SECTION A (Multiple Choice)
1. Which of the following is an economic
activity?
A. Teaching of a student in the school
B. A mother teaching her son at home
C. A mother serving her child at home
D. Students playing football
2. Suppose you buy an Economics
textbook. What is the opportunity cost of
your purchase?
A. Whatever you would have spent the
money on if you had not bought the
book.
B. The money you paid for the book.
C. The cost of producing the book.
D. The time you spend studying the
book.
3. Another name for opportunity cost is
A. money cost.
B. social cost.
C. real cost.
D. revenue cost.
4. Opportunity cost will exist as long as
A. an economy has money.
B. relative prices are variable.
C. production is unregulated.
D. sacrifices have to be made.
5. When opportunity cost is zero it means;
A. There is enough resource to
purchase all wants.
B. Resources has no alternative use
C. Resources are over-abundant
D. All of the above
6. The PPC indicates that
A. There is opportunity cost in resource
allocation.
B. There is a direct relationship
between human wants and resources.
C. There is an equal relationship
between human wants and resources.
D. None of the above
7. Points on the PPC shows;
A. The points a country borrows
effectively
B. The points a country produces
effectively
C. The points a country import
effectively
D. The points a country export
effectively
8. An outward shift or increase in the PPC
results in all except when there is;
A. An improvement in the level of
technology
B. A discovery and exploitation of idle
resources
C. An improvement in the quality of
labour force in the country
D. An exportation of labour force
9. A curve which shows the maximum
combination of commodities that can be
produced with available resource is
A. An indifference curve
B. A production function
C. A production possibility curve
D. An equal curve
10. Operating inside a society’s PPC is
A. A way to stimulate economic growth
B. An indication of an inefficient use of
resources
C. The sign that population is growing
rapidly
D. An indication of very efficient use of
resources
11. For an efficient utilization of economic
resources, one must avoid
A. Under employment of factors of
production
B. Combining resources in the right
proportions
C. Relating production to specific needs
of society
D. The application of new techniques of
production
12. What are the characteristics of free
good?
A. Has an opportunity cost and takes
resources to produce it
B. Has an opportunity cost and takes no
resources to produce it
C. Has no opportunity cost and takes no
resources to produce it
D. Has an opportunity cost and takes
resources to produce it
13. What gives rise to the problem of
scarcity?
A. A lack of money
B. An uneven distribution of income
C. Capital equipment being greater
than labor
D. Wants exceeding resources
14. A man presently works as a builder. His
previous jobs included working as a
ofarm laborer and a street trader. His
next best-paid job is that of a carpenter,
but he would rather choose to work as a
gardener, if he was not a builder. What
will be the opportunity cost of him
working as a builder? Working as:
A. A carpenter
B. A farm laborer
C. A gardener
D. A street trader
15. What does a production possibility curve
show?
A. The amount of capital and labor
in a country
 B. The output of two products that
can be produced with a given
resources
C. The popularity of the two
products
D. The price of the two products
that are produced with given
resources
16. The diagram shows a country’s
production possibility curve for rice and
wheat. A major flood destroys a large
area of agricultural land.
Which movement could represent the
resulting change in output?
A. P to Q
B. Q to R
C. R to S
D. S to P
17. The reward of capital is
A. Profit
B. Wages
C. Interest
D. Rent
18. Scarcity requires that people must
A. Trade
B. compete.
C. cooperate
D. make choices
19. The condition of scarcity exists because
A. Supply
B. Resources are too expensive
C. Demand
D. There aren’t enough resources to
produce everyone’s wants
20. An economy with few resources is
encouraged to improve the quality of its
human resources. Which policy will lead
to such an improvement?
A. conserving and protecting more of its
natural resources
B. limiting the immigration of skilled
labour
C. providing more opportunities for
education and training
D. reducing the use of machines in
production
21. What is the quantity of goods or service
produced?
A. Standard of living
B. Inputs
C. Output
D. Productivity
22. Which of the following is not an
example of an increase in Productivity?
A. Producing more output with same
inputs
 B. Producing the same output with C. providing more opportunities for
fewer inputs education and training
C. Market D. reducing the use of machines in
D. d. Producing more output with more production
input Use the information below to answer
23. The opportunity cost of something you question 30 to
decide to get is A firm that sells its product for $6 a unit
A. the amount of money you pay to get has the following information below:
it. Productio Output Labour
B. the highest valued alternative you n Levels (units) Costs ($)
give up to get it. A 50 40
C. the lowest valued alternative you B 100 100
give up to get it. C 200 120
D. all possible alternatives that you give D 300 150
up to get it.
24. Given that labour cost is $500.00, total 26. Which production level has the highest
revenue is $1500.00 and output is 50 profit?
units, what will be the labour cost per A. Production Level A
unit? B. Production Level B
A. $20.00 C. Production Level C
B. $300.00 D. Production Level D
C. $40.00 27. Which production level has the most
D. $10.00 efficient labour cost per unit?
25. An economy with few resources is A. Production Level A
encouraged to improve the quality of its B. Production Level B
human resources. Which policy will lead C. Production Level C
to such an improvement? D. Production Level D
A. conserving and protecting more of its 28. Which production level has the lowest
natural resources revenue generation capacity?
B. limiting the immigration of skilled A. Production Level A
labour B. Production Level B
 C. Production Level C D. Quota
D. Production Level D 30. Economics is mainly concerned with
29. What is the measure of economic A. using minimum input for
performance that indicates how maximum output
efficiently inputs are converted into B. combining factors of production
output? C. production, distribution and
A. Productivity consumption of goods and
B. Standard of living services
C. Subsidy D. management of natural resources
 SECTION B
Answer all questions from this section
1) The table below shows the various combinations of cars and bicycles that can be produced in
country Ghana. Use this information to answer the questions that follow:
Production
Cars Bicycles
Possibilities
O 0 550
P 50 500
Q 100 450

a. What is the opportunity cost of producing;

i. 50 cars

2)
In late 2016 an Australian firm announced that it would be starting a project to use the power of
waves off the coast in Cornwall in the UK to generate electricity. More entrepreneurs are
becoming interested in making use of wave power which is a free good. More labour is likely to
be employed in the industry. The quantity of labour has increased in recent years.
a. Explain the difference between a free good and an economic good. [4]
b. Does the extract suggest that electricity is a free good? What of waves? [4]
c. Analyse, using a PPC, the effect on an economy of an increase in the supply of labour. [6]
d. What would be the production point on the PPC if an economy underutilizes the labour?
Explain your answer. [6]

3) a. Why is scarcity a fundamental problem in Economics?

b. Give one reason why economics is a
i. Social Science
c. How do government solve the problem of scarcity?

4) a. Define the following:

i. free goods
ii. economic goods
b. Give three characteristics of free good and economic good
c. Classify the following commodities under free good and economic good
i. air
ii. pipe water
iii. river water
iv. public education
v. oxygen cylinder