Chapter 5: Factors of Production

1. A bus company provides transportation services.

Which of the following items are factors of production of a bus company?

(1) the seats on the bus

(2) passengers

(3) bus drivers

(4) diesel oil

• A. (1) and (3) only

• B. (2) and (4) only

• C. (1), (3) and (4) only

• D. (2), (3) and (4) only

2. Which of the following is an example of ‘land’ in economics?

• A. the rainwater in a desert

• B. the water in a swimming pool

• C. the oxygen provided on an airplane in emergencies

• D. the red pandas (小熊貓) living in Ocean Park Hong Kong

3. In economics, _________ is classified as capital, because ________.

• A. oil beneath the sea … its supply is limited

• B. thin air in Tibet … people prefer to breathe more air

• C. soil with chemical fertiliser … it helps increase the productivity of farmers

• D. endangered species of sharks living in an aquarium … they are raised by human

4. Which of the following is the difference between land and capital?

• A. No cost is involved in using land while cost is involved in using capital.

• B. Capital can be used for production while land cannot.

• C. Land is a kind of free good while capital is a kind of economic good.

• D. The supply of capital can be increased by human effort while the supply of land cannot.

5. Which of the following would raise the labour supply of an economy?

• A. The granting of paternity leave benefits is extended from the public sector to the private sector.

• B. More firms provide on-the-job training for their employees.

• C. The government raises the legal retirement age of civil servants.

• D. Division of labour is more widely practised in the economy.

6. A country is facing the problem of labour shortage. Which of the following measures would help ease the problem?

(1) encouraging housewives and househusbands to enter the labour market

(2) relaxing the restriction on admitting overseas talent

(3) extending free education to tertiary education

(4) cutting the amount of unemployment benefit

• A. (1), (2) and (3)

• B. (1), (2) and (4)

• C. (1), (3) and (4)

• D. (2), (3) and (4)

7. Refer to the following information of a firm.

Based on the above information, labour supply __________ and average labour productivity__________.

• A. rose … rose

• B. rose … fell

• C. fell … rose

• D. fell … fell

8. Which of the following would lower the average labour productivity of an economy?

• A. The number of years of free education is extended.

• B. The legal retirement age is raised.

• C. The government cuts its subsidy on on-the-job training.

• D. Legislation on standard working hours is passed.

9. Refer to the following table.

Which of the following may be the reason for the difference in labour productivity between Town A and Town B?

• A. Town A adopts time rate while Town B adopts piece rate to pay their workers.

• B. Town B’s working environment is better.

• C. Fewer capital goods are used in Town A.

• D. Workers in Town B are less skilled.

10. The occupational mobility of labour will decrease if

• A. the government puts more resources into retraining programmes.

• B. the government cuts transport subsidies to eligible people.

• C. some professional bodies relax licensing requirements.

• D. division of labour is more widely practised.