Answer the following:
Q1 Economics is the study of
A) the share market and its effect on consumers and businesses
B) money and how it is used by society
C) unlimited wants and limited resources
D) unlimited resources and limited wants
Q2 Which of the following does not illustrate opportunity cost?
A) If I study I must give up my sport and hobbies.
B) If I purchase a new computer I must give up spoiling myself with “goodies”.
C) the more I spend now the more I will be likely to spend in the future.
D) If I spend more on my car the less I will have to spend on other luxuries.
Q3 The opportunity cost of going to university is
A) the money spent at university including all fees
B) the benefit gained from having a university degree
C) dollar value of all alternatives
D) the next best alternative of the money spent
Q4 An economic model indicates that a rise in income will result in consumers purchasing fewer fast food meals, ceteris paribus. “Ceteris paribus” means
A) other relevant factors like consumer incomes must be held constant
B) consumers need for food remains the same regardless of price
C) the theory is widely accepted but cannot be accurately tested
D) food prices must first be adjusted for inflation
Q5 If the price of meat pies increases, “ceteris paribus” (other things being equal), demand for tomato sauce will:
A) not change, only the quantity demanded changes
B) increase because the goods are substitutes
C) decrease because the goods are substitutes
D) decrease because the goods are complements
E) increase because the goods are complements
Q6 Assume that petrol and cars are complementary goods. What would be the effect on the car market of a decrease in the price of petrol, “ceteris paribus”:
A)decrease in the quantity of cars demanded
B)decrease in demand for cars
C)increase in the quantity of cars demanded
D)increase in demand for cars
Q7 On a Production Possibilities Frontier a change from economic inefficiency to economic efficiency is shown by
A) a movement along the frontier
B) a movement from a point within the frontier to a point outside the frontier
C) a movement from a point within the frontier to a point on the frontier
D) a change in the slope of the frontier
Q8 A nation is able to increase its economic growth by
A) reducing the number of skilled migrants into the country
B) adding to its stock of capital
C) reducing its expenditure on research and development when in a budget deficit
D) imposing tariffs and quotas on imported goods
Q9 The demand curve for cinema tickets shifts to the right. This would be caused by
A) a fall in price of cinema tickets
B) an increase in the price of DVD’s
C) a fall in consumer income
D) a rise in price of cinema tickets
Q10 Coca Cola and Pepsi are substitute goods. If the price of Coca Cola increases, we would expect that
A) the demand for Coca Cola would decrease
B) there would be an upward movement along the demand curve for Pepsi
C) the demand curve for Pepsi would shift to the right
D) the demand curve for Pepsi would shift to the left
This summer appears to be another scorcher. Coca Cola and all the major drink companies are banking for record sales of fizzy drinks. During the past decade the government have pressed for healthy eating and drinking habits as unhealthy Australian culture is costing the government an enormous amount of funding for health care. The government is consistently trying to raise awareness of the sugar content of some of the fizzy drinks via multiple advertising. It appears that that this might have had an effect after all. Coca Cola has reported that sales have been slowly dropping over the years for its fizzy drinks and upon closer look there are now many smaller businesses selling healthy drinks all around the major cities such as Boost Juice. Using the concepts of demand and supply (chapter 1, 2, 3) analyze the change in the trend of healthy drinking for fizzy & healthy drinks.
In your working life you will be required to present arguments and explain your decisions. Economics gives you tools to do this. However, many of those with whom you work will have little, if any, understanding of the principles of Economics and their application. To communicate with these people you will have to put your arguments succinctly into language that they understand. This does not mean that your argument is any less rigorous or sophisticated. Rather, it means that you are being asked to communicate important concepts and decisions in a manner that most people can understand. We see this as the most important result of your study of this subject and therefore a passing mark (50% to 64% depending on the quality of your answer) on any question will require that you are able to successfully explain to the lay person (one who has not studied economics) the issues associated with any question. Thus in the first part of an answer to any assessment question in this subject you will be required to summarize, in a non-technical manner, the essence of a correct answer.
Of course, you will need to know and understand the relevant theory and associated diagram(s)/model(s) on which you are basing your answer. Thus in the second part of your answer to any question you will be required to correctly outline the basic theory – including the construction and explanation of the diagram(s)/model(s) associated with it. This ability to theorize will indicate your ability to place the issues raised in the question into an appropriate theoretical/abstract context from which to further examine the economic issues and to draw appropriate conclusions. If you successfully complete both the first and second part of an answer you will be awarded a credit mark (65% to 74% depending on the quality of your answer). The third part of your answer requires you to correctly utilize the diagram(s)/model(s) to illustrate the changes to the diagram(s)/model(s) that the circumstances discussed in the question imply. This will illustrate your ability to manipulate the tools of Economics. Students who successfully complete this part of the question (in addition to the first two parts) will be awarded a distinction mark (75% to 85% depending on the quality of your answer). Finally, in the fourth part of your answer, you must correctly analyse, using the diagram(s)/model(s), the impact of the change on variables and issues of concern, determine if a response is required (by business or government), what that response should be and predict the impact of that response in both the short-run and the long run.