Tutorial 1 Question

UNIVERSITI KUALA LUMPUR BUSINESS SCHOOL
SEMESTER 1 / YEAR 2021
TUTORIAL 1
CHAPTER 1
SUBJECT CODE : EIB 10203

SUBJECT TITLE : PRINCIPLES OF ECONOMICS
LEVEL : BACHELOR DEGREE
LECTURER : DR YASOTHA NAIR
Student’s Name : ATHIRAH BINTI MOHD AZHAN
Student’s ID : 62211121026
SECTION A
Instruction: Answer ALL questions in this section. Each question carries 1 mark. This
section carries a total of 20 marks. Multiple Choice Questions- Please circle/ highlight
the correct answer.
1). Which of the following is the best definition of economics?

A) the study of how individuals and societies choose to use the scarce resources that
nature and previous generations have provided
B) the study of how consumers spend their income
C) the study of how business firms decide what inputs to hire and what outputs to
produce
D) the study of how the federal government allocates tax dollars
2). Economics is best defined as the study of how people, businesses, governments, and
societies
A) make choices to cope with scarcity.
B) attain wealth.
C) choose abundance over scarcity.
D) use their infinite resources.
3). Studying how the management of Hewlett Packard decides how many computers to
produce and the price to charge for its computers would be considered
A) descriptive economics.
B) empirical economics.
C) microeconomics.
D) macroeconomics.
4) When an economist talks of scarcity, the economist is referring to the

A) ability of society to employ all of its resources.
B) ability of society to consume all that it produces.
C) inability of society to satisfy all human wants because of limited resources.
D) ability of society to continually make technological breakthroughs and increase
production.
5) Scarcity exists because

A) society and people are greedy and wasteful.
B) our wants exceed the resources available to satisfy them.
C) of the inefficient choices we make.
D) poor people need more food and other goods.
6) As an economic concept, scarcity applies to

A) both money and time.
B) money but not time.
C) time but not money.
D) neither time nor money.
7) The problem of "scarcity" applies
A) only in industrially developed countries because resources are scarce in these
countries.
B) only in underdeveloped countries because there are few productive resources in these
countries.
C) only in economic systems that are just beginning to develop because specialized
resources are scarce.
D) to all economic systems, regardless of their level of development.
8) People must make choices because

A) most people enjoy shopping.
B) of scarcity.
C) there are many goods available.
D) None of the above answers is correct.
9) Which of the following is NOT a factor of production?

A) mineral resources
B) a university professor
C) an apartment building
D) 100 shares of Microsoft stock
10) The study of economics

A) focuses mainly on individual consumers.
B) arises from the fact that our wants exceed available resources.
C) recognizes that scarcity does not affect rich nations.
D) deals mainly with microeconomics.
11) In part, microeconomics is concerned with the study of

A) unemployment and economic growth.
B) the Federal Reserve's policies.
C) the effect government regulation has on the price of a product.
D) national output of goods and services.
12) The branch of economics that deals with the analysis of the whole economy is called
A) macroeconomics.
B) marginal analysis.
C) microeconomics.
D) metroanalysis.
13) Under which economic system would factors of production most likely be owned by a
government?
A) market economy
B) command economy
C) traditional economy
D) mixed economy
14) In a command economy, how are the prices of goods and services determined?
A) market forces of supply and demand
B) the central government
C) independent agencies and independent regulators
D) business owners
15) Which statement best describes the difference between a market economy and a
traditional economy?
A) in a market economy, decisions are based on custom
B) in a traditional economy, decisions are based solely on supply and demand
C) in a traditional economy, decisions are based on habit and custom
D) in a market economy, decisions are based on habit
16) All economic questions are about

A) how to make money.
B) what to produce.
C) how to cope with scarcity.
D) how to satisfy all our wants.
17) Economics is best defined as the study of how people, businesses, governments, and
societies
A) choose abundance over scarcity.
B) make choices to cope with scarcity.
C) use their infinite resources.
D) attain wealth.
18) Economists point out that scarcity confronts

A) neither the poor nor the rich.
B) the poor but not the rich.
C) the rich but not the poor.
D) both the poor and the rich.
19) The United States economy can best be described as which type of economy?
A) market economy
B) command economy
C) traditional economy
D) mixed economy
20) The term used to emphasize that making choices in the face of scarcity involves a cost
is
A) utility cost.
B) opportunity cost.
C) accounting cost.
D) substitution cost.
[Total: 20 marks]
SECTION B
Instruction: Answer ALL the questions in this section. This section carries a total of 25
marks.
1) Explain how the three basic economic questions would be answered in a free market
economy and in a centrally-planned economy. (10 marks)
The three basic economic were what should we produce? How should we produce
it? and for whom should we produce it?. A free market economy is a self
regulating economic system powered by individuals acting in their own self-
interest. In free market economy, the factors of production are privately owned
and individuals and is also allocating resources and goods through markets where
prices are generated.
Next in centrally planned economy also known as command economy. The central
government controls the factors of production and answers the three basic
economic questions for all of society. Two systems often mentioned when centrally
planned economies are discussed are socialism and communism.
[Total:10 marks]
Corn Cloth
2) (pounds (yards
per per
month) month)
6 and 0
4 and 1.0
2 and 2.0
0 and 3.0
Joe’s production possibilities are given in the table to the right. What are Joe’s opportunity
costs of producing corn and cloth at each output in the table? (5 marks)
Opportunity cost of 1 cloth is 4 pounds of corn and the opportunity cost of 2 corn
is 2 yards of cloth. When Joe produce 4 pounds of corn in a month, it produces less 1
yards of cloth. The opportunity cost of 6 yards of cloth is 0 pounds of corn.
3) The figure above represents the production possibilities frontier for a country.
a) The nation is currently producing at point B and wants to move to point C. What is
the opportunity cost of the move? (5 marks)
In moving point B to point C, the quantity of the cameras increases by 1 million.
The quantity of automobiles decreases by 1 million. The opportunity cost of the second 1
million cameras is I million of automobiles.
b) The nation is currently producing at point B and wants to move to point A. What is
the opportunity cost of the move? (5 marks)
In moving point B to point A, the quantity of automobile increase by 1 milion.

The quantity of camera decreases by 3 milion. The opportunity cost of the first 1
million automobile is 3 million cameras.
__________000__________

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UNIVERSITI KUALA LUMPUR BUSINESS SCHOOL

SEMESTER 1 / YEAR 2021

SUBJECT CODE : EIB 10203

Student’s Name : ATHIRAH BINTI MOHD AZHAN

1). Which of the following is the best definition of economics?

4) When an economist talks of scarcity, the economist is referring to the

5) Scarcity exists because

6) As an economic concept, scarcity applies to

8) People must make choices because

9) Which of the following is NOT a factor of production?

10) The study of economics

11) In part, microeconomics is concerned with the study of

16) All economic questions are about

18) Economists point out that scarcity confronts

In moving point B to point A, the quantity of automobile increase by 1 milion.

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