Macro - Scarcity specialisation opportunity cost and statements

Question 1

Individuals and businesses must make choices because

Answer 1

Of resource scarcity

Question 2

True or False: According to the basic model of competition in a market, firms seek to maximise profits

Answer 2

True

Question 3

“The national minimum wage is a poor idea: It makes some workers too expensive so firms do not hire than; It disincentivises the workers just above the minimum wage, and; It reduces the competitiveness of the economy”. What type of statement is the above?

Answer 3

Normative

Question 4

True or False: The following statement is an example of a normative statement: “the cost of fruit and vegetables should be subsidised by the government to encourage healthy eating”

Answer 4

True

Question 5

A student works for a book shop during the holidays. She is offered the alternative of being paid £100 per week in cash of choosing £150 worth of books from the shelves. What is the opportunity cost to the student of choosing the books?

Answer 5

£100

Question 6

If scarce resources are allocated efficiently then

Answer 6

It is impossible to increase the output of one good without reducing the output of another good

Question 7

The existence of scarcity implies that

Answer 7

Households, firms and governments must make choices

Question 8

The workers in a factory currently earn £240 for a 40 hour week. The management offers them a choice between either a straight 10 per cent wage increase or an increase in the weekly wage to £260 along with a reduction in hours from 40 to 39 hours. Disregarding the value of leisure time, what is the opportunity cost to each worker of opting for the 39 hour week?

Answer 8

£4

Question 9

Statement 1: The London Congestion Charge on motor vehicles has reduced air pollution in the city. Statement 2: The plan to introduce a higher congestion charge for motor vehicles with a large engine is unfair. Which of the following best describes the two statements above?

Answer 9

Statement 1 is positive and statement 2 is normative.

Question 10

Which of the following is the best definition of a positive statement?

Answer 10

A statement that is value judgement free. It can be tested and can be proven right or wrong.