IGCSE Economics Paper-1: Specimen Questions with Answers 23 - 24 of 64

Question 23

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Question

MCQ▾

________ factor of production function is to make decision and risk taking

Choices

Choice (4)

a.

Land

b.

Capital

c.

Labor

d.

Entrepreneur

Answer

d.

Explanation

Factor of production

Factor of Production

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  • Factors of production are the inputs needed to produce goods and services. Entrepreneur is one of the four factors of production. Entrepreneur as a factor of production combines all the other factors- Land, Labor, and Capital to earn profit.

  • Entrepreneur is the innovator of the business who uses his decision-making and risk taking skills to develop new ways to produce goods and services efficiently.

Example - Mark Zuckerberg who took the risk for the success or failure of his social media platform and to realize the market for his networking site.

Question 24

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Question

MCQ▾

What does point, “B “refers in the production possibility curve graph?

“B “refers in the production possibility curve graph

“B “Refers in the Production Possibility Curve Graph

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Choices

Choice (4)

a.

Production is greater than country’s potential

b.

Production is less than country’s potential

c.

Production is at point with country’s maximum potential

d.

Production is less than country’s maximum potential.

Answer

c.

Explanation

  • In the given graph, point “A” refers to the point with company’s maximum potential as every point on PPC shows the maximum output of two goods, which can be produced by efficiently allocating the resources between the two products.

  • A Production Possibility Curve (PPC) is also referred to as production possible frontier or boundary line. A PPC indicates the combination of any two goods an economy can produce if all its resources are employed and efficiently utilized.

Production is at point with country’s maximum potential

Production is at Point with Country’s Maximum Potential

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  • This graph shows how an economy will make choice in producing armaments and welfare services if all its resources are fully employed. Each point on the curve depicts how much of each good can be produced when resources are shifted from making more of one good and less of the other.

  • It measures the trade-off between producing one good over the other.

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