ABBE1013 MICROECONOMICS

Tutorial 1

Section A: Multiple Choice Questions

1.

Economics is defined as ______________.

A.
science of efficiency
C.
B.
science of scarcity
D.

study of markets
study of human activity

2.

The economic problem of scarcity refers to ______________.

A. limited wants and unlimited resources
B. unlimited wants and unlimited resources
C. limited resources and unlimited wants
D. limited resources and limited wants

3.

All the following are basic economic questions EXCEPT ______________.

A.
how to produce?
C.
where to produce?
B.
what to produce?
D.
for whom to produce?

4.

Which of the following is a positive economic statement?

A. I hope unemployment comes down soon.
B. I think everyone should sacrifice to reduce the deficit.
C. If taxes are reduced, unemployment would drop.
D. Government control of rent is injustice.

5.

Normative economics is ______________.

A.
usually incorrect
C.
B.
a statement of fact
D.

the analysis of what is

the study of what ought to be

6.

Microeconomics is the branch of economics that deals with human behaviour and
choices as they relate to ______________.
A. what is
B. what should be
C. relatively small units in the economy
D. aggregates or the entire economy

7.

A production possibilities curve illustrates ______________.

A.
scarcity
C.
consumer preferences
B.
market prices
D.
the distribution of income

8.

In a socialist economy, the economic problem of deciding what goods to produce is

solved by the ______________.
A.
government
C.
market prices
B.
the distribution of income
D.
consumer preferences

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ABBE1013 MICROECONOMICS
9.

Tutorial 1

Macroeconomics is the study of economics from the viewpoint of ______________.

A.
individual firms
C.
government units
B.
the individual
D.
the entire economy

10.
The production possibility frontier (PPF) bows outward because
______________.
A. resources are varied
B. opportunity costs decrease as the production of goods increases
C. opportunity costs increase as the production of goods increases
D. opportunity costs remain constant as the production of goods increases
11.

the

The Production Possibility Frontier (PPF) curve DOES NOT show ______________.
A.
choice
C.
scarcity
B.
freedom
D.
economic growth

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ABBE1013 MICROECONOMICS

Tutorial 1

Section B: Essay Questions

1.

(a)

With examples, describe the FOUR (4) resources used to produce goods and
services.
(12
marks)

(b)

Explain the following concepts:

(i)

Scarcity;

(3

(ii)

Opportunity cost;

(3

(iii)

Productive efficiency.

(3

marks)
marks)
marks)
[Source: Mar/Apr 2012/13]
(c)

Describe the TWO (2) types of production possibility frontier (PPF).

(6 marks)
[Source: Aug 2013/14]

2.

(a)

Distinguish between:
(i)

Socialism and capitalism.

(4

(ii)

Microeconomics and Macroeconomics.

(4

(iii)

Positive economics and normative economics.

(4

marks)
marks)
marks)
(b)

3.
(a)
marks)
(b)

Using a production possibility curve (PPF), distinguish between productive

efficiency and productive inefficiency.
(8
marks)
[Source: Jan/Feb 2011/12 & Aug 2011/12]
Define production possibility frontier (PPF).

(4

Define the term an advance in technology. Using a diagram, describe the

effect of an advance in technology on the production possibility frontier.
(6 marks)
[Source: Aug 2011/12 & Aug 2013/14]

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