Scarcity, choice and opportunity cost

Written by Dr. Ahmed Raza (Economics)

Class 11 · Economics · 12 questions

Name: ____________________ Date: ____________

Scarcity means that:
- A people do not work
- B there is no food
- C goods are expensive
- D resources are limited compared with wants
The opportunity cost of a choice is:
- A the cost of production
- B the price of the good
- C the money spent
- D the next best alternative given up
Which one is NOT a factor of production?
- A Enterprise
- B Labour
- C Money
- D Land
The reward for labour is:
- A interest
- B wages
- C profit
- D rent
The reward for land is:
- A profit
- B interest
- C rent
- D wages
A point inside the production possibility curve shows:
- A impossible output
- B unemployed or wasted resources
- C economic growth
- D full employment
An outward shift of the production possibility curve shows:
- A scarcity ending
- B rising prices
- C economic growth
- D unemployment
Which of the following is a basic economic problem?
- A What to produce
- B Where to sell
- C Which taxes to pay
- D How to advertise
An economy in which the government owns the resources and makes the decisions is called:
- A a free economy
- B a mixed economy
- C a market economy
- D a planned economy
The study of the whole economy, such as national income and inflation, is:
- A macroeconomics
- B statistics
- C accounting
- D microeconomics
Which statement is a positive statement?
- A Petrol prices rose by 5 % last month.
- B The government ought to lower taxes.
- C Wages are unfairly low.
- D Petrol prices should be lower.
A farmer uses land to grow wheat instead of rice. The rice that could have been grown is the:
- A profit
- B wage
- C rent
- D opportunity cost

Answer key

1. D, 2. D, 3. C, 4. B, 5. C, 6. B, 7. C, 8. A, 9. D, 10. A, 11. A, 12. D

Scarcity is the shortage of resources in relation to unlimited wants.
Opportunity cost is the value of the best alternative that is given up.
The factors of production are land, labour, capital and enterprise. Money is not a factor in this sense.
Labour earns wages. Land earns rent, capital earns interest and enterprise earns profit.
Rent is the payment for the use of land.
Inside the curve the economy is producing less than it could with its resources.
More resources or better technology allow more output of both goods.
Every society must decide what, how and for whom to produce.
In a planned or command economy the government decides what, how and for whom to produce.
Macroeconomics looks at the economy as a whole.
A positive statement can be checked against facts. The others contain opinions.
The rice is the next best alternative given up, so it is the opportunity cost.