vegetables grown at home

8. To help reduce the price of oil, new supplies are needed. However, in 2013, objectors
opposed attempts to explore new sites because of the environmental damage the
exploration might cause.

How does this illustrate the basic economic problem?

A Oil is a limited resource.

B Oil is expensive.
C The exploration involves demand and supply.
D There are external costs involved in production.

9. What can be found in a mixed economy but not in a market economy?

A a national economic development plan
B an unequal distribution of income and wealth
C the operation of the price mechanism
D the private ownership of factors of production

10. Which of the following best describes the concept of opportunity cost?
A the next best average choice forgone
B the next worst alternative forgone in making a choice
C the next best alternative forgone in making a choice
D the actual choice made