Section 1 Economics

Opportunity cost is the scarifies of

• the lowest cost alternative

• the next alternative

• the best alternative

• the next best alternative

The following are four ways factors of production are used.

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

• a carpenter making wooden articles in his leisure time for sale at a monthly market

• a food shop owner sometimes selling flowers in the shop

• a householder harvesting vegetables grown at home

• a corn farmer negotiating with other farmers to hire expensive machinery

A person makes sandwiches at home for five hours each day. She makes 20 sandwiches per

hour, and she sells each sandwich for $2 each.

What is the opportunity cost if she takes a holiday on a working day?

• $40

• 20 sandwiches

• $2

• 100 sandwiches

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?

• There are external costs involved in production.

• The exploration involves demand and supply.

• Oil is a limited resource.

• Oil is expensive.

The diagram shows production possibility curves (PPC) for a country that can produce

agricultural products or manufactured products. Its current PPC passes through points Q and S but the country is currently experiencing

unemployment. If there is now full employment at the same time as new agricultural techniques enable an

increase in productivity, what would be the movement on the PPC diagram?

• Q to R

• P to R

• P to S

• S to R

Why are wants not fully satisfied in an economy?

• Governments cannot print enough money to pay for goods and services.

• An economy can only produce a limited amount of goods and services.

• Workers are too skilled for the requirements of the jobs available.

• There is an over-production of goods and services by business organisations.

Which statement(s) is/are correct to described as public goods?

• It is free and abundant

• It is limited

• Zero opportunity cost

• It is essential for living things

Of the four factors of production, which of these are not a factor of production?

• Land

• Capital

• Development

• Labour

Scarcity exists because

• human wants exceed the resources available to satisfy them.

• some individuals have low income.

• the costs of production are high.

•  some people make bad economic decisions.

The opportunity cost of a decision is measured in terms of

• time

• the price of the alternative we choose.

• the next best thing given up.

• sunk cost