Which of the following is the MAJOR problem facing all economies?
Allocating scarce resources among competing users
Achieving an equal distribution of income
Preventing the depletion of natural resources
Achieving a fair distribution of wealth
An ‘economy’ is BEST described as a system where
Suppliers produce all the goods and services needed by the consumers
Resources are used by manufacturers to produce goods and maximize profits
All the goods and services used by the citizens of a country are provided by the government
Resources are used to produce goods and services to meet the needs and wants of society
Sita and Peter are planning to buy a new house. Which of the following factors should not affect the couple’s decision?
Their joint monthly income
The possibility of a job promotion for Peter
The high cost of renting their current home
The acquisition of a new home by Sita friend
A student has daily allowance of $20 with which he can purchase chicken and chips or a burger, but NOT both. If he purchases the chicken and chips, the opportunity cost of his decision will be
The burger he gave up
The satisfaction he gets from burgers
The price of the chicken and chips
The satisfaction he gets from the chicken and chips
A ‘free good’ is BEST described as a good
That is given away by a retailer to promote the sale of another good
Which gives no satisfaction to consumers
Which has an infinite elasticity of supply
Whose opportunity cost is zero
Which of the following is NOT a primary product?
Bauxite
Banana
Furniture
Petroleum
Which of the following is an advantage of a market economy?
There is equality of income
It provides an incentive to produce
It reduces pollution and congestion
Price control measures can be effected
An outward shift in the production possibility curve can be caused by an
Increase in wages
Increase in prices
Increase in imports
Improvement in technology
Which of the following are NOT considered factors of production in the bauxite industry?
Companies that use bauxite
Lands on which mines are located
Workers employed to work on the mines
Persons who invest their capital to carry out mining operations
Which of the following is NOT an example of a factor of production in a commercial bank?
The building
The bank’s vault
Shareholders of the bank
Special savings accounts for students
Why do consumers have to make choices among the goods and services that they purchase?
Their wants are scarce and their resources are limited
Their resources are insufficient to satisfy all their wants
Their resources increase more rapidly than their wants
They receive most of their goods and services at no cost.
The Government of Country X decides to switch resources from investment goods to crop production. The opportunity cost of this decision is the
Profit earned by farmer
Rent of the land on which crops are grown
Reduction in investment goods
Wages earned by farm workers
An economy produces two goods, namely sugar and bauxite. What name is given to the curve which shows the maximum amount of bauxite that can be produced for every given amount of sugar?
Production market curve
Production demand curve
Production possibility curve
Production capability curve
Prices of goods in market economies fluctuate while prices of goods in planned economies tend to be fixed. The MOST likely reason for this difference is that, in the market economy,
Profits are lower
Producers are never efficient
Buyers and sellers determine prices
There are higher unemployment levels
Item 15 refers to the diagram below which shows the production possibility curve for an economy that produces bananas (X) and oranges (Y). What is the greatest amount of oranges that can be produced at Point B?
OX1
OY1
OX2
OY2
Item 16 refers to the diagram below which shows the production possibility curve for two goods: butter and guns. At what point in the diagram are resources underemployed?
A
B
C
X
A MAJOR disadvantage of a planned economy is that it
Causes inequality in the distribution of income
Discourages individual initiative and enterprise
Results in widespread unemployment
Causes high rate of inflation
In which of the following economic systems does the state own ALL the factors of production EXCEPT labour?
A mixed economy
A market economy
A planned economy
A subsistence economy
Sam and Su started a catering business. They organized the factors of production and pooled their financial resources to produce goods and services. Which factors of production should Sam and Su be classified as?
workers
investors
managers
entrepreneurs
Which of the following determines the allocation of resources in a mixed economy?
Consumers only
Government only
Government and producers only
Government, producers and consumers
An economy in which ALL of the resources EXCEPT labour are owned by the state can be described as a
Free economy
Mixed economy
Capitalist economy
Command economy
Which of the following features are characteristics of a fully planned economy?
All wages are equal
Goods do not have prices
There are no private shareholders
The profit motivate does not exist
Many developing countries have changed their economies from a command economy to a market based economy in order to increase
Government control
Efficiency
Subsidies
Price control
The Sugar industry in New Island uses a high ratio of labourers to capital as inputs in the production of sugar. Which of the following economic questions is being answered in this production arrangement?
How much to produce
For whom to produce
What to produce
How to produce
Joe uses one plot of land and 65 seedlings to do his farming. Each seedling costs $8 and he rents the land for $200. The cost of the land represents his
average cost
fixed costs
marginal cost
variable costs