Economics section A

This is based on all choice questions from unit 1 of microeconomics. Most of these questions are from many different past papers. 

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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.
  • prices.
  • investment.
  • saving.

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.

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