IG MCQ PRACTICE 5

Economists refer to factors of production. Which is not a factor of production?

• the fields of a farm

• the machinery in a factory

• the shares of a company

• the staff in an office

A government allowed a building company to construct new houses which destroyed an area designated as an area of natural beauty. Which concepts can be applied to this statement?

• budget surplus; public sector

• external cost; opportunity cost

• government subsidy; mixed economy

• private enterprise; budget deficit

The country is using all its resources to produce both manufactured goods and services. What movement would represent an improvement of technology in manufacturing?

• K to N

• L to K

• N to K

• N to M

What is the government most likely to produce in a mixed economy?

• all of the services and none of the goods

• amounts of goods and services equal to those of the private sector

• no goods and services

• some of the goods and services

Which of the effects of economic development is an external cost?

• higher employment

• higher fixed costs

• increased production

• increased traffic congestion

The table illustrates the demand and supply for coffee in a market in Africa. When the price rises from $20 to $30 per kg, what is the price elasticity of demand for coffee?

• 0.2

• 0.5

• 2.0

• 5.0

It was reported that the supply of oil would be affected by the discovery of new oil fields and demand would be affected by rapid global economic growth. If point X is the initial equilibrium point, which point could represent the new equilibrium?

• A

• B

• C

• D

What is likely to decrease the level of saving in an economy?

• an increase in the general level of income

• an increase in the number of cheap offers in shops

• a redistribution of income from poor to rich households

• a rise in the rate of interest

Which change will make a manufacturing company replace machines with labour to maintain the most efficient combination of factors of production?

• The price of the product manufactured has increased

• The productivity of labour has increased

• The productivity of machinery has increased

• The wages of labour have increased

Although there are higher paid jobs in offices many workers stay in low-paid jobs on farms. What might explain this in developing economies?

• Agricultural workers lack the necessary education and skills

• Governments plan to increase indirect taxes on services

• Manual workers are being replaced by machines

• Workers on farms have high labour mobility