WHSS Test O 1 C

1. What is part of the economic definition of scarcity? 

A high levels of taxation 

B low levels of investment 

C unequal distribution of income 

D unlimited consumer wants

• A

• B

• C

• D

 A government spends $100m on subsidising wind farm construction instead of spending it on an increase in healthcare. Which economic concept does this spending decision illustrate? 

A external cost 

B free goods 

C market disequilibrium 

D opportunity cost 

• A

• B

• C

• D

What is a definition of a firm’s revenue? 

A money received from sales 

B sales volume 

C surplus over costs 

D tax payments 

• A

• B

• C

• D

The Chinese government is concerned about the level of poverty and the need for more resources in low-income regions of the country. As a result, it is increasing its expenditure in those regions and reducing it in high-income regions. Which economic concept does this government policy illustrate? 

A diseconomies of scale 

B market forces 

C opportunity cost 

D specialization

• A

• B

• C

• D

An airline needs people and equipment. These can be divided into factors of production. What is allocated to its correct factor of production?

• A

• B

• C

• D

A government decides to move towards a market economy by selling state-owned enterprises. What is a possible motive for this? 

A to create greater income equality 

B to extend government control of the economy 

C to increase efficiency of production 

D to take account of external costs

• A

• B

• C

• D

Which government policy will increase productivity? 

A decreasing the number of training programmes 

B encouraging labour-intensive production 

C promoting good industrial relations 

D reducing private sector investment

• A

• B

• C

• D

What is the effect on an economy of net emigration of people aged 20–40? 

A a more mobile labour force 

B an ageing population 

C higher government tax revenue 

D rising house prices 

• A

• B

• C

• D

What does an economist mean by capital? 

A man-made goods that do not directly satisfy human wants 

B money used to set up new businesses and expand existing businesses 

C natural resources that will not be replaced 

D the ability to earn profits by combining resources to produce goods

• A

• B

• C

• D

 What is found in a mixed economy but not a free market economy? 

A banks 

B division of labour 

C price controls 

D profit motive  

• A

• B

• C

• D