Timed Test

Question 1

Ceteris Paribus

Answer 1

All other influencing factors are held constant

Question 2

What 3 questions does the economic problem try to answer?

Answer 2

What to produce
For whom to produce
How to produce

Question 3

Rationing function

Answer 3

Increased demand or reduced supply leads to a price rise.

Question 4

Signalling function

Answer 4

Changing prices give a signal to leave or enter a market

Question 5

Incentive function

Answer 5

Consumer or producer is motivated to a course of action

Question 6

Factors of production

Answer 6

Land
Labour
Capital
Enterprise

Question 7

Ways of rationing scarce resources

Answer 7

Market price
Consumer income
Assessment of need

Question 8

Capital goods

Answer 8

Goods used to make consumer goods. Eg- technology

Question 9

Consumer durables

Answer 9

Products used up in consumption
Eg drinking coffeee

Question 10

Opportunity cost

Answer 10

The next best alternative foregone

Question 11

Positive statements

Answer 11

Factually based and not influenced by opinion

Question 12

Normative statements

Answer 12

Comments influenced by opinion

Question 13

Value judgement

Answer 13

Statement put forward by individual that can’t be verified factually

Question 14

Outward shift in PPF

Answer 14

Improvement in economic efficiency

Question 15

Inward shift in PPE

Answer 15

Economy using resources inefficiently