1. Economic Methodology - Year 1

In a free market economy, the economic problem of what goods should be produced is usually solved by

• consumers expressing their tastes and preferences in their pattern of spending.

• consumers expressing their tastes and preferences in their pattern of spending.

• firms planning their activities to meet production targets set by government.

• firms planning their activities to meet production targets set by government.

Which one of the following is a positive economic statement?

• The pattern of wealth ownership in the UK is unfair.

• There are too many poor people in the UK today.

• The distribution of income in the UK is unequal.

• The rich should be taxed more than the poor.

Which one of the following would be classified by an economist under the factor of production known as land?

• a tractor

• a chemical fertiliser

• fish in the ocean

• a farmer

Which one of the following would be classified by an economist as an example of the factor of production known as capital?

• A delivery van

• Stocks and shares

• Savings in the bank

• Underground reserves of coal

A positive statement in economics is always

• capable of being tested.

• based upon an opinion.

• based upon numerical data.

• correct.

The central purpose of economic activity is

• to create maximum profit.

• the satisfaction of needs and wants.

• to achieve economic efficiency.

• to save scarce resources.

• Only W and Y

• Only V, W and X

• Only V, W, X and Y

• V, W, X, Y and Z

The fundamental economic problem facing all societies is

• what, how and for whom goods and services should be produced.

• the existence of unemployed resources.

• the existence of unemployed resources.

• inequalities in the distribution of income and wealth.

• V to W

• V to X

• X to Y

• X to Z

• OJ.

• JK.

• OF.

• KL