Economics Unit 1

Which of the following is a want?

• Healthcare

• Education

• Luxury Holiday

• Basic Clothing

Which of the following is a

characteristic of needs?

• They vary across individuals and

  societies

• They are the same for everyone

• They are unlimited

• They are defined by society’s values

Scarcity is a condition that:

• Exists only in poor countries

• Exists only when resources are scarce

• Exists in all countries and at all times

• Exists only when there are natural

  disasters

Which of the following is the

fundamental economic problem?

• Unlimited resources relative to limited

  human wants

• Limited resources relative to unlimited human wants

• Limited resources and limited human

  wants

• Unlimited resources and unlimited

  human wants

Which of the following is an example of

opportunity cost?

• The cost of raw materials used to

  produce a good.

• The wages paid to workers to produce

  a good.

• The value of the land on which a

  factory is built.

• Choosing to produce wheat and sacrificing the production of Rice.

Which of the following is an example of

opportunity cost in terms of time?

• A firm invests in a new piece of

  machinery to increase productivity.

• A worker chooses to take a vacation

  instead of working overtime.

• A customer pays a higher price for a

  product because it is of better quality.

• A government imposes a tax on

  imported goods to protect domestic

  producers

Which of the following statements best

describes the concept of ceteris paribus

in economics?

• It is the assumption that all factors in

  the economy are constantly changing.

• It is the assumption that consumers

  always act rationally and in their own

  self-interest.

• It is the assumption that only the price

  of a good or service is important to

  consumers.

• It is the assumption that all other factors

  are held constant except the one being

  analysed.

Marginal analysis or decision making at the margin is the process of:

• Making decisions based on the total cost

  of a decision.

• Making decisions based on the

  incremental cost and benefit of a decision.

• Making decisions based on the average

  cost and benefit of a decision.

• Making decisions based on the sunk cost

  of a decision.

When making a decision at the margin,

a rational decision-maker will continue

to pursue an activity as long as:

• Marginal benefit is greater than

  marginal cost.

• Total benefit is greater than total cost.

• Marginal benefit is equal to marginal cost.

• Average benefit is greater than average cost

Which term assumes the existence of ‘qualities, knowledge and skills’ that allow an

individual to be more productive?

• Enterprise investment

• Specialisation

• Mechanisation

• Human Capital