Quiz 1: ECO415 (Chapter 1: Introduction to Economics)

The general concern of economics is with the study of the

• A. degree of competition in stock and bond markets in the economy.

• B. efficient use of limited productive resources to satisfy economic wants.

• C. issue of inequality in the distribution of income and wealth among households.

• D. budget deficits and surpluses.

As a result of scarcity

• A. there is never enough of anything.

• B. production has to be centrally planned.

• C. things which are plentiful have relatively high prices.

• D. individuals and communities have to choose from among alternatives.

The basic difference between microeconomics and macroeconomics is that

• A. microeconomics studies the behavior of individual consumers whilst macroeconomics studies the behavior of individual firms.

• B. microeconomics studies the behavior of individual consumers and firms whilst macroeconomics focuses more on the performance of the whole economy.

• C. microeconomics looks at the aggregate economy whilst macroeconomics is concerned with the behavior of individual markets.

• D. Microeconomics explores the causes of economic growth whilst macroeconomics studies the causes of unemployment and inflation.

Opportunity cost is the

• A. cost of the best alternative forgone.

• B. cost of undesirable alternative.

• C. cost of factors of production.

• D. cost of buying the best alternative.

Pak Tam owns a shop lot. If he were to open a restaurant, he estimates his revenue to be RM4 000 per month. However, if he were to let it to others, he would get the rent payment by the same amount. Assume that he decides to open a restaurant, how much is his opportunity cost?

• A. RM2 000.

• B. RM4 000.

• C. RM8 000.

• D. RM12 000.

Resources are limited and human wants are unlimited. This implies that

• A. efficiency in production cannot be achieved.

• B. no goods and services can be attained freely.

• C. choices have to be made and opportunity cost will exist.

• D. people will compete with each other to satisfy their unlimited wants.

A study on why a farmer chooses to grow dragon fruit instead of star fruit despite higher production costs would be considered as

• A. public finance.

• B. econometrics.

• C. macroeconomics.

• D. microeconomics.

The problem of scarcity is relevant to

• A. third world countries.

• B. countries with low income.

• C. countries before practicing mass production.

• D. all countries and individuals.

'What to produce' depends on the types of products or services needed to be produced.

• True

• False

When producers are considering the cheapest method of production, they are trying to solve the problem of 'How to Produce'.

• True

• False