The Basic Economic Problem : Scarcity And Choice

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| By Vajrakant
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Vajrakant
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Quizzes Created: 1 | Total Attempts: 2,466
| Attempts: 2,466
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  • 1/5 Questions

    In a mixed economy, resources are used as a result of

    • The decisions of consumers only.
    • The decisions of firms only.
    • The decisions of consumers and firms.
    • The decisions of consumers, firms and government.
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About This Quiz

This quiz addresses the basic economic problem of scarcity and choice, exploring factors of production, economic systems, and opportunity costs through practical questions.

The Basic Economic Problem : Scarcity And Choice - Quiz

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  • 2. 

    Which of the following is a factor of production?

    • The payment of interest on a bank loan

    • The profit declared by a company in its annual report

    • The skill of the managers of a business

    • The taxes paid to the government

    Correct Answer
    A. The skill of the managers of a business
    Explanation
    The skill of the managers of a business is considered a factor of production because it contributes to the production process and the overall success of the business. Managers play a crucial role in organizing and coordinating resources, making decisions, and ensuring efficient operations. Their skills and expertise directly impact the productivity and profitability of the business. Therefore, the skill of the managers can be categorized as a factor of production alongside other traditional factors such as land, labor, and capital.

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  • 3. 

    A farmer decides to use a more fertile field. As a result he is able to produce the same output as before but with fewer workers and less equipment.This is a substitution in which

    • Capital replaces labour and land.

    • Labour replaces capital and land.

    • Land replaces capital and enterprise.

    • Land replaces capital and labour.

    Correct Answer
    A. Land replaces capital and labour.
    Explanation
    In this scenario, the farmer decides to use a more fertile field, which implies that the land is replacing the capital and labor. By utilizing a more fertile field, the farmer is able to maintain the same level of output as before but with fewer workers and less equipment. This indicates that the land is substituting for both the capital (equipment) and labor (workers) that were previously required.

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  • 4. 

    What can happen in a planned economy that does not happen in a market economy?

    • The allocation of resources can take account of the total effects on society.

    • There can be full employment of factors of production.

    • There can be inflation.

    • There can be international trade.

    Correct Answer
    A. The allocation of resources can take account of the total effects on society.
    Explanation
    In a planned economy, the allocation of resources can take into consideration the overall impact on society. This means that decisions regarding resource allocation are made with the goal of maximizing societal welfare and addressing social needs. In contrast, in a market economy, resource allocation is driven by individual choices and profit motives, which may not always align with the best interests of society as a whole. Therefore, the ability to consider the total effects on society is a unique characteristic of a planned economy.

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  • 5. 

    The table shows the various combinations of food and clothing which a village can produce using all its resources.    food units                                  clothing units          0                                                   500        100                                                400        200                                                250        300                                                 50        400                                                  0 What is the opportunity cost to the village of increasing the production of food from 200 to 300 units?

    • 50 units of clothing

    • 100 units of clothing

    • 200 units of clothing

    • 250 units of clothing

    Correct Answer
    A. 200 units of clothing
    Explanation
    The opportunity cost of increasing the production of food from 200 to 300 units is 200 units of clothing. This means that in order to produce an additional 100 units of food, the village has to give up producing 200 units of clothing.

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  • Current Version
  • Mar 22, 2022
    Quiz Edited by
    ProProfs Editorial Team
  • Jul 23, 2009
    Quiz Created by
    Vajrakant
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