ECS1501: Economics 1A
Q1 Economics is best described as the study of:
A How governments manage national budgets
B How individuals and societies make choices under scarcity ✓
ANSWER
C The history of financial markets
D Mathematical models of population growth
Q2 The basic economic problem arises because:
A Resources are unlimited but wants are limited
B Resources are limited but wants are unlimited ✓ ANSWER
C Governments fail to distribute goods equally
D Prices are set too high by monopolies
Q3 Opportunity cost is defined as:
A The monetary price paid for a good
B The next best alternative forgone when a choice is made ✓
ANSWER
C The total cost of producing a good
D The tax imposed on consumption
Q4 A production possibility frontier (PPF) illustrates:
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,ECS1501: Economics 1A
A The maximum combinations of two goods an economy can
produce given its resources ✓ ANSWER
B The level of consumer satisfaction for two goods
C The relationship between savings and investment
D The price level and output in an economy
Q5 A point inside the PPF indicates:
A Full and efficient use of resources
B Productive inefficiency ✓ ANSWER
C An unattainable production level
D Technological advancement
Q6 Which of the following is NOT a factor of production?
A Land
B Labour
C Money ✓ ANSWER
D Capital
Q7 The law of increasing opportunity cost states that:
A As more of a good is produced, its price falls
B As more of one good is produced, progressively more of another
good must be given up ✓ ANSWER
C Technology always reduces opportunity cost
D Governments can eliminate scarcity
Q8 Which statement best describes a normative economic
statement?
A 'Unemployment in South Africa is 33%'
B 'An increase in money supply raises the price level'
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,ECS1501: Economics 1A
C 'The government should increase the minimum wage' ✓
ANSWER
D 'GDP grew by 2% last year'
Q9 Ceteris paribus means:
A All things change proportionally
B All other things remaining equal ✓ ANSWER
C The market is in equilibrium
D Prices adjust freely
Q10 Which economic system relies entirely on price signals to
allocate resources?
A Command economy
B Mixed economy
C Traditional economy
D Market economy ✓ ANSWER
Q11 Microeconomics primarily studies:
A National income and employment
B Individual consumers, firms, and markets ✓ ANSWER
C International trade flows
D Government fiscal policy
Q12 The concept of 'trade-offs' arises directly from:
A Government regulation
B Scarcity of resources ✓ ANSWER
C Inflation
D Interest rate changes
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, ECS1501: Economics 1A
Q13 If a country moves along its PPF, this represents:
A Economic growth
B A reallocation of resources between two goods ✓ ANSWER
C An improvement in technology
D An increase in population
Q14 Which of the following is an example of a capital good?
A A loaf of bread
B A factory machine ✓ ANSWER
C A household television
D A government bond
Q15 An outward shift of the PPF represents:
A Productive inefficiency
B A decrease in resources
C Economic growth ✓ ANSWER
D A change in consumer preferences
Q16 Positive economics deals with:
A Value judgements about what should be
B Statements that can be tested against facts ✓ ANSWER
C Government policy recommendations
D Ethical questions about distribution
Q17 The fundamental questions every economy must answer
include all EXCEPT:
A What to produce?
B How to produce?
C Why prices change? ✓ ANSWER
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Q1 Economics is best described as the study of:
A How governments manage national budgets
B How individuals and societies make choices under scarcity ✓
ANSWER
C The history of financial markets
D Mathematical models of population growth
Q2 The basic economic problem arises because:
A Resources are unlimited but wants are limited
B Resources are limited but wants are unlimited ✓ ANSWER
C Governments fail to distribute goods equally
D Prices are set too high by monopolies
Q3 Opportunity cost is defined as:
A The monetary price paid for a good
B The next best alternative forgone when a choice is made ✓
ANSWER
C The total cost of producing a good
D The tax imposed on consumption
Q4 A production possibility frontier (PPF) illustrates:
Page 1 of 47
,ECS1501: Economics 1A
A The maximum combinations of two goods an economy can
produce given its resources ✓ ANSWER
B The level of consumer satisfaction for two goods
C The relationship between savings and investment
D The price level and output in an economy
Q5 A point inside the PPF indicates:
A Full and efficient use of resources
B Productive inefficiency ✓ ANSWER
C An unattainable production level
D Technological advancement
Q6 Which of the following is NOT a factor of production?
A Land
B Labour
C Money ✓ ANSWER
D Capital
Q7 The law of increasing opportunity cost states that:
A As more of a good is produced, its price falls
B As more of one good is produced, progressively more of another
good must be given up ✓ ANSWER
C Technology always reduces opportunity cost
D Governments can eliminate scarcity
Q8 Which statement best describes a normative economic
statement?
A 'Unemployment in South Africa is 33%'
B 'An increase in money supply raises the price level'
Page 2 of 47
,ECS1501: Economics 1A
C 'The government should increase the minimum wage' ✓
ANSWER
D 'GDP grew by 2% last year'
Q9 Ceteris paribus means:
A All things change proportionally
B All other things remaining equal ✓ ANSWER
C The market is in equilibrium
D Prices adjust freely
Q10 Which economic system relies entirely on price signals to
allocate resources?
A Command economy
B Mixed economy
C Traditional economy
D Market economy ✓ ANSWER
Q11 Microeconomics primarily studies:
A National income and employment
B Individual consumers, firms, and markets ✓ ANSWER
C International trade flows
D Government fiscal policy
Q12 The concept of 'trade-offs' arises directly from:
A Government regulation
B Scarcity of resources ✓ ANSWER
C Inflation
D Interest rate changes
Page 3 of 47
, ECS1501: Economics 1A
Q13 If a country moves along its PPF, this represents:
A Economic growth
B A reallocation of resources between two goods ✓ ANSWER
C An improvement in technology
D An increase in population
Q14 Which of the following is an example of a capital good?
A A loaf of bread
B A factory machine ✓ ANSWER
C A household television
D A government bond
Q15 An outward shift of the PPF represents:
A Productive inefficiency
B A decrease in resources
C Economic growth ✓ ANSWER
D A change in consumer preferences
Q16 Positive economics deals with:
A Value judgements about what should be
B Statements that can be tested against facts ✓ ANSWER
C Government policy recommendations
D Ethical questions about distribution
Q17 The fundamental questions every economy must answer
include all EXCEPT:
A What to produce?
B How to produce?
C Why prices change? ✓ ANSWER
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