January MOCKS

Question 1

what is the basic economic problem

Answer 1

allocating limited resources given unlimited wants

Question 2

what is opportunity cost

Answer 2

the value of the next best alternative when a decision is made

Question 3

what does the PPF show

Answer 3

shows the maximum production of 2 goods with the given factors of production

Question 4

what is Q^2

Answer 4

quality and quantity

Question 5

how can we move from A to B on a PPF curve

Answer 5

by improving the quality~(increasing productivity) of CELL

Question 6

how can we move from B to C on a PPF curve

Answer 6

by increasing the quantity of CELL

Question 7

what is a way of increasing the quality of CELL

Answer 7

re allocating use of production to specialise

Question 8

what is productive efficiency

Answer 8

when the economy is using all available resources to produce along the PPF

Question 9

what are the functions of money

Answer 9

medium of exchange - avoids barter
store of value as long as inflation is controlled
measure of value

Question 10

what are the characteristics of money

Answer 10

portable
divisible
difficult to forge
limited supply

Question 11

what are the advantages of specialisation

Answer 11

increased output
greater understanding of the requirement of production

Question 12

what are the disadvantages of specialisation

Answer 12

• reduces flexibility of the workforce
• workforce can become monotonous(can lead to absenteeism)

Question 13

who is an amabassador for 1.commad economy 2.free market economy 3.mixed economy

Answer 13

1.karl marx
2.adam smith
3.friedrick hayek

Question 14

how do we know if something is inelastic

Answer 14

when the coefficient is between 0 and 1 , -1 and 0

Question 15

what is the formula to work out PED

Answer 15

% Chnage in QD / % Chnage in P

Question 16

what is the formula to workout Cross Elasticity of demand

Answer 16

% Change of QD of product A / % Change of Price of product B

Question 17

what is the formula to workout Income Elasticity of Demand

Answer 17

% Change in QD / % change of income

Question 18

In XED what does a positive coefficient indicate

Answer 18

Substitute
elastic - close substitute
inelastic - far substitute

Question 19

In XED what does a negative coefficient indicate

Answer 19

complement
elastic - close complement
inelastic - far complement

Question 20

diminishing marginal returns

Answer 20

when labour is added to capital then total revenue and marginal product will initially increase then decrease

Question 21

what is the reason to supply decreasing as an additional worker is added

Answer 21

as more labour is added the capital becomes more scarce

Question 22

how to work out opportunity cost

Answer 22

num. of goods we give up / num. of goods we get

Question 23

private benefit

Answer 23

the benefit that consumers get from consuming a good

Question 24

private cost

Answer 24

the cost of production of producing goods to supply for consumers

Question 25

what are negative externalities associated with

Answer 25

demerit goods(cigarettes)

Question 26

what are positive externalities associated with

Answer 26

merit goods(education)