NEC preparation 2

If Jason plays professionals sports, he can earn 5 million dollars per year; If he opens a restaurant, he can only earn 1 million dollars per year. Therefore, the opportunity cost of Jack opening a restaurant is:

• 0 dollars

• 1 million dollars

• 5 million dollars

• 6 million dollars

The three sources of income for the household are

• taxes, subsidies from the government, and rent

• wages, rent, and profit

• wages, rent subsidies from the government

• wages, rebates, and rent

You take the bus to work every day. When you get a raise in your salary, you no longer take the bus as your primary means of transportation because bus rides are

• an inferior good

• a normal good

• a substitute good

• a complementary

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

What causes market failure?

• government provision of services

• social costs equal private costs

• the existence of external benefits

• the existence of perfect competition

What is the most important factor that affects how much a family saves?

• the income of the family

• the level of taxation

• the rate of inflation

• the reliability of banks

Why is the energy supply industry dominated by very large firms in many economies?

• Government controls prevent the exploitation of consumers.

• High fixed capital costs exist.

• Labour-intensive production techniques are used.

• Non-price advertising increases competition.

An entrepreneur buys a workshop for $200000 to make plastic boxes. In the first year of operation he spends $70000 on materials, employs ten production workers paid by the amount produced (piece rate) at a total cost of $80 000 and buys two delivery vehicles for $10 000 each.

What are his total variable costs?

• $100000

• $150000

• $220000

• $370000

The demand curve shows

• The highest price buyers actually pay for each unit of a good and the amount they would buy

• The highest price buyers would be willing and able to pay for each unit of the good or the amount purchased at each price

• the consumer surplus buyers gain from each uni of the good if they were to purchase it

• the enjoyment consumers get from each unit of the good if they were to purchase

Which of the following items can best conclude the description that a measure of the overall cost of the goods and services bought by a typical consumer?

• CPI

• PPI

• GDP

• Inflation rate