Section 1: The Basic Economic Problem Quiz

Which factor of production involves risk-taking?

• capital

• enterprise

• labour

• land

What is the basic problem facing all economies?

• how to achieve a stable balance of payments

• how to maximise tax revenues

• how to reach full employment

• how to use scarce resources

The diagram shows the production possibility curve (PPC) for an economy.

What will happen to the opportunity cost of producing more units of consumer goods in terms of capital goods as the economy move down its PPC from point X to point Z?

• It will decrease continuously from point X to point Z.

• It will decrease up to point Y and then increase towards point Z.

• It will increase continuously from point X to point Z.

• It will increase up to point Y and then decrease towards point Z.

Which factor of production is not represented in the list shown?

• capital

• enterprise

• labour

• land

What do economies aim to achieve in tackling the economic problem of scarcity?

• equal balance between public and private sectors

• equal reward for equal effort

• increased competition in the use of resources

• optimum allocation of the finite resources

The diagram shows a country's production possibility curve (PPC). Which statement is correct?

• a movement from X to Y shows a decrease in efficiency in the economy

• a movement from X to Z shows a discovery of new resources in the economy

• a movement from Y to Z shows resources are being diverted from capital goods to consumer goods

• a movement from Z to Y shows an increase in efficiency in the economy

Which example of a factor of production in the fishing industry is correct?

• capital- charges on loan for fishing boat

• enterprise- salaries of fish warehouse managers

• labour- profits of fish shop owners

• land- fish in the sea

Hospital services are provided by the government and paid for through taxation. People cannot always get the treatment they require because of long waiting lists.

Of what is this an example?

• external cost

• market system

• perfectly inelastic supply

• scarcity

The diagram shows a production possibility curve (PPC) for an economy.

Which change on the diagram could represent an increase in unemployment?

• W to X

• W to Y

• Y to X

• Y to Z

What could an economist regards 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 individual in a country