2. In a market economy, what does the entrepreneur decide?

A. the combination of resources used

B. the demand for the product

C. the equilibrium price of the product

D. the level of profits

3. A government spends $100m on employing extra teachers instead of extra nurses. What will be the opportunity cost of this?

A. $100m

B. the cost of training extra teachers

C. the extra nurses

D. the reduction in unemployment among teachers

4. What is the basic economic problem facing all societies?

A. how to achieve price stability

B. how to keep employment levels high

C. the extent to which incomes should be redistributed

D. what will be produced, how and for whom?

5. A firm decides to stop manufacturing ovens and to produce washing machines instead. What is the opportunity cost to the firm?

A. the additional washing machines produced

B. the cost of producing ovens

C. the cost of producing washing machines

D. the loss of the production of ovens

6. How is the immediate effect of an increase in unemployment illustrated on a production possibility curve diagram?

A. a movement of the production point closer to the curve

B. a movement of the production point further inside the curve

C. a shift of the production possibility curve inwards

D. a shift of the production possibility curve outwards

7. A firm can produce a number of possible combinations of two goods. It can either produce 500 of good X and 300 of good Y, or 600 X and 250 Y. What is the opportunity cost of producing an extra 100 of good X?

A. 100 Y

B. 250 Y

C. 50 Y

D. The extra wages paid to the workers

8. What is not one of the basic questions in Economics?

A. for whom will goods be produced?

B. how will goods be produced?

C. how will goods be transported?

D. what goods will be produced?

9. If a planned economy becomes a mixed economy, which industry would be most likely to remain under government control?

A. agriculture

B. coal mining

C. defence

D. motor car production

10. What is found in a market economy but not a command economy?

A. division of labour

B. economies of scale

C. money as a store of value

D. the profit motive