Introduction to Economics II

Which of the following are the four factors of production?

• Land, labour, capital, enterprise

• Wages, social wages, interest and commission

• Wages, rent, interest and profit.

• Wages, rent, interest and commission

Answer explanation

Remember PROFIT is a term references in business studies.  Economics is focused on resource efficiency.

The diagram shows a production possibility curve for food and clothing in an economy.

What is the opportunity cost of increasing food output from 40 to 80?

• 30 units of clothing

• 150 units of clothing

• 40 units of food

• 80 units of food

Which are the payments for the four factors of production in economics?

• Wages, rent, interest and profit

• Wages, rent, interest and icecream

• Labour, capital, profit and interest

• Land, labour, capital and enterprise

Which of the following statements best describes relative scarcity?

• The existence of unlimited needs and wants and limited resources

• The scare supply of all goods and services

• The existence of unlimited resources and limited needs and wants

• The limited supply of resources is insufficient to eliminate poverty

Which of the following questions raised by the economic problem is NOT influenced by consumer sovereignty?

• How to produce?

• How much to produce?

• What to produce?

• To whom to distribute?

The diagram shows the business cycle for a hypothetical economy.

What is the trend in this economy between points A and B?

• Rising unemployment, output and inflation

• Lower employment, increasing inflation and lower output

• Rising employment, falling inflation and lower output

• Falling output and inflation, and rising unemployment

What is the opportunity cost of consuming a certain good?

• The other goods a consumer has given up in order to purchase the good

• The market price of the good

• The price paid for the resources used to produce the good

• The other goods which could be produced with the same resources

Which of the following is an example of investment in the economic sense?

• A business buying new plant and equipment to expand production

• A consumer buying shares of the Australian share market

• A consumer depositing money in a savings account

• A business borrowing funds from a financial institution

What is the condition for equilibrium income in the FOUR sector circular flow of income model?

• S+T=I+G

• S=I

• S+T+M = I+G+X

• S+T+M>I+G+X

Answer explanation

Read the question! 🙂 FOUR sector model.

The table shows an economy's production possibility schedule for wheat and rice.

What is the opportunity cost of increasing the production of rice from 100 to 150?

• 40 wheat

• 80 wheat

• 50 rice

• 150 rice