Cambridge International AS and A Level Economics

Worksheet – Chapter 1
True or false?
Decide whether the following statements are true or false.

1 There is no difference in economics between a want and a need

2 Capital is a factor of production. This is a positive statement.

3 Specialisation usually produces a more efficient allocation of resources.

4 A production possibility curve can be used to show an economy’s output of two goods.

5 A free rider is someone who travels for nothing on a bus.

Missing words
Add the missing words to complete the sentences; the number of words, in each case, is indicated in brackets.
(8)
1 Opportunity cost refers to . A consumer has to make a choice between two Big Macs or a portion of KFC.
(3)
If the KFC is chosen, the opportunity cost is . With a production possibility curve, the opportunity cost is
(7) (2)
represented by , which tends to as the output of one good nears its maximum.
(1) (2)
2 In a mixed economy, decisions on resource allocation are taken by and . When an economy
(6)
moves from being a command economy to a mixed economy, one of the first things that occurs is that . It is
(5)
also essential that the government in order to implement economic reforms.
(1) (1)
3 A private good has two characteristics. These are and and they mean
(6) (9) (4)
that and . An example of a free good is .

Diagram
The diagram below shows a production possibility curve (PPC) for an economy.

100

D
A
70
Food

25 B

0 150 180 200

Clothing

© Cambridge University Press 2015 Cambridge International AS and A Level Economics Worksheet – Chapter 1 1
Cambridge International AS and A Level Economics

1 If production moves from A to B, what is the opportunity cost ratio of producing more clothing?

2 If production moves from B to A, what is the opportunity cost ratio of producing more food?

3 Write two or three sentences to explain

■ why the economy would not want to produce at C

■ why it is not able to produce at point D.

© Cambridge University Press 2015 Cambridge International AS and A Level Economics Worksheet – Chapter 1 2