Yr11 Econ Quiz 1

When buying your first car, which of the following would not normally be regarded as an internal factor affecting your behaviour as a consumer?

• Feedback from your family

• Type of personality

• Values

• Sense of what is cool

Which statement least reflects a traditional view of customer behavior?

• Consumers behave rationally and act in their own self-interest

• Consumers have priorities or ordered preferences.

• Consumers make rash, uniformed decisions

• Consumers seeks to maximise their pleasure and minimise their pain

Modern behavioural economics suggests that consumers make decisions based on​ ​ (a)  

• bounded rationality
• shortcut thinking
• bounded irrationality
• impulse

Answer explanation

The definition of bounded rationality involves the idea that the capacity of human beings' decision making is not fully rational because it faces various limits.

Diminishing marginal utility or benefit suggests that the satisfaction of consuming most goods or services ​ (a)   the more we consume it.

• decreases
• increases

Match the following

• There is no government interference in the free operation of markets.

• Pure Market Economy

• Typically, all businesses are government-owned and make up the public sector.

• Mixed Economy

• Basic economic questions are answered and guided by long-established traditions and customs

• Traditional Economy

• Combines most of the features of market economies with some of the features of planned economies.

• Pure Planned Economy

Which statement about the simple two sector circular flow model is incorrect?

• There are four flows or streams shown on the model.

• One sector involves everyone in the country whereas the other sector involves fewer people.

• The various flows making up the model are assumed to be equal in value and interdependent.

• The model allows for spending on foreign goods and services, and household savings.

Answer explanation

Spending on foreign goods and services, and savings are shown in the five sector circular flow model (not the 2 sector circular flow model).

Thinking of the two sector circular flow model, which statement is incorrect following a rise in total spending on final goods and services by $100 million?

• There would be a period of expansion in GDP, possibly leading to a peak.

• There is likely to be a slowdown associated with a rise in the unemployment of resources among the household sector.

• There may be a rise in incomes received by the household sector.

• The rate of inflation (a general rise in prices) may accelerate if spending rises too quickly.

What do economists use the two sector circular flow diagram to show?

• how the household sector operates

• how the business sector operates

• how the global market operates

• how the household and business sectors of the economy interact

Match the following

• Inefficient use of resources

• Point X

• Maximum efficiency in use of resources

• Point D

• Unachievable outputs

• Point A

Illustrate the law of demand by drawing a demand curve.