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IGCSEEconomicsCambridge (CIE)Exam Questions1. The Basic Economic Problem1.1 The Nature of the Economic Problem

The Nature of the Economic Problem (Cambridge (CIE) IGCSE Economics)

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1.1 The Nature of the Economic Problem

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1.1 The Nature of the Economic Problem

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11 mark

What causes economic agents to make choices?

  • limited needs and wants

  • the existence of finite resources

  • the existence of free goods

  • the market mechanism

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21 mark

What is the basic economic problem?

  • excess supply of goods and services

  • lack of profits

  • recession

  • scarcity of resources

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31 mark

What is the cause of the economic problem facing all countries?

  • climate change and global warming

  • significant quantities of unemployed resources

  • uneven distribution of income and wealth

  • unlimited wants in relation to limited resources

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41 mark

What is the basic problem facing all economies?

  • how to achieve a stable balance of payments

  • how to maximise tax revenues

  • how to reach full employment

  • how to use scarce resources

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51 mark

What is the basic economic problem?

  • The scarcity of resources relative to human wants

  • The unlimited supply of resources to fulfil human needs

  • The efficient allocation of resources by the government

  • The equal distribution of wealth among all individuals

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11 mark

Why do consumers have to make choices when spending their income?

  • Advertising encourages consumer spending.

  • Consumers have unlimited incomes.

  • Consumer wants cannot all be satisfied with their income.

  • Not all products will be attractive to consumers.

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21 mark

What identifies a finite resource?

  • The resource does not renew itself.

  • The supply of the resource is greater than demand.

  • There is no opportunity cost for the resource.

  • There is unlimited supply of the resource.

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31 mark

What do economies aim to achieve in tackling the economic problem of scarcity?

  • equal balance between public and private sectors

  • equal reward for equal effort

  • increased competition in the use of resources

  • optimum allocation of finite resources

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41 mark

Hospital services are provided by the government and paid for through taxation. People cannot always get the treatment they require because of long waiting lists.

Of what is this an example?

  • external cost

  • market system

  • perfectly inelastic supply

  • scarcity

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51 mark

What is the primary reason for the existence of the basic economic problem of scarcity?

  • Inefficient production techniques used by firms

  • Rapidly increasing population and human wants

  • Inadequate government intervention in the economy

  • Overconsumption of goods and services by consumers

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11 mark

Which of the following is not a consequence of the basic economic problem of scarcity?

  • The need for individuals and societies to make choices and trade-offs

  • The potential for economic growth and technological advancements

  • The emergence of opportunity cost in decision making

  • The ability to satisfy all human wants and needs without constraints

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21 mark

Why does the basic economic problem of scarcity persist even in prosperous societies?

  • These societies have an overabundance of resources to meet all human wants

  • People in prosperous societies tend to have fewer material desires

  • Technological advancements have eliminated resource limitations

  • The unlimited nature of human wants outstrips available resources

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31 mark

What is the relationship between scarcity and competition in the marketplace?

  • Scarcity reduces competition, leading to lower prices

  • Scarcity intensifies competition, driving up prices

  • Scarcity and competition are unrelated concepts in economics

  • Scarcity and competition both result from excessive consumer demand

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41 mark

Which of the following economic systems is most directly affected by the basic economic problem of scarcity?

  • Market economy

  • Traditional economy

  • Command economy

  • Mixed economy

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51 mark

Which of the following best explains how the basic economic problem of scarcity influences the production of goods and services?

  • Scarcity encourages businesses to produce only luxury goods to maximise profits

  • Scarcity necessitates the efficient allocation of resources to meet diverse consumer needs

  • Scarcity reduces the need for specialized labor as fewer goods can be produced

  • Scarcity ensures that businesses produce goods only for the wealthiest segment of society

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