Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
1. Basic Economic Ideas
s2013/12
1.1 A government minister states that the main economic benefit of locating a new factory in a coastal
region is the 500 jobs it will create. What does this statement imply about the coastal region?
A Alternative employment opportunities are scarce.
B Job seekers have a wide range of choices open to them.
C Labour is a scarce resource.
D Unemployment is at a low level.
2.2 The diagram shows two production possibility curves (EF and GH), before and after technological
progress has taken place.
After technological progress has taken place, what is the opportunity cost in capital goods of
producing OX consumer goods?
A MH
B OH
C OM
D YF
3.3. The table shows indicators for four countries undergoing a transition to a market economy. Which
country has achieved the most indicators of a successful transition?
Prices
exchange rate system stock exchange
inward investment
A administered managed
yes
allowed
B administered floating
no
controlled
C liberalised
floating
no
allowed
D liberalised
managed
yes
controlled
4.4 A kitchen manufacturer wanted to become more efficient. It decided to move to an industrial estate
and to increase the division of labour in the manufacture of its products. Which statement about the
division of labour is correct?
A It occurs only in manufacturing industry.
B It occurs only in market economies.
C It occurs only when similar firms are located in the same area.
D It occurs only when workers become more specialised.
W2012/12
5.1. What is the defining characteristic of a mixed economy?
A one in which the allocation of resources is determined partly by the state and partly by
individual producers and consumers
B one in which there are both monopolies and purely competitive industries
C one in which there are features of both more economically developed and less
Economically developed economies
D one which produces a mixture of agriculture and industrial products
1
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
6.2. In the diagram the original production possibility curve is LM.
What might cause the curve to shift to NP?
A a higher retirement age
B a reallocation of resources
C the depletion of natural resources
D the underemployment of resources
7.3. The diagram shows a production possibility curve for an economy that produces only two goods,
X and Y.
The economy produces 1200 of good X and produces on its production possibility curve.
Which quantity of good Y is given up?
A 400
B 600
C 800
D 1000
8.4. What might cause a country’s currency notes to cease to act as money?
A the notes are issued in smaller denominations
B the notes become harder to counterfeit
C the notes become more long lasting
D the notes become unlimited in supply
S2012/12
9.1. What is a characteristic of a planned economy?
A All property is owned privately.
B All resources are allocated centrally.
C Supply and demand always determine prices.
D There is competition in most markets.
2
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
10.2. In the diagram, JK is an economy’s production possibility curve.
What could cause the curve to shift to GH?
A a decrease in innovation
C an increase in the price of energy
B an increase in the retirement age
D an increase in the unemployment rate
11.2. The growing domestic, agricultural and industrial demand for water is leading to a world
shortage of water. Which change would reduce this problem of water scarcity?
A an increase in demand for food
B an increase in population growth
C climate change which leads to lower rainfall
D more efficient water management
12.3. What is considered as money if money is defined as anything which is always acceptable when
paying for goods and services?
credit cards
cheques
cash
A yes
yes
no
B yes
no
yes
C no
no
yes
D no
yes
no
w2011/12
13.1. An individual has an appointment with his bank manager. He has a choice between travelling to
the appointment by car, or leaving the car at home and travelling by bus and then by train. The costs
of the journey are given below.
$
bus fare
2
train fare
3
car parking charge
4
petrol
2
car wear and tear costs
1
Given this information, what is the opportunity cost to the individual of travelling by car rather than
by bus and train?
A $2
B $4
C $7
D $12
14.2. The curve PP in the diagram is the production possibility curve for a country producing goods X
and Y. The production of X is more labour intensive than the production of Y.
The working hours of the labour force are reduced by law. Which curve could be the country’s new
production possibility curve?
A TT
B SS
C QQ
D RR
3
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
15.3. In Economics, decisions are usually taken ‘at the margin’. What does this mean?
A They are concerned with actions that occur in free market not planned economies.
B They are concerned with issues on the boundary between macroeconomics and microeconomics.
C They are concerned with the choice between normative and positive actions.
D They are concerned with the effect of adding a further action to the current level of activity.
16.4.Which factor of production and example are correctly linked?
factor of production
example
A capital
$10 000 in a savings account
B enterprise
a company accountant
C labour
a robot
D land
the flow of a river
s2011/12
17.1. What distinguishes capital from other factors of production?
A Capital exists only in capitalist market economies.
B Capital results from the operation of the other factors.
