The Basic Economic Problem : Scarcity And Choice

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 The Basic Economic Problem : Scarcity And Choice

  
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  • 1. 
    What can happen in a planned economy that does not happen in a market economy?
    • A. 

      The allocation of resources can take account of the total effects on society.

    • B. 

      There can be full employment of factors of production.

    • C. 

      There can be inflation.

    • D. 

      There can be international trade.


  • 2. 
    Which of the following is a factor of production?
    • A. 

      The payment of interest on a bank loan

    • B. 

      The profit declared by a company in its annual report

    • C. 

      The skill of the managers of a business

    • D. 

      The taxes paid to the government


  • 3. 
    In a mixed economy, resources are used as a result of
    • A. 

      The decisions of consumers only.

    • B. 

      The decisions of firms only.

    • C. 

      The decisions of consumers and firms.

    • D. 

      The decisions of consumers, firms and government.


  • 4. 
    A farmer decides to use a more fertile field. As a result he is able to produce the same output as before but with fewer workers and less equipment.This is a substitution in which
    • A. 

      Capital replaces labour and land.

    • B. 

      Labour replaces capital and land.

    • C. 

      Land replaces capital and enterprise.

    • D. 

      Land replaces capital and labour.


  • 5. 
    The table shows the various combinations of food and clothing which a village can produce using all its resources.    food units                                  clothing units          0                                                   500        100                                                400        200                                                250        300                                                 50        400                                                  0 What is the opportunity cost to the village of increasing the production of food from 200 to 300 units?
    • A. 

      50 units of clothing

    • B. 

      100 units of clothing

    • C. 

      200 units of clothing

    • D. 

      250 units of clothing


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