1. The best definition of economics is

A.how choices are made under conditions of scarcity.

B.how money is used.

C.how goods and services are produced.

D.how businesses maximize profits.

2.Which one of the following statements is correct?

A.Wants, needs and are essentially simply different terms that have the same meaning.

B.Wants and needs are essentially the same, but differ from demand.

C.Wants and demand are essentially the same - people only demand things that they want.

D.Demand differs from wants and needs. demand

3.Scarcity is a condition that exists when

A.there is a fixed supply of resources.

B.there is a large demand for a product.

C.resources are not able to meet the entire demand for a product.

D.All of the above.

4.Which of the statements below best illustrates the use of the market process in determining the allocation of scarce resources?

A."Let's make this product because this is what we know how to do best."

B."Although we're currently making a profit on the products we make, we should consider shifting to products where we can earn even more money."

C."Everyone is opening video stores, why don't we?"

D."We can't stop making this product. This product gave our company its start."

5.Which of the following is not considered as a factor of production?

A.money

B.machinery and equipment

C.land

D.unskilled labor

6.Which one of the following statements is incorrect?

A.Choice always involves sacrifice.

B.Choice always involves opportunity cost.

C.Economists measure cost in terms of opportunity cost.

D.Economists consider only explicit monetary costs.

7.Which one of the following statements is false?

A.An item of clothing is a durable consumer good.

B.A vacuum cleaner is a durable consumer good.

C.Petrol is a non-durable consumer good.

D.A pair of shoes is a semi-durable consumer good.

2.Select the group that best represents the basic factors of production.

A.land, labor, capital, entrepreneurshipB. land, labor, money, management skills C. land, natural resources, labor, capital

D. land, labor, capital, technology

3.Problems relating to the allocation of the factors of production and the distribution of income exist: A. in socialist economies only.

B.in capitalist economies only.

C.in market economies only.

D.in all economies.

4.Which one of the following statements is false?

A.Motor vehicles and petrol are complements.

B.Credit cards and cash are substitutes.

C.Honey and jam are complements.

D.A house and furniture are complements.

5.A decrease in the cost of flour used to bake bread, is most like to

A.decrease the demand for bread.

B.increase the supply of bread.

C.decrease the equilibrium quantity of bread traded.

D.decrease the quantity of bread demanded.

12. Opportunity cost is best defined as

A.the amount given up when choosing one activity over all other alternatives.

B.the amount given up when choosing one activity over the next best alternative.

C.the opportunity to earn a profit that is greater than the one currently being made.

D.the amount that is given up when choosing an activity that is not as good as the next best alternative.

13. Which one of the following statements is correct?

A.Invention and innovation are synonyms.

B.Money is the most important factor of production.

C.Goods and services can be produced only by employing factors of production.

D.Entrepreneur is simply another term for manager.

14. Rich economies which produce more goods and services each year:

A.do not have an economic problem.

B.still have an economic problem.

C.do have an economic problem but are solving it.

D.give more money to the government to solve its problems.

15. The fundamental purpose of production is to:

A. earn high profits. B. increase exports.

C.fulfil government plans.

D.meet human wants.

16. Which one of the following statements is false?

A.The determinants of a country's economic growth are an example of a macroeconomic issue.

B.The total production of wine in South Africa is a macroeconomic issue.

C.The determination of the price of maize is a microeconomic issue.

D.Inflation is a macroeconomic issue.

17. Macroeconomics is a branch of economics that studies:

A.the determination of the price of a specific product.

B.the behaviour of individual decision-making units in the economy.

C.decisions by households regarding the most efficient use of resources.

D.the effects and consequences of the aggregate behaviour of all decision-making units.

18. A production possibility frontier shows:

A.the maximum combination of inputs that can be used to produce output in a typical economy.

B.the maximum revenue that can be generated from the sale of output produced by limited resources in an economy.

C.the minimum quantities of commodities that can be produced from limited but fully-employed resources in an economy.

D.the maximum quantities of commodities that can be produced from limited but fully-employed resources in an economy.

19.Which of the following statements is a focus area in Microeconomics?

A. The countrywide demand for accountants. B. A decrease in the net exports of a country.

C.An increase in the number of jobseekers in the economy.

D.A continuous and significant increase in the general prices of a country.

Use the diagram below, which shows production possibilities for beer andtextbooks, to answer this question.

20.The opportunity cost of producing an additional textbook would be greatest at:

A.A.

B.B.

C.C.

D.D.

21. Opportunity cost is best defined as

A.the out-of-pocket money costs incurred when a decision is made.

B.the value of the best alternative sacrificed when a choice is made.

C.the value of all the alternatives given up when a choice is made.

D.the value of time lost when a choice is made.

Table 1 below shows the production of wheat and beer in an imaginary economy.Usethe information in the table to answer Questions 22 and 23.

22. What is the opportunity cost of producing Possibility D?

A.950 tons of wheat.

B.950 tons of wheat and 20000 litres of beer.

C.850 tons of wheat and 4000 litres of beer.

D.1050 tons of wheat and 16000 litres of beer.

23. Which of the following statements are INCORRECT?

1.The opportunity cost of moving from producing possibility B to possibility D is 8000 litres of beverages.

2.If the economy produces 400 tons of wheat and 7000 litres of beer per month, then the economy is being inefficient.

3.The economy is efficient when it produces a combination of 950 tons of wheat and 20000 litres of beer.

