WHSS Economics 2281 30 on 30: Section 1

To help reduce the price of oil, new supplies are needed. However, objectors oppose exploration of new sites because of the environmental damage it may cause. Why is this statement an example of the basic economic problem?

A Oil is a limited resource.

B Oil is expensive.

C The exploration involves demand and supply.

D There are external costs involved in production

• A

• B

• C

• D

What is an opportunity cost for a consumer spending money on a holiday?

A the potential interest earned if the holiday money had been saved

B the price paid for an air ticket to the holiday destination

C the rubbish created during the holiday which affects the local community

D the satisfaction that the consumer gains from the holiday

• A

• B

• C

• D

Helium is a gas that is limited in supply because it takes thousands of years to form. The US government holds 35% of the world’s supply of helium and has been selling its stocks. Helium is essential in medical scanners. It is also used for party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement?

A demand and supply, government subsidy

B excess demand, resource allocation

C opportunity cost, private monopoly

D public sector, factors of production

• A

• B

• C

• D

Which combination of characteristics describes a public good?

A excludable and non-rival in consumption

B excludable and rival in consumption

C non-excludable and non-rival in consumption

D non-excludable and rival in consumption

• A

• B

• C

• D

Which government policy will increase productivity?

A decreasing the number of training programmes

B encouraging labour-intensive production

C promoting good industrial relations

D reducing private sector investment

• A

• B

• C

• D

Which statement about the factors of production is correct?

A Capital is a financial resource and includes savings in banks.

B Enterprise is limited in supply and includes office workers.

C Labour is a human resource and includes pensioners and children.

D Land is a natural resource and includes trees and fish.

• A

• B

• C

• D

A builder spends one hour travelling to and from work. He works 40 hours per week for $200. He is given a choice to work 50 hours a week for an extra $75. What would be the opportunity cost to the builder of working the extra hours?

A the ability to increase his purchasing power

B the additional time travelling to and from work

C the increased hourly earnings of $7.50

D the ten hours of leisure time

• A

• B

• C

• D

What is an economist’s definition of a market?

A a collection of informal retail outlets run by small firms

B a place where traders gather regularly for short periods

C a system that enables individuals and firms to buy and sell goods

D the existence of consumer demand for a good

• A

• B

• C

• D

It is expected that consumers will use less paper money. What is the most likely reason for this?

A Inflation reduces the value of paper money.

B More ways of making payments will be available.

C Other forms of money are more durable.

D Paper money will have less intrinsic value.

• A

• B

• C

• D

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

A A farm owner buys a television.

B A farm owner buys additional land.

C A farm owner buys fertiliser for their crops.

D A farm owner buys some farming equipment.

• A

• B

• C

• D