Exercise: Section 1.1 – The Nature Of The Economic Problem 1. Which of the following describe the basic economic problem? a. The interaction of market forces to satisfy unlimited needs & wants b. Meeting increased demand for goods & services with limited resources c. How to satisfy limited wants & needs with unlimited resources d. How to allocate scarce resources to satisfy unlimited needs & wants 2. Which of the following is a free good? a. Tennis rackets b. Running shoes c. Public playgrounds d. Houses 3. An olive farm in Country ABC produces organic olive oil by which it sells on its website to specialist shops around the globe. Which of the following is a tertiary industry activity? a. Selling the oil over the internet b. Growing olive trees c. Crushing the olives to extract the oil d. Bottling the olive oil 4. One of the followings is not the basic economic question addressed by an economy: a. When should production take place? b. What production should take place? c. How should production take place? d. For whom should production take place? 5. Which of the following is not physical items like haircuts, bus journey and internet access? a. Services b. Opportunity cost c. Goods d. Factor of production 6. Public sector refers to… (2 marks) 7. Distinguish between needs and wants, with examples. (4 marks) 8. What are the differences between economic goods and free goods? (4 marks) 9. Differentiate between goods and services. (4 marks) 10. How do we link poverty to the basic economic problem? (4 marks)
