Homework for week 1

Student’s name____________________ Group _______

WHAT IS ECONOMICS? - Quiz

TASK: Answer all multiple-choice questions. Please note that there is only one correct answer per
question and you can highlight the correct answer using the ‘Highlighting option’ in Word.

1) Economics is the study of

A. The decisions made by governments and banks

B. How to increase economic growth
C. How to ensure that resources are shared equally
D. How resources should be allocated

2) Scarcity is a situation in which ______________________.

A. wants exceed the resources available to satisfy them

B. something is being wasted
C. people are poor
D. people intentionally reduce their wants because resources are limited

3) Consumer wants refer to:

A. all those things people buy

B. all those things required by a consumer to sustain existence
C. not having enough
D. desires for the consumption of goods and services

4) Resources are sometimes called _____________________.

A. Profits
B. wages and salaries
C. factor inputs
D. investment

5) Our productive resources include all the following except _____________.

A. skills of people
B. land and equipment/ buildings owned by firms
C. the money people own
D. skills of entrepreneurs and people, the land and capital they own

6) The factor of production, land, includes

 A. Combine harvesters
B. Dams
C. Meadows
D. Roads

7) The factor of production, capital includes

A. Money
B. Delivery vans
C. A mortgage

8) Choice is fundamental because _______________

A. people find it difficult to choose what they want

B. choosing makes people to be more rational
C. price depend on people making choices
D. resources are scarce in relation to people’s wants

9) What is it called when you choose between two possible uses for a resource, giving up one
alternative for another?
A. Trade Offs
B. Opportunity cost
C. Trading spaces
D. Monetary cost

10) By studying at the college, you are paying an opportunity cost that includes
___________________.

A. the money you spend on an iPad

B. the wages you could earn if you took a job
C. the money you spend on clothes
D. the money you spend on food and drink
 Production Possibility Frontier exercise

With reference to the diagram above answer the following questions on PPF. You can type your answers
under each question.

a) Define ‘Production possibility curve’.

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b) What can be said about the combination of capital and consumer goods shown at point G?

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c) What is the opportunity cost of movement from point G to C?

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d) What is the opportunity cost of movement from point C to E?

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e) What is the most likely effect on current and future living standards if the combination of capital and
consumer goods moves from point D to C?

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f) What is representative by point F and how could the economy start operating there?

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