MULTIPLE CHOICE QUESTIONS

1. Which is the most accurate definition of the study of economics?

[1] Distributing surplus goods to those in need.

[2] Dealing with affluence in a morally bankrupt world.

[3] Using scarce resources to satisfy unlimited human wants.

[4] Reducing human wants to eliminate the problem of scarcity.

2. Computer software represents

[1] labour.

[2] land.

[3] capital.

[4] entrepreneurship.

3. Suppose you have graduated with a degree in accounting and are offered a job with an accounting firm. But you are also considering joining a R&B band and abandoning your promising career in accounting. The opportunity cost of aiming at stardom would include all of the following except

[1] the cost of acquiring a whole new wardrobe made entirely of leather.

[2] the thousands of rands spent on useless tuition payments.

[3] the lucrative salary you could be making as an accountant.

[4] interest on the loan you take out to purchase a million-watt amplifier.

4. Tito, a Limpopo farmer, has 1000 hectares of land. He currently plants 500 hectares maize and 500 hectares sorghum. He also farms with pigs and he feeds the pigs with the maize he produces. A research scientist at the Agricultural Research Council (ARC) discovers a new way to make ethanol from maize which makes it much cheaper to produce ethanol, increasing the demand for maize. How would this influence the opportunity cost of Tito?

[1] The opportunity cost of growing sorghum would rise.

[2] The opportunity cost of growing maize would rise.

[3] The opportunity cost of feeding pigs would decrease.

[4]. It would have no bearing on the farmer's opportunity cost because he feeds the maize to the pigs.

5. Which of the following is a positive statement?

[1] Fighting inflation should be the most important priority of the South African Reserve Bank.

[2] Reducing unemployment levels is the most important priority of the South African Reserve Bank.

[3] The current annual rate of inflation is 4.6 percent.

[4] Economic growth is desirable since it increases employment opportunities.

6. Which of the following statements about economic theories is correct?

[1] They cannot be tested because we cannot do economic "experiments."

[2] They must apply to all countries equally to be true.

[3] They attempt to explain economic behaviour.

[4] They are unrealistic because of the assumptions they contain.

7. A microeconomist might be concerned with

[1] savings by the household sector.

[2] total output of the South African economy.

[3] the effect of oil prices on motor vehicle sales.

[4] the South African unemployment rate.

8. Which of the following are considered three major types of economic systems?

[1] traditional, command and market

[2] monopoly capital, command and market

[3] socialism, communism and command

[4] traditional, market and monopoly capital

9. A mixed economy is defined by economists to include

[1] both labour and capital in the production process.

[2] both agriculture and services.

[3] both the employed and the unemployed.

[4] both elements of a command economy and of a market economy

10. In the diagram of the production possibilities curve, scarcity is indicated by

[1] the negative slope of the curve.

[2] the concave to the origin shape of the curve.

[3] the unattainable points outside the curve.

[4] the area under the curve.