IGCSE Economics Quiz 1

What gives rise to the problem of scarcity?

• a lack of money

• an uneven distribution of income

• capital equipment being greater than labour

• wants exceeding resources

As an economy becomes richer, what happens to resources and wants?

• Resources decrease, wants decrease

• Resources decrease, wants increase

• Resources increase, wants decrease

• Resources increase, wants increase

Which of the following is an example of the factor of production 'capital'?

• the money a farmer has borrowed to buy livestock

• the money a farmer has saved in the bank

• a farm worker

• a tractor

Which type of factor of production can be described as a 'natural resource'?

• capital

• entrepreneur

• labour

• land

A woman owns a TV which she bought for $300. She is considering buying a better model for $450. Her neighbour offers her $200 for her TV. What is the opportunity cost of her rejecting this offer?

• $100

• $200

• $300

• $450

A man presently works as a builder. His previous jobs included working as a farm labourer and a street trader. His next best-paid job is that of a carpenter, but he would rather choose to work as a gardener, if he was not a builder. What will be the opportunity cost of him working as a builder? Working as:

• a carpenter

• a farm labourer

• a gardener

• a street trader

What does a production possibility curve show?

• the amount of capital and labour in a country

• the output of two products that can be produced with given resources

• the popularity of the two products

• the price of the two products that are produced with given resources

What could have caused the change in the shape of the production possibility curve (PPC) shown below?

• advances in technology in the clothing industry

• an increase in the size of a country's labour force

• a change in consumer preferences towards clothing

• more resources being devoted to producing clothing

What is the change in the opportunity cost of increasing the output of capital goods from 20 to 30 when the PPC shifts to the right the diagram below?

• a reduction of 10 consumer goods

• a reduction of 20 consumer goods

• a reduction of 30 consumer goods

• a reduction of 40 consumer goods

The diagram below shows a country producing at point X. What is the opportunity cost of moving production to point Y?

• 34 basic goods

• 17 luxury goods

• 12 basic goods and 3 luxury goods

• zero goods