1. In a market based economy the scarcity of factors of production means that
- the economy cannot achieve economics growth every year.
- consumers must inevitably consider the opportunity cost of their choices.
- inflation is inevitable.
- the economy cannot produce on its production possibility frontier.
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2. A multiple effect occurs when an initial change in government spending leads to a larger change in the level of
- national income.
3. Which one of the following statements referring to the price mechanism is correct?
- High prices are always associated with hight profits for producers.
- High prices can ration demand for scare goods and services.
- Producers and consumers take account of externalities.
- Films are unable to influence the market demand for their products.
4. What are goods provided by the government for people who are deemed to need them called?
- Positive externalities.
- Merit goods.
- Demerit goods.
- Negative externalities.
5. Positive externalities exist when
- production and consumption creates pollution.
- social costs exceed private costs.
- private benefits are less than social benefits.
- private benefits are greater than private costs.