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Introductory concepts test 1 economicstutor.com.au
Multiple choice
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Relative scarcity in economics means that
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The demands placed upon resources is very high
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The demands placed upon resources is excessive when compared to the availability of these resources
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Resources available for use in production are limited
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Economies experience shortages of all factors of production
Which of the following is not an example of a factor of production?
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Land
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Capital
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Labour
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Money
All economies will face the economic problem known as relative scarcity because
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All economies will experience some type of market failure that stems from the problem of scarcity
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Both developed and underdeveloped economies have a large number of demands placed on resources
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Regardless of the quantity of resources available, the demands placed on them is relatively excessive
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All economies have limited amounts of labour and capital
Opportunity costs in economics occur because
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All economic agents must make choices about how they will best use their resources because of the problem of scarcity
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Production of goods and services will involve significant financial outlays
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Consumers will always seek to reduce the prices of goods purchased
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Producers will always seek to minimise costs and maximise profits
Opportunity cost is best defined as the
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Cost incurred in the purchase of any good or service where there was an opportunity to spend on more than one good
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The benefits that are derived from spending money on any project other than the most preferred one
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The costs that are incurred when spending money on any project other than the most preferred one
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Cost or benefit that is sacrificed or foregone when a decision about resource use or expenditure is made
Which of the following is not an example of a capital item used in the production process?
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A motor car used by a sales representative for a pharmaceutical company
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A motor car in the sales yard of the Ford Motor Company
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A motor car used to carry passengers by a Taxi company
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A motor car used to chauffer politicians
In relation to the Production Possibility Curve (or frontier) shown
[if image does not show, right click on icon and select 'open image in new tab']
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A movement from point 1 to 7 means that the economy will be producing a combination of goods and services that better satisfies society
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The opportunity costs associated with a move from 5 to 1 is less than those related to the move from 2 to 6
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The opportunity costs associated with a move from 6 to 2 are more than those related to the move from 1 to 5
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An increase in productivity from one period to the next will mean that the economy cannot be producing at point 3
In relation to the Production Possibility Curve (or frontier), which of the following statements is incorrect?
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A movement along the curve illustrates the concept of opportunity cost
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A production point outside the curve is unattainable at the current time but can be reached in the future via increases to productive capacity
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In terms of the best allocation of resources, each point along the curve is equally valued or allocatively efficient
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A production point inside the curve is likely to be associated with some unemployment
Which of the following economic issues relates to a microeconomic concern rather than a macroeconomic concern?
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An unequal distribution of income in Australia
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Higher labour costs in the building industry
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Declining levels of inflation
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The high level of interest rates
Which of the following is the least correct representation of the problem of scarcity in Australia?
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We don't have enough money to buy all of the goods and services we want
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We want a very large number of goods and services because we are inherently greedy
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We don't have enough resources to satisfy all of our wants
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We want too many goods and services in relation to the ability to satisfy our wants
OK
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