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Question 1

The resources in an economy:

a) Are always fixed

b) Can never decrease

c) Always increase over time

d) Are limited at any moment in time

Question 2

Human wants are:

a) Always fixed

b) Limited

c) Unlimited

d) Likely to decrease over time

Question 3

The sacrifice involved when you choose a particular course of action is called the:

a) Alternative

b) Opportunity cost

c) Consumer cost

d) Producer cost

Question 4

Which one of the following is not one of the basic economic questions?

a) What to produce

b) Who to produce for

c) How to produce

d) How to minimize economic growth

Question 5

The basic economic problems will not be solved by:

a) Market forces

b) Government intervention

c) A mixture of government intervention and the free market

d) The creation of unlimited resources

Question 6

The free market involves:

a) The free provision of products

b) The subsidising of products by the government

c) Market forces of supply and demand

d) All trade via barter

Question 7

A mixed economy:

a) Allocates resources via supply but not demand

b) Allocates resources via demand but not supply

c) Allocates resources via supply and demand

d) Allocates resources via market forces and government intervention

Question 8

Which of the following is NOT likely to be true in a command economy?

a) Businesses may pursue social objectives

b) The profits of a business belong to the government

c) Resources are allocated by government directives

d) Market forces determine what is produced and who receives the products

Question 9

The public sector includes:

a) Investors owning companies

b) Government ownership of assets

c) Market forces of supply and demand

d) Private enterprise

Question 10

Which of the following is a normative statement in economics?

a) More spending by the government reduces poverty

b) Higher taxes lead to less desire to work

c) The UK economy is growing fast relative to other European Union members

d) The government should concentrate on reducing unemployment

Gillespie: Foundations of Economics 2e

Unit 01

Instructions