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Dr. Juniours T. Marire , 18:46:54, 03/07/2019RHODES UNIVERSITY
DEPARTMENT OF ECONOMICS AND ECONOMIC HISTORY
TEST 1 12TH MARCH 2019
ECONOMICS 101
Examiners: Professor G.C.G. Fraser Marks: 50
Dr J.T Marire Time: 90 minutes
Ms. S. Phakathi
Ms. T. Friderichs
___________________________________________________________________________
1. All questions are to be answered.
2. Please indicate on the answer booklet and MCQ sheet your name, your tutor’s name
and tutorial period and venue.
3. Write clearly and all diagrams must be carefully labelled.
4. Task Number is 03
Page 1 of 8
, MULTIPLE CHOICE QUESTIONS [40 marks]
Answer by SHADING the chosen option on the MCQ sheet, which must be handed in
with your answer script. There is no negative marking.
Choose the one alternative that best completes the statement or answers the question.
1.1.The key economic concept that serves as the basis for the study of economics is:
a. inflation. Key: To economise means to use limited resources to satisfy unlimited wants and
b. unemployment. needs. D
c. money.
d. scarcity.
1.2.A recurring theme in economics is:
a. unlimited resources and unlimited economic wants.
b. people can increase resources by limiting their economic wants.
c. people have limited economic wants and limited resources.
d. people have unlimited economic wants, but limited resources. BY definition, D is is correct i.e. scarcity.
1.3.As a consequence of the condition of scarcity:
a. there is never enough of anything. Concept: Scarcity leads to choices since we
can't satisfy all our wants, hence we must
b. production has to be planned by government. prioritize and to prioritize implies to choose in
c. things which are plentiful have relatively high prices. order of importance/value. D
d. individuals have to make choices from among alternatives.
1.4.Which statement would best complete a short definition of economics? "Economics is the
study of:
a. the production and distribution of capital goods." Concept: the definition must include the idea of
b. how the economy generates incomes for people." scarcity, and the idea that we make the best use
c. the optimal use of scarce productive resources." (optimise) of the limited resources. C
d. how the stock market creates wealth for investors."
1.5.What is the economic meaning of the expression that "there is no such thing as a free
lunch"?
a. It refers to "free-riders," who do not pay for the cost of a product, but who receive the
benefit from it.
b. It means that economic freedom is limited by the amount of income available to the
consumer.
c. It means that there is an opportunity cost when resources are used to provide "free"
Concept: Scarcity implies that any resource we use in something else, will cost us some
products.
opportunity that we have to forego elsewhere. Hence C.
d. It indicates that products only have value because people are willing to pay for them.
1.6.Opportunity cost is best defined as:
a. marginal cost minus marginal benefit.
b. the time spent on an economic activity. By definition C because it is about the second best opportunity
c. the value of the best foregone alternative. we sacrifice to do what we are doing now.
d. the money cost of an economic decision.
Page 2 of 8
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