Bas Econom Prob

Define the Economic Problem.

• limited wants exceeding infinite resources

• unlimited wants exceeding infinite resources

• unlimited wants exceeding finite resources

• limited resources exceeding infinite wants

What gives rise to the problem of scarcity?

• a lack of money

• wants exceeding resources

• capital equipment being greater than labour

• an uneven distribution of income

Which of the following is an example of the factor of production ‘capital’?

• the money a farmer has borrowed to buy livestock

• the money a farmer has saved in the bank

• a farm worker

• a tractor

A woman owns a TV which she bought for $300. She is considering buying a better model for $450. Her neighbour offers her $200 for her TV. What is the opportunity cost of her rejecting this offer?

• $100

• $200

• $300

• $450

Which type of factor of production can be described as a ‘natural resource’?

• land

• capital

• entrepreneur

• labour

What does a production possibility curve show?

• the output of two products that can be produced with given resources

• the amount of capital and labour in a country

• the popularity of the two products

• the price of the two products that are produced with given resources

What could have caused the change in the shape of the production possibility curve (PPC) shown?

• more resources being devoted to producing clothing

• an increase in the size of a country’s labour force

• a change in consumer preferences towards clothing

• advances in technology in the clothing industry

What is meant by ‘opportunity cost’?

• The labour used in producing the product

• The cost of the item selected

• The best alternative forgone

• The cost of exploring business opportunities

Opportunity cost is an important concept for producers because they have to decide how to use the resources they employ.

• True

• False

Which of the following is a free good?

• Inoculation provided without charge by the state

• Products given away by a supermarket to attract customers

• Wind coming in from the sea

• Recycled paper