Basic economic problem and the factors of production

What is an example of the purchase of a consumer good?

• A farm owner buys a television

• A farm owner buys additional land

• A farm owner buys fertiliser for their crops.

• A farm owner buys some farming equipment.

What is the function of the factors of production in an economy?

• to make goods and services to fulfil wants and needs

• to provide an even distribution of income

• to provide tax income for the government

• to reduce the existence of external costs

A natural resource was discovered in a country. The exploitation of this resource allowed the country to double its gross domestic product within ten years. Why did this not solve the basic economic problem?

• Exploiting the resource required high expenditure on capital equipment.

• Exploiting the resource caused significant environmental damage.

• Gross domestic product was unevenly distributed in the country.

• Wants still exceeded the resources available to meet those wants.

What is not a factor of production?

• a $20 banknote

• an office

• a photocopier

• a secretary

What is classified as one of the four economic resources?

• consumption

• enterprise

• production

• trade

Which statement about factors of production is correct?

• A Capital is the amount of money borrowed from a bank.

• Labour is output made by an employee.

• Land includes commercially grown rice crops

• Profit is the reward for enterprise

What identifies a finite resource?

• The resource does not renew itself

• The supply of the resource is greater than demand

• There is no opportunity cost for the resource

• There is unlimited supply of the resource

What would an economist regard as an example of the factor of production capital?

• an individual’s purchase of stocks and shares

• borrowing by a firm to pay for electricity

• the building by a firm of a new factory

• total savings by individuals in a country

A government wishes to increase agricultural output. It gives farmers the tools to irrigate the farmers’ fields. Which factors of production are provided by the farmers?

• capital and enterprise

• enterprise and labour

• labour and land

• land and capital

In farming, what is an example of what economists call capital?

• savings the farmer has in the bank

• shares in a farming company

• the money the farmer set aside to pay taxes

• the tractor owned by the farmer