C The rewards earned by the owners of capital are uncertain.
D Unlike labour or land, capital must be owned rather than hired or rented.
18.2. What is likely to be greater in a planned economy than a market economy?
A efficiency
B flexibility
C innovation
D stability
19.3.Which is a normative statement?
A An increase in the rate of inflation will lead inevitably to an increase in unemployment.
B A reduction in unemployment below a certain level will lead to higher inflation.
C Inflation can be reduced only by increasing the level of unemployment.
D Unemployment is more harmful than inflation.
20.4. What is consistent with an individual demand curve that slopes down from left to right?
A As price falls, a person switches away from rival products towards the product.
B As price falls, a person’s willingness and ability to buy the product will decline.
C As price rises, a person becomes less sensitive to price changes.
D As price rises, a person’s opportunity cost of purchasing the product falls.
w2010/12
21.1. What is the central problem for an economy?
A to achieve maximum growth in production
B to allocate resources between alternative uses
C to ensure all resources are fully exploited
D to overcome inequalities in income distribution
22.2 What are most likely to be disadvantages found in a market economy?
A economic growth and state-owned companies B merit goods and free competition
C public goods and economic specialization
D unemployment and external costs
23.3 The diagram shows the production possibility curve of an economy.
4
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
Which statement explains the shape of this curve?
A More efficient workers are drawn away from the production of consumer goods.
B Resources cannot be switched between producing capital and consumer goods.
C The economy is more efficient at producing capital than consumer goods.
D The opportunity cost of producing capital goods increases the more capital goods are made.
24.4 What is a correct statement about money?
A Its functions mean the characteristics that it possesses.
B Its liquidity means its use as legal tender.
C Its supply means the total value of banknotes in circulation.
D Its value means its purchasing power.
s2010/12
25.1 The diagrams show the change in a country’s production possibility curve between Year 1 and Year 2.
What can be deduced from the diagrams?
A Future growth prospects have been harmed.
B The level of unemployment has fallen.
C The opportunity cost of consumer goods has risen.
D The proportionate growth in production is greater in consumer goods.
26.2 Which statement about trade unions is normative?
A Since trade unions exist to safeguard the interests of their members, they deserve the Legal
protection of the state.
B In countries where trade unions are strong, income distribution is more equal.
C Uneven trade union membership has resulted in a widening of the wage gap between different
industries.
D In industries where trade unions are powerful, technical progress tends to be much slower.
27.3 A worker can make 10 hats or 5 pairs of shoes in a day. In the market three hats can be sold at the
same price as two pairs of shoes. The worker should make
A 4 hats and 3 pairs of shoes daily.
B 6 hats and 2 pairs of shoes daily.
C hats only.
D shoes only.
28.18 The diagram shows production possibility curves for two countries, X and Y. What can be
deduced from the diagram?
A Both countries can benefit from specialization.
B Country X has a higher opportunity cost than Y in producing good M.
C Country Y has a comparative advantage in both goods.
D Trade between X and Y will not take place.
5
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
29.30 In a command economy, what is the basis for determining the allocation of factors of
production?
A the pattern of consumers’ spending
B the perceived needs of the country
C the revenue from taxes
D the size of public sector companies
w2009/12
30.1 The diagram illustrates the production possibility curves for an economy in Year 1 (X1 Y1) and Year 2
(X2 Y2).
What can be concluded from the diagram?
A The cost of production was lower in Year 2 than in Year 1.
B The full employment level of output was lower in Year 2 than in Year 1.
C The opportunity cost of production was lower in Year 2 than in Year 1.
D Unemployment rose between Year 1 and Year 2.
31.2 What does the concept of ceteris paribus allow economists to do?
A calculate the monetary value of consumer surplus
B distinguish between economic and free goods
C distinguish between normative and positive statements
D isolate the effect of one variable on another variable
s2009/1
32.1 Three women work in a pottery workshop, each dividing their time equally between three
products. The table shows how many units of each product are made.
Later, division of labour is introduced and each woman makes only the product in which she has
absolute advantage. What is the rise in total output?
A 150 units
B 300 units
C 600 units
D 900 units
33.2 The diagram shows two production possibility curves (EF and GH), before and after
technological progress has taken place.
After technological progress has taken place, what is the opportunity cost in capital goods of
producing OX consumer goods?
