Economic Methodology (May/June) (16/08/22)

What is an example of the factor of production "capital"?

• A bank account held by a small firm to be used for future purchases

• A forest of hardwood trees ideal for furniture making

• The market value of a company's shares

• Word processing software used by a writer to complete her new book

What is the opportunity cost to a previously unemployed individual who becomes employed?

• the leisure they would otherwise have had

• the value of the goods and services they produce

• the wages they are paid

• zero

In economics, a statement is positive if

• it assumes current economic conditions remain unchanged

• It concerns the factual outcomes of an economic action

• it examines the desirability of government economic policy

• it is based upon the opinion of an economic adviser

Which of these questions is not one an economy has to address?

• how resources are used

• where resources are used

• for whom resources are used

• for what resources are used

A government has limited resources to fund the wants of its population. This means that:

• the government has to make choices.

• the government is unable to provide any goods free of charge.

• the government has to cut the pay of government workers.

• the government is unable to borrow more funds.

In economics, the short run refers to

• a period where all inputs are fixed

• the starting stages of a firm

• a period where all factors of production are variable

• a period where some inputs are fixed

Which action by an individual would not be considered an action of the factor of production labour?

• leaving college to work on the land

• moving from a labour-intensive industry to work in a capital-intensive one

• setting up a new business in information technology

• undertaking a training course in computer skills

Which is a normative statement?

• Inflation can be reduced only by increasing the level of unemployment.

• An increase in the rate of inflation will lead inevitably to an increase in unemployment.

• Unemployment is more harmful than inflation.

• If unemployment is reduced below a certain level, this will lead to higher inflation.

Why is scarcity the central feature of the economic problem?

• People's needs are limited.

• Resources have alternative uses.

• Economic resources are finite.

• Consumers have limited choices.

The term "ceteris paribus" means "___ things being equal"