IGCSE Economics Paper-1: Specimen Questions with Answers 19 - 20 of 64

Question 19

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Question

MCQ▾

A rational person acts only when:

Choices

Choice (4)
a.Action is ethical
b.Marginal costs exceeds marginal benefits
c.Marginal benefits that exceed marginal costs
d.An act makes money for the consumer.

Answer

c.

Explanation

  • A rational person is person who takes decision based on critical thinking rather than on emotion. Choices are made by the individual based on the idea from where he will derive maximum amount of satisfaction from the consumption of a commodity. Tendency of a consumer is to purchase the commodity at a minimum cost and the consumer makes when the satisfaction exceeds the amount paid a rational choice.
  • Thus, a rational person acts when the Marginal benefits exceed marginal cost i. e. the cost incurred on purchase of additional unit of a commodity.

Question 20

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Question

MCQ▾

What are the two factors that contribute to the basic economic problem of scarcity?

Choices

Choice (4)
a.Opportunity cost and limited resource
b.Limited resources and unlimited wants
c.Unlimited wants and unlimited resources
d.Limited resources and wants

Answer

b.

Explanation

  • Scarcity in economics is referred to as the basic economic problem, which means limited resources. Because of these limited resources, consumers have to make a rational decision while making purchases.
  • They have to allocate the resources in the most efficient manner. Example of scarce resource can be coal which is used generate energy but is available in limited amount in the economy. Whereas, on the other hand human wants are unlimited as soon as basic need is satisfied a higher level of want arises.
  • Unlimited wantslimited resource is one fundamental half of the economic problem and is the other half of the problem of economics since the beginning of time.

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