IGCSE Economics Paper-1: Specimen Questions with Answers 25 - 26 of 64

Question 25

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Question

MCQ▾

The consistent problem in economics is

Choices

Choice (4)
a.Inefficiency of people to work together
b.How to earn maximum profit
c.Gap between rich and poor
d.To satisfy unlimited wants with limited resources.

Answer

d.

Explanation

  • Economics is defined as “the study of how we choose to use limited resources to obtain the maximum satisfaction of unlimited human wants. ” This definition has four major parts-
    • Study of economics
    • Choice
    • Limited resource
    • Maximum satisfaction
  • In this definition the fundamental problem of economics is highlighted i. e. Scarcity. Do you have everything you want? The answer to this question is No, reason being scarcity. Since the wants of human are unlimited and resources to satisfy them is limited, there is scarcity.
    • Limited Resource Scarcity of goods and services Unlimited Wants.

Therefore, as a society we have to make a trade-off. We have to efficiently allocate resources, as limited resources cannot meet our unlimited wants.

Question 26

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Question

MCQ▾

While making a purchase decision which of the following would a consumer consider more often?

Choices

Choice (4)
a.Factors of production
b.Exports-Imports
c.Opportunity cost of the product
d.Taxes

Answer

c.

Explanation

  • Opportunity cost refers to the cost of the next best alternative. Every time while making an economic decision when we come across mutually exclusive alternative, the cost that we will be subject to is opportunity cost.
  • Opportunity cost helps us to make better economic decisions as the cost and benefits are framed in terms of what is important at that particular period of time. You pay a cost when you choose one alternative over the other. In actual practice, it is not a cost in regular meaning rather it is the benefit of choosing one alternative over the other.
    • For example: If you are given a choice to choose between one piece of apple and one piece of orange. If you choose orange, so, the opportunity cost would be enjoyment of apple. Thus, you pay for orange by sacrificing the enjoyment of consuming an apple.
  • Opportunity cost impacts various economic decision of life including your job, house, and other lifestyle elements. Thus, it is the cost of giving up the next best alternative.

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