MCQ Questions:

1. Which terms summarise the nature of the economic problem?
A. finite resources and limited wants
B. finite resources and unlimited wants
C. infinite resources and limited wants
D. infinite resources and unlimited wants

2. The government of a country with a rapidly increasing population decides to switch resources from investment to increased subsidies to farmers. What is the opportunity cost of this decision?
A. the profit earned by farmers
B. the rent of the land on which food is grown
C. the reduction in investment
D. the wages of the farm workers

3. Which economic change would increase the problem of scarcity?
A. a decrease in fish stocks
B. a discovery of a new oil field
C. an increase in labor productivity
D. a reduction in waste

4. What makes choice an important element in the basic economic problem?
A. Increased demand leads to higher market prices.
B. Limited resources have many alternative uses.
C. Reaching a market equilibrium may take a long time.
D. Scarce economic resources are distributed equally.

5. A government is faced with the choice of spending on either education or healthcare. Of what is this an example?
A. conservation of resources
B. monetary policy
C. opportunity cost
D. substitution of factors

6. A firm decides to stop manufacturing ovens and to produce washing machines instead. What is the opportunity cost to the firm?
A. the additional washing machines produced
B. the cost of producing ovens
C. the cost of producing washing machines
D. the loss of the production of ovens

7. What is meant by the economic problem?
A. how to achieve efficiency with the existence of fixed resources and limited wants
B. how to allocate resources between public and private sectors
C. how to balance unlimited wants against finite resources
D. how to decide which methods to use to exploit all resources

8. Every business organization faces the problem of satisfying wants. Why wants are not fully satisfied?
A. An economy can only produce a limited amount of goods and services.
B. Governments cannot print enough money to pay for goods and services.
C. There is an over-production of goods and services by business organizations.
D. Workers are too skilled for the requirements of the jobs available.

9. Economics is primarily concerned with
A. allocating scarce resources for unlimited wants
B. controlling unemployment and inflation
C. determining the level of government expenditure
D. studying how new wants and economic resources can be produced

MCQ Answers:

1. B. finite resources and unlimited wants
2. C. the reduction in investment
3. A. a decrease in fish stocks
4. B. Limited resources have many alternative uses.
5. C. opportunity cost
6. D. the loss of the production of ovens
7. C. how to balance unlimited wants against finite resources
8. A. An economy can only produce a limited amount of goods and services.
9. A. allocating scarce resources for unlimited wants