These eight questions use invented places and figures. Write your own answer first, then open each explanation.
Use the timed original practice session builder to attempt them against the clock. The lessons are in economic scarcity and choice.
Questions 1 to 4: needs, wants and opportunity cost
Question 1. Label as need or want, with a reason: (a) rice for a family’s dinner, (b) a third pair of sports shoes for someone who owns two.
Answer
(a) Need, because food is required for living. (b) Want, because the person already has footwear and the extra pair is a desire.
Question 2. A bakery owner in a fictional town uses an oven, flour, the baker’s time and her own decisions. Name the four resource types.
Answer
The shop’s ground is land, and the baker’s time is labour.
The oven is capital, and the owner’s decisions and risk-taking are entrepreneurship. Flour is a material input, used together with these.
Question 3. Nisha has RM30 and can buy a book, buy a cinema ticket or save it toward a bicycle. She ranks them as book first, bicycle savings second and cinema third, and she buys the book. State the opportunity cost.
Answer
The opportunity cost is saving toward the bicycle, the next best alternative. The cinema ticket is also given up, but it ranks third.
Question 4. A farmer can earn RM3 800 from maize or RM4 400 from sweet potato on the same plot. He plants sweet potato. What is the opportunity cost and the gain from his choice?
Answer
The opportunity cost is the RM3 800 from maize. The gain from the choice is RM600 more income (4 400 − 3 800 = 600). The gain and the opportunity cost are different figures.
Questions 5 to 8: curves and systems
Question 5. A workshop’s maximum combinations of chairs and tables are: A (0 chairs, 50 tables), B (10, 46), C (20, 38), D (30, 24). Find the opportunity cost of moving from B to C.
Answer
Moving from B to C gives 10 more chairs and gives up 46 − 38 = 8 tables.
Question 6. Does the cost in Question 5 rise as you move along the curve? Give figures.
Answer
Yes. A to B gives up 4 tables (50 − 46), B to C gives up 8, and C to D gives up 14 (38 − 24). Each extra 10 chairs costs more tables, so the opportunity cost rises.
Question 7. Is the combination (20 chairs, 30 tables) attainable? Is it efficient?
Answer
It is attainable, since at 20 chairs the workshop can make up to 38 tables. It is not efficient, because it lies inside the curve and 8 tables’ worth of resources is not used.
Question 8. Pulau Timur has private shops and factories, but the state owns the water supply and sets the price of electricity. Most other prices rise and fall with demand and supply. Classify the system.
Answer
It is a mixed system. Private ownership and market prices are market features, and state ownership of water and a set electricity price are government features. See comparing economic systems using stated features.
If you got some wrong
Questions 1 and 2 link to distinguishing needs, wants and resources. Questions 3 and 4 link to explaining opportunity cost. Questions 5 to 7 link to reading a production possibility curve.
If you want a teacher to read your answers, see online one-to-one Economics tuition.