4.Scarcity is explained by the reality that the economy cannot produce 100 tons of wheat and 15000 litres of beer.

A.Statements 1 and 4 only

B.Statements 1; 3 and 4 only

C.Statements 2; 3 and 4 only

D.Statements 2 and 4 only

24. An oven bought by a baker to produce bread and muffins is an example of ________ whereas a lecturer employed by DUT to teach economics is an example of ________.

A.consumer goods; entrepreneurship

B.natural resources; labour

C.capital goods; labour

D.entrepreneurship; capital goods

25. Which of the following statements are INCORRECT in terms of economic systems?

1.In a command economy, households determine what goods are produced.

2.Demand and supply determines what is produced in a free market economy.

3.Economic systems seek to answer the what, how and for whom questions.

4.Market forces through the invisible hand determine prices in a command economy.

A.Statements 2 and 3 only.

B.Statements 1 and 4 only.

C.Statements 1; 3 and 4 only.

D.Statements 2; 3 and 4 only.

26. Economics identifies four main factors of production, namely, land, labour, capital, and entrepreneurship. Which of the following is an example of capital as a production factor?

A.Money saved in a fixed account at a local bank.

B.The risk taken by an individual to start and run a business.

C.An industrial oven used by a baker to produce bread.

D.The skills of an IT technician employed in a marketing firm.

27. The axes of the production possibility curve measure

A.quantities of productive inputs.

B.quantities of finished commodities.

C.quantities of raw materials.

D.values of finished commodities.

28.In a command economic system,

A.the "invisible hand" coordinates economic activity.

B.competition makes privately owned firms to produce better products.

C.customs and beliefs govern economic decisions.

D.all resources are owned by the government or state.

29. Which one of the following is not a basic economic system?

A.Monetary system

B.Market system

C.Mixed system

D.Command system

30. One of the advantages of a mixed-economic system is that:

A.firms specialize on the production of needs, while the government provides wants.

B.all resources are owned by everybody, that is, everything is common property.

C.unlike command, mixed economies provide the freedom to own private property.

D.there are high levels of negative externalities.

31. Ceteris paribus, the demand for printed newspapers (normal good) decreases if:

A.the price of printed newspapers increases.

B.the average income of newspaper readers increases.

C.a large number of the population finds online newspapers to be relatively affordable.

D.the supply of printed newspapers increases.

32. In an unregulated economy, which of the following statements are CORRECTregarding a market price above the equilibrium price?

1.Market forces will push the price back to equilibrium.

2.A shortage arises and firms will increase prices to clear the shortage.

3.A surplus arises and firms will reduce prices to clear the surplus.

4.The quantity demanded will be greater than the quantity supplied.

A.Statements 1; 2 and 3 only.

B.Statements 2; 3 and 4 only.

C.Statements 1 and 4 only.

D.Statements 1 and 3 only.

33. The shortage of water in the Western Cape Province drastically affected grape farmers in the Cape Winelands. Ceteris paribus, how will this affect the equilibrium price level and quantity in the market for South African-made wine?

A.Price will increase and quantity will increase.

B.Price will increase and quantity will decrease.

C.Price will decrease and quantity will increase.

D.Price will decrease and quantity will decrease.

34. Table 2 shows the demand and supply of diesel in an imaginary market. Use the information provided in the table to answer Questions 34 to 36. Table 2

Price of diesel (Rand/Litre)

8

10

12

16

Quantity supplied (Litres/week)

40 000

50 000

70 000

90 000

Quantity demanded (Litres/week)

100 000

90 000

70 000

60 000

What is the equilibrium price of diesel in this market?

A.R8.

B.R10. C. R12.

D. R16.

35. What is the quantity of diesel traded when the price is R10 per litre?

A. 90 000 litres. B. 40 000 litres.

C.50 000 litres.

D.140 000 litres.

36. What would happen in this market if the government imposes a minimum price of R16/litre?

A.There will be a demand for 90 000 litres of diesel per week.

B.There will be a shortage of 60 000 litres of diesel per week.

C.There will be a shortage of 30 000 litres of diesel per week.

D.There will be a surplus of 30 000 litres of diesel per week.

37. Which of the following would not be viewed by economists as a factor of production?

A.The chemistry laboratories at Stellenbosch University.

B.A skilled bricklayer.

C.An unskilled labourer.

D.The wages earned by a skilled bricklayer.

38. Use the diagram below to answer the question below.

The diagram depicts a decrease in the demand for pies on a campus. If at the sametime there was a rent increase for food outlets on campus, then in comparisonwith the original equilibrium E₀, there would be:

A.an increase in equilibrium price and quantity.

B.an increase in equilibrium quantity but a decrease in price.

C.a decrease in equilibrium quantity but an increase in price.

D.a decrease in equilibrium quantity but an indeterminate effect on price.

39. Use the diagram below to answer the question below.

The diagram depicts an increase in the demand for wine, following research reportshighlighting the benefits of its consumption to one's health. If at the same time therewas a strike by workers on wine farms, then in comparison with the originalequilibrium E₀, there would be:

A.an increase in equilibrium price and quantity.

B.an increase in equilibrium quantity but a decrease in price.

C.a decrease in equilibrium quantity but an indeterminate effect on price.

D.an increase in equilibrium price but an indeterminate effect on quantity.

40. Agricultural prices:

A.tend to be more stable than other prices.

B.do not respond much to changes in supply.

C.often vary significantly, even if demand remains unchanged.

D.are not influenced by the forces of supply and demand.