QCM : Year 10 Economics Fundamentals — 59 questions

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Robbins defined economics as the social science studying human behavior in relation to unlimited ends and scarce means with alternative uses. The focus on national wealth belongs to Adam Smith’s definition.

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Scarcity exists because available resources are limited compared with insatiable human wants. This forces individuals and societies to make choices.

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Opportunity cost is the value of the next best alternative forgone. Here, it is the value of the study time sacrificed by working.

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Needs are essential for living, whereas wants are desires that people can live without. Both are treated as ends in economics.

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Economic analysis tools are methods, techniques and instruments used to understand economic problems and support sound decisions and predictions.

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The median is the middle value in an ordered data set. Mean, median and mode are all measures of central tendency, but they identify the center in different ways.

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For ungrouped data, the arithmetic mean is calculated as the sum of the observations divided by the number of observations, \(\bar{X}=\frac{\sum x}{n}\).

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A mixed economy combines the price mechanism with government regulation. This distinguishes it from command and purely capitalist systems as described here.

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Production involves creating goods and services and distributing them to final consumers. It is therefore described as the creation of utility.

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Capital goods are man-made goods used to produce other goods and services. A bakery machine supports further production, unlike the items purchased for direct satisfaction.

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Secondary production processes raw materials into finished products. Extracting oil is primary production, while legal advice and retailing are tertiary activities.

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The four factors of production are land, labor, capital and the entrepreneur. The other choices identify economic participants, rewards or market concepts rather than productive resources.

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Scale of production refers to the size of a firm’s productive capacity or the size of operation it adopts. It is distinct from output, which is the quantity actually produced.

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Internal economies result from a firm’s own expansion and may include lower average cost, greater efficiency, better technology, and stronger bargaining power. The other examples arise from industry or location growth.

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Private enterprises are owned by individuals and primarily pursue profit, while public enterprises are government-owned and primarily provide social services. The distinction concerns ownership and main purpose.

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A sole proprietorship is owned, financed, and managed by one person. That owner seeks profit and has unlimited liability for the business’s obligations.

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A partnership is a profit-making business formed by 2 to 20 persons under a legal agreement called a partnership deed. This distinguishes it from a sole proprietorship and companies.

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In a limited partnership, liability is limited for some partners, while at least one partner has unlimited liability. In a general partnership, all partners share responsibilities, risks, profits, and unlimited liability.

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Demand requires both willingness and ability to buy a commodity at a given price, place, and time. Desire without purchasing ability is not effective demand.

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Ceteris paribus, the law of demand states that a lower price causes a higher quantity demanded, while a higher price causes a lower quantity demanded.

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A change in quantity demanded results from a change in the commodity’s own price and produces movement along the demand curve. Changes caused by other factors shift the curve instead.

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Derived demand is demand for a commodity because another commodity or service is demanded. Buses are demanded because consumers demand transportation services.

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Effective supply is the quantity sellers are both willing and able to offer for sale at a particular price and time. Willingness and ability to buy instead describe demand.

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Ceteris paribus, the law of supply predicts a direct relationship between price and quantity supplied: a higher price leads to a higher quantity supplied.

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A change in the product’s own price causes a change in quantity supplied, represented by movement along the existing supply curve. Other factors cause the entire supply curve to shift.

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Market equilibrium occurs when total quantity demanded equals total quantity supplied. Graphically, it is found where the demand and supply curves intersect.

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Fiscal policy uses government spending and taxation to influence the economy. Monetary policy instead regulates the money supply and interest rates through a central bank.

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Trade policies govern international trade and include tariffs, quotas, and trade agreements. Interest rates, minimum wages, and exchange-rate arrangements belong to other policy areas.

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A production possibility curve shows the maximum combinations of two goods or services that can be produced when resources are fully and efficiently used with given technology.

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Points inside the production possibility curve are feasible but inefficient because resources are not being fully or efficiently used. Points outside the curve are unattainable under current conditions.

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The slope represents opportunity cost because moving along the curve to produce more of one good requires giving up some output of the other good.

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Marginal product is the additional output generated by applying one additional unit of a variable factor while other factors remain fixed.

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Population density measures how many people live within a given unit of land area. It differs from population size, which is the total number of people.

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Population density is calculated by dividing total population by land area: 2,000,000 ÷ 50,000 = 40 people per square kilometre.

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Net migration is the difference between the number of immigrants entering a country and the number of emigrants leaving it.

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A de facto census counts people who are physically present at the time of counting. A de jure census counts permanent residents whether they are present or absent.

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In the labour market, workers provide the supply of labour while employers provide the demand for labour, with wages or salaries exchanged.

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The labour force includes employed people and unemployed people who are willing and able to work and actively seeking employment.

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Labour efficiency refers to producing the greatest possible output while using the least effort, time and resources.

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Excess demand for labour occurs when demand exceeds supply at the current wage, creating upward pressure on wages.

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Agriculture involves cultivating soil, growing crops and raising animals for food, fibre, fuel and other products.

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Subsistence agriculture produces mainly for the farmer’s family and generates little surplus. Commercial or mechanized agriculture produces for sale and uses modern technology and mechanization.

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Soil degradation and water scarcity are among the major problems affecting agriculture, along with climate change, biodiversity loss, price volatility and limited market access.

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Mining is the extraction of minerals, metals, and other valuable resources from the Earth's crust for industrial, economic, or domestic use.

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Exploration involves searching for mineral deposits, whereas extraction is the stage in which minerals are removed from the Earth.

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Inadequate infrastructure is one of the major problems affecting Nigeria's mining industry, alongside illegal mining, environmental degradation, obsolete technology, and other challenges.

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Direct distribution moves goods from the producer straight to the consumer without an intermediary. The other channels are indirect because they include wholesalers, retailers, agents, or brokers.

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A trade union is an organized group of workers formed to promote and protect interests such as better wages, improved working conditions, and job security.

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A go-slow deliberately reduces the pace of work, while a strike involves stopping work. Both can be used as trade-union tools, but they are not the same action.

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Barter is the direct exchange of goods and services without using money as a medium of exchange.

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Barter has difficulty with deferred payment because goods may change in value, deteriorate, or be unavailable when a future obligation must be settled.

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Unemployment occurs when people who are willing and able to work at prevailing wage rates cannot find paid employment. Choosing not to work despite available jobs describes voluntary unemployment.

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Structural unemployment is one of the recognized types of unemployment, along with frictional, cyclical, seasonal, technological, voluntary, residual, casual unemployment, and underemployment.

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An economic recession reduces overall economic activity and demand, causing businesses to cut production and employment. Recession is therefore a recognized cause of unemployment.

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Widespread unemployment causes loss of income and reduced purchasing power, and can also lower national productivity and GDP. The other options describe outcomes contrary to the listed effects.

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An economic system organizes and allocates resources, goods, and services while determining how they are produced, distributed, and consumed. A single market concerns only a particular exchange environment.

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Capitalism relies on private ownership of productive resources, profit maximization, competition, and supply-and-demand market forces, with relatively limited government intervention. Government ownership and centralized planning are more characteristic of socialism.

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Socialism is characterized by government ownership and control of major factors of production and distribution, centralized planning, and an emphasis on equitable distribution. A mixed system combines public and private sectors rather than relying primarily on government control.

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A mixed economic system combines private and public sectors, regulates markets, and provides welfare programs while balancing profit with social equity. The other choices describe more purely capitalist, socialist, or disorganized arrangements.