1 An unemployed worker accepts a job. Which of the following is the opportunity cost of this decision?

A the cost of travel to work B the income from the new job C the leisure time lost D the training in the new job 2 A hospital cannot treat all the people that need treatment. This is an example of A excess supply. B limited wants. C scarcity. D unlimited resources. 3 Economic growth in Russia and China used to be led by the public sector. Now it results more from activities in the private sector. However, both sectors are important. Which term describes the current system in Russia and China? A market B mixed C planned D subsistence 1 Which of the following is an advantage of the market economic system? A It aims for equality of income. B It ensures the provision of defence and law and order. C It gives an incentive to produce. D It reduces pollution and congestion. 2 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? A 50 units of clothing B 100 units of clothing C 200 units of clothing D 250 units of clothing

3 Why did planned economies often experience long queues for consumer goods? A The factors of production were able to move freely. B The distribution of goods was inefficient. C The output decisions were taken to maximise profits. D The needs of consumers determined production. 1 Which action is evidence that a country is a planned economy? A A central bank plans an interest rate change. B A government plans the allocation of all resources. C A local authority plans a new library. D A ministry of finance plans the annual budget. 2 Which statement best explains why drought is an economic problem? A Drought cannot be controlled. B Rainfall is unreliable. C The effects of drought involve the government. D Water is a scarce good. 3 In 2002 the government of Zimbabwe diverted US$18 million, originally intended to support private business, to help feed millions of people threatened by famine. Some of the money was used to import up to 1.8 million tonnes of corn. What was the opportunity cost to Zimbabwe of this decision? A the cost of the extra food B the cost of the 1.8 million tonnes of corn C the effect on private business D the US$18 million

1 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 2 China is changing from a centrally planned economy towards a market economy. How will the influence of consumers and the government change? consumers government A decrease decrease B decrease increase C increase decrease D increase increase 3 A factory working at full capacity is producing tennis racquets and golf clubs. The management decides to produce fewer racquets and more clubs because of an increase in demand for golf clubs. What is the opportunity cost of producing more golf clubs? A the cost of retraining some workers to make golf clubs B the cost of transporting and selling the extra golf clubs produced C the materials bought to make extra golf clubs D the tennis racquets that will not now be produced

1 What is the basic economic problem facing all economies? A inequality of income B insufficient resources C low economic growth D shortages of skilled labour 2 What occurs in a planned economy but not a market economy? A allocation by the government B allocation by the price system C economies of scale D specialisation 3 A government spends $100 m on employing extra teachers instead of extra nurses. What will be the opportunity cost of this? A $100 m B the cost of training extra teachers C the extra nurses D the reduction in unemployment among teachers 4 It was reported in 2002 that South Africa, a mixed economy, would face sharp increases in air and water pollution unless action was taken to develop environmentally friendly policies for its citizens. Why is a mixed economic system thought to be a satisfactory means of achieving environmentally friendly development? A because all development is paid for by the government B because it allows external costs to be considered C because it ensures development at lowest cost D because it is the most productive system

1 Construction companies are building new houses on land previously used for farming. What is the opportunity cost to society of this activity? A improved living conditions B less congestion in city centres C more homes for new homeowners D some farm output 2 If a planned economy became 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 3 A boat owner employs a crew to catch fish to sell on the market. Which factors of production are involved in this activity? A labour, capital and enterprise only B land, labour and capital only C land, labour and enterprise only D land, labour, capital and enterprise

1 A government decides to spend more on defence and, therefore, cannot spend as much on improving the countrys infrastructure. What economic idea is illustrated by this decision? A budget surplus B monetary policy C opportunity cost D specialisation 2 Countries that have changed from command to market economies will expect to find an increase in A choice. B price control. C rationing. D subsidies.

1 $2 bn is invested in developing a countrys natural resources and infrastructure. Which two factors of production does this refer to directly? A capital and labour B capital and land C enterprise and land D labour and land 2 What makes specialisation easier? A the imposition of taxation B the protection of trade C the system of barter D the use of money 3 A free market economy is more likely than a planned economy to encourage development because A equality of income is encouraged. B factors of production would be employed efficiently. C government intervention uses taxes and subsidies. D social costs are taken into consideration. 3 UCLES 2007 2281/01/M/J/07 [Turn over 4 An economy is producing at X. food machines 0 75 100 150 200 X Y What is the opportunity cost of choosing to produce at Y instead of X? A 25 machines B 50 units of food C 75 machines D 150 units of food 5 Each country of Southern Africa has a mixed economy.

Which statement about a mixed economy is correct? A The government employs most primary sector workers. B The government owns all major secondary sector industries. C The government owns the transport network. D The government provides public and merit goods.

1 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 2 The diagram shows the choices for an individual between leisure and earnings. 24 20 16 12 8 4 0 0 20 40 60 80 100 120 earnings $ hours of leisure per day X Y What is the opportunity cost to the individual of the extra earnings when moving from position X to position Y? A $20 B $80 C 4 hours of leisure per day D 8 hours of leisure per day 3 There are more people in developing countries who cannot read or write than in developed countries. What can be concluded from this? A Developed countries will use more labour than capital as it is skilled. B In developing countries, factors of production are not used to their maximum potential. C Less money needs to be spent on education in developed countries than in developing countries. D Production in developing countries is likely to rely more on capital than labour.