What identifies a finite resource?
The resource does not renew itself.
The supply of the resource is greater than demand.
There is no opportunity cost for the resource.
There is unlimited supply of the resource.
A natural resource was discovered. The exploitation of this resource allowed the country to double its GDP. Why did this not solve the basic economic problem?
Exploiting the resource required high expenditure on capital equipment.
Exploiting the resource caused significant environmental damage.
Gross domestic product was unevenly distributed in the country.
Wants still exceeded the resources available to meet those wants.
What is the function of the factors of production in an economy?
to make goods and services to fulfil wants and needs
to provide an even distribution of income
to provide tax income for the government
to reduce the existence of external costs
What is not a factor of production?
a $20 banknote
an office
a photocopier
a secretary
What is classified as one of the four economic resources?
consumption
enterprise
production
trade
In 2016, 20 billion barrels of oil and 1.6 billion barrels of natural gas were discovered in US. Which factor of production has increased in the US?
capital
enterprise
labour
land
Which statement about factors of production is correct?
Capital is the amount of money borrowed from a bank.
Labour is output made by an employee.
Land includes commercially grown rice crops.
Profit is the reward for enterprise.
What is the key role of an entrepreneur?
inventor
risk taker
shareholder
worker
In farming, what is an example of what economists call capital?
savings the farmer has in the bank
shares in a farming company
the money the farmer set aside to pay taxes
the tractor owned by the farmer
What would an economist regard as an example of the factor of production capital?
an individual’s purchase of stocks and shares
borrowing by a firm to pay for electricity
the building by a firm of a new factory
total savings by individuals in a country
On which factor of production does innovation directly depend?
decisions of entrepreneurs
high inputs of capital
long hours of manual labour
plentiful supplies of land
A government wishes to increase agricultural output. It gives farmers the tools to irrigate the farmers’ fields. Which FOP are provided by the farmers?
capital and enterprise
enterprise and labour
labour and land
land and capital
What is an example of the purchase of a consumer good?
A farm owner buys a television.
A farm owner buys additional land.
A farm owner buys fertiliser for their crops.
A farm owner buys some farming equipment.
Sam wrote a list of how he would prefer to spend his Saturday afternoon. What was the opportunity cost of going to the cinema?
going to a cricket match
watching the annual town parade
visiting relatives
losing his Saturday free time
In recent years more golf courses, which use large quantities of water, have opened in China. What may be the opportunity cost of this?
cost of water
loss of farmland
sales of golf equipment
wages of golf course staff
A farmer decides to grow potatoes instead of wheat. What is the opportunity cost of growing the potatoes?
the output of wheat
the price of seed potatoes
the profit from growing potatoes
the time spent preparing the potato field
Countries X and Y have identical resources. The diagram shows their production possibility curves. What can be concluded from the diagram?
X can produce food and drink more cheaply than Y.
X experiences higher unemployment than Y.
Y can produce food and drink more efficiently than X.
Y has higher retail prices than X.
The diagram shows a production possibility curve (PPC). Why is the curve usually drawn like this?
International free trade exists.
Opportunity cost changes.
Resources are unlimited in supply.
Some resources will be unemployed.
The diagram shows a production possibility curve (PPC) for an economy that produces both capital goods and consumer goods.
Point A
Point B
Point C
Point D
What would cause an outward shift of a country’s production possibility curve (PPC)?
a fall in unemployment
an increase in the rate of income tax
an increase in the labour force
a reduction in expenditure on education
The diagram shows two production possibility curves. Which statement about the movement from point X to point Y is correct?
Demand for consumer goods has risen.
The opportunity cost for producing consumer goods has risen.
There has been an increase in productivity in consumer goods production.
There has been an inward shift in the production possibility curve.
Country X provides computers to help teachers in the classroom. How would this technology increase the economic potential of country X?
It improves the quality of human resources.
It reduces the amount of land required for education.
It removes the need for teachers.
It requires more teachers to do the same work.
A country produces at T, has an ageing population and decides to allocate more resources to the production of health services. Which movement shows this change?
T to S
T to U
T to V
T to W
An economy produces cotton and cars, at point Q. There is improved technology that can only be used in the production of cars. How would this be represented?
by a movement from Q to W
by a movement from Q to X
by a movement from Q to Y
by a movement from Q to Z
The diagram shows an economy’s production possibility curve (PPC). The economy moves from point X to point Y. What is the most likely effect of this change?
Different quantities of the goods are produced.
More people are employed.
There is an immediate fall in gross domestic product.
There is an increase in investment.