Higher Econ Prelim Revision 1

What is the basic economic problem?

• Inflation
• Scarcity
• Unemployment
• Growth

What does a production possibility curve illustrate?

• Demand for a product
• The trade-off between two goods
• Unemployment levels
• Consumer preferences

Which of the following is an example of a public good?

• Street lighting
• Private healthcare
• A cinema ticket
• A mobile phone

What is the key characteristic of a monopoly?

• A large number of small firms
• No barriers to entry
• One seller dominates the market
• Perfect competition

Which of the following is an advantage of division of labour?

• It reduces dependency on technology
• It reduces unemployment
• It increases efficiency and productivity
• It promotes market competition

Which term refers to the responsiveness of quantity demanded to a change in price?

• Income elasticity
• Price elasticity of demand
• Cross elasticity of demand
• Market elasticity

What type of market failure occurs when goods with external costs are overproduced?

• Information asymmetry
• Negative externalities
• Public goods
• Positive externalities

Which of the following is a direct tax?

• Value-added tax (VAT)
• Corporation tax
• Import tariffs
• Sales tax

What is the main objective of monetary policy?

• To regulate government spending
• To encourage international trade
• To control inflation and stabilize the economy
• To promote monopolies

What is the term for a sustained increase in the general price level?

• Recession
• Inflation
• Deflation
• Stagflation