1. Markets, PPF & Opportunity Cost - Y11 Economics

The distinguishing characteristic of an economic good is

• that is satisfies an economic want.

• that resources are used to produce it.

• that it is relatively scarce.

• that demand and supply determine its price.

The economic concept of scarcity is expressed in a simple fashion as:

• our natural resources are running out.

• certain goods (rare coins, vintage wines etc.) are fixed in quantity.

• productive resources are limited relative to human wants.

• most people and countries in the world are poor.

The economic problem is a problem of

• limited resources and limited wants.

• limited resources and unlimited wants.

• unlimited resources and limited wants.

• unlimited resources and unlimited wants

Which of the following is a factor of production?

• The profits made by firms

• the satisfaction of needs and wants

• A bank loan

• Labour productivity

Which of the following factors of production is classified as land?

• Fishing boats

• Fishing nets

• Fisherman

• Fish in the ocean

In a free market, the rationing function of the price mechanism means that:

• An increase in demand, leading to a rise in price, will encourage new firms to enter the market.

• When there is a shortage of a product, the price will rise and deter some consumers from buying the product.

• Changes in price provide information to both producers and consumers about changes in market conditions.

• If a product is scarce, a rise in price is likely to make the shortage worse.

The production possibility frontier shows the various combination of cars (Y) and vans (X) that an economy can produce when all of its resources are fully and efficiently employed. Which one of the following statements is correct? The opportunity cost of producing one more car is:

• greater at A than at B.

• lower at A than at B.

• the same at both A and B.

• zero at both A and B.