Economics- P1-Nov-24-11,12

What has an opportunity cost in consumption?

• air

• food

• sea water

• sunlight

In which case is it possible to set the level of reward before production takes place for the first factor of production but not for the second factor?

• A

• B

• C

• D

The diagram shows the production possibility curve (PPC) for an economy. Which cost can be determined as the economy moves along its PPC from point X to point Y?

• the opportunity cost of producing more capital goods

• the opportunity cost of producing more consumer goods

• the social cost of producing more capital goods

• the social cost of producing more consumer goods

Which person is most likely to make a microeconomic decision as part of their job?

• a government finance minister

• the global administrator of the Human Development Index

• the governor of the central bank

• the manager of a private sector firm

What necessarily describes the market system?

• all resources used to produce consumer goods

• an economy with both a private and a public sector

• limited resources but unlimited wants

• resources allocated through demand and supply

The diagram shows the demand for and supply of a product. The original equilibrium is at X. Which point indicates the new equilibrium position if there is an increase in the price of a close substitute for the product while other things remain the same?

• A

• B

• C

• D

• -0.5

• +0.5

• +1.0

• +2.0

Why does a government provide certain goods and services in a mixed economic system?

• The government always provides goods more cheaply than private firms.

• The government considers only private costs and private benefits.

• The government provides goods to prevent the development of monopolies.

• The government provides public goods because private firms cannot charge for them.

A government intends to subsidise bus fares and increase taxes on private motoring. How would this affect the private cost of transport?

• A

• B

• C

• D

What is not a function of money?

• medium of exchange

• portability

• store of value

• unit of account