A MH
B OH
C OM
D YF
6
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
34.3 What must be true of a positive statement?
A It is one that can be shown to be correct or incorrect.
B It is one that deals with positive changes in economic well being.
C It is one that is true by definition.
D It is one with which everyone is in agreement.
35.19 In the diagram, MN is the production possibility curve of a country that has a comparative
advantage in the production of good Y.
What might enable the country to consume the quantities of X and Y indicated by point R?
A increased specialisation in the production of good X
B international trade
C a reduction in unemployment
D increased specialisation in the production of good Y
W2008/1
36.1Why is scarcity the central feature of the economic problem?
A People’s needs are limited.
B Resources have alternative uses.
C Economic resources are finite.
D Consumers have limited choices.
37.2 The production possibility curve for an economy producing capital and consumer goods is
represented by the line PQ.
What is the opportunity cost of producing OS of consumer
goods?
A OR of capital goods
B PR of capital goods
C SQ of consumer goods
D SQ of consumer goods + PR of capital goods
38.3 In which types of economy might a government control prices?
A market and mixed only
B market and planned only
C market, mixed and planned
D mixed and planned only
39.4 Which action by an individual would not be considered an action of the factor of production
labour?
A leaving college to work on the land
B moving from a labour-intensive industry to work in a capital-intensive industry
C setting up a new business in information technology
D undertaking a training course in computer skills
7
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
40.19 The diagram represents the production possibility curves of two economies X and Y.
As a result of soil erosion in economy X, the production possibility curve shifts from X to X1.
According to the law of comparative advantage, what should country Y do following this change?
A cease to trade with country X
B export agricultural goods to country X
C export manufactured goods to country X
D import both agricultural and manufactured goods from country X
S2008/1
41.1 A country’s production possibility curve moves from XX to YY as shown in the diagram.
What could have caused this movement?
A a rise in the retirement age
B an increase in investment
C an increase in net emigration
D a rise in technological progress
42.2 A Southern African government was concerned about
the market influence of a large producer and was keen to
take control of the company. What might be the possible
result of this?
A an increase in the role of the market
B an increase in public ownership
C an increase in the role of the consumer
D an increase in the amount of competition
43.3 Which of the following is a normative statement?
A If firms spend more on advertising, sales volume may not rise.
B If firms raise prices, profits will rise.
C The government should reduce taxes on spending so that economic welfare will rise.
D Export volumes will rise if the government lowers the exchange rate.
44.4 What is not an essential characteristic of money?
A It must have intrinsic value.
B It must be generally acceptable as a means of settling debts.
C It must serve as a unit of account.
D It must be limited in supply.
S2014/1
45.1. By 2030, as the human population grows, the world will need at least 50% more food, 45%
more energy and 30% more water from the same resources. What does this statement directly
indicate?
A comparative advantage
B merit goods
C negative externalities
D the economic problem
8
Md. Ziaul Alam, MSS(Eco), MBA(Mkt & HRM), B.ed. Teacher: Economics, Business Studies, Bd. Studies
Mob: 01712524004,01972524004, Email:zia524004@yahoo.com, zia524004@gmail.com, web:zia-academy.com
46.2. A country was at point P on its production possibility curve. Following the threat of invasion
it prepared for war. The war then reduced the country’s infrastructure.
What are the most likely changes on the production possibility
curve diagram that are consistent with these events?
A P to Q followed by Q to R
B P to Q followed by Q to S
C P to R followed by R to Q
D P to R followed by R to S
47.3. Which is a normative statement?
A A reduction in unemployment below a certain level will lead to higher inflation.
B An increase in the rate of inflation will lead inevitably to an increase in unemployment.
C Inflation can be reduced only by increasing the level of unemployment.
D Unemployment is more harmful to economic welfare than inflation.
48.4 Meera has just finished a course at art college and has decided to set up a business on her
own producing clay figures of famous people. Which factors of production is she likely to have to
purchase from other businesses?
MCQ Marks Scheme AS (Eco)
Q NO
ANS
1
2
A
A
3
C
4
5
D
A
6
C
7
B
8
D
9
B
10
11
12
13
14
15
16
17
18
C
D
C
A
B
D
D
B
D
19
D
20
21
22
23
24
A
B
D
D
D
25
49
50
C
Q NO
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
ANS
A
C
D
B
B
D
B
A
A
B
C
B
D
C
C
C
B
C
A
D
B
D
C
Q NO
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
ANS
Q NO
ANS
9