Economic: Chapter 1

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What is necessary for effective specialisation?

a barter system

a medium of exchange (correct)

a production possibility curve

a system of trade protection

Which statement is the most valid reason for government intervention in a free market economy?

Consumers are well informed, making it difficult for producers to make profit.

Health and education are not available in sufficient quantities. (correct)

Producers are motivated by profit maximisation.

There are many competitive firms and not enough sole suppliers.

What could cause the curve to shift to XZ?

a fall in productivity in manufacturing

a fall in the price of manufactured good

a higher demand for manufactured goods

an improvement in manufacturing technology (correct)

Why is choice central to the economic problem?

Most resources have alternative uses. Signup and view all the answers

What is likely to be introduced in the market for bus travel if an economy moved from a mixed economy to a market economy?

allowing companies to bid for bus routes Signup and view all the answers

In which aspect is the planned economy likely to offer more than the market economy?

security Signup and view all the answers

How would an economist establish the market demand curve for a private good?

by combining individual demand curves horizontally Signup and view all the answers

What is most likely to severely affect the ability of money to act as a medium of exchange?

a very high rate of inflation Signup and view all the answers

Which statement about the opportunity cost of good R in terms of good S is not correct?

It is greater at all points on R4S4, than on R3S3. Signup and view all the answers

Choose the correct diagram.

B Signup and view all the answers

When will the price mechanism not function as a system for allocating goods?

when the government maintains an effective maximum price Signup and view all the answers

A group of tourists become stranded on a desert island. They decided to use their own system of money. Which statement about their choice of money is correct?

Coins in their possession would be suitable if there are enough of them. Signup and view all the answers

What is not an example of the role of the factor enterprise in a modern economy?

Making payments to suppliers for raw materials and capital goods. Signup and view all the answers

John sells cakes for $10. Aisha offers online tutoring for $20 per hour. One hour of Aisha’s tutoring is worth two of John’s cakes, Which function of money is being illustrated?

unit of account Signup and view all the answers

A businesswoman sets up a charity to provide toys for young children of low income families. Which term most accurately describe these toys?

private goods Signup and view all the answers

Which statement about the opportunity cost of good Y is terms of good X is correct?

It is never above 1Y = 2X. Signup and view all the answers

A flood-control dam is an example of a good provided by directly by a government. Which statement related to the direct provision of a flood-control dam is not correct?

Direct provision of a flood-control dam involves the supply of a merit good. Signup and view all the answers

There has been a worldwide move towards market economies and away from state controlled nationalised industries. Which policy would limit this transaction?

Regulation of prices of former nationalised industries’ products. Signup and view all the answers

Which statement about nationalised and privatised industries is correct?

Privatisation is a way of raising money for the government. Signup and view all the answers

What is unlikely to occur with an increase in the provision of public goods?

reduction in tax Signup and view all the answers