This set mixes the five skills from scarcity, choice and opportunity cost: finding opportunity cost, effective demand, classifying resources, reading a PPC and interpreting an outward shift. Questions run from easier to harder. Try each on paper first, then open the answer.
All names and economies are fictional. Keep a note of each error in the mistake log and retest queue so you can retest weak points later.
Easier questions
1. Zaid has a free Saturday. His options: a paid shift worth RM60, tutoring a friend worth RM45, or volunteering worth RM30 to him. He chooses the shift. What is his opportunity cost?
Show answer
Rank the options: shift RM60, tutoring RM45, volunteering RM30. The next most valued option not chosen is tutoring. The opportunity cost is tutoring, worth RM45.
2. True or false: “Scarcity only exists in poor countries.” Explain.
Show answer
False. Scarcity means limited resources compared with unlimited wants. Every economy, rich or poor, faces it, so every economy must make choices.
3. Nina wants a pair of shoes priced at RM240. She has RM90. A different pair costs RM85 and she is willing to pay that. Which price gives effective demand?
Show answer
At RM240 she cannot pay, so it is only a want. At RM85 she is willing and able (RM90 is enough). Effective demand exists at RM85, not at RM240.
4. Classify each as land, labour, capital or enterprise: a tractor, a rubber plantation worker, a copper mine, a person who sets up a new bakery and risks her savings.
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Tractor: capital. Plantation worker: labour. Copper mine: land (natural resource). Bakery founder: enterprise.
Medium questions
5. Match each reward to its factor: wages, rent, interest, profit.
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Wages: labour. Rent: land. Interest: capital. Profit: enterprise.
6. Kampung Roti can spend RM6,000 on a new oven (extra RM900 profit a month), a delivery bike (RM700) or advertising (RM500). It chooses the oven. State the opportunity cost.
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The next most valued alternative is the delivery bike. The opportunity cost is RM700 a month of extra profit from the delivery bike.
7. A person says: “I have RM30,000 in savings, so I own capital.” Comment.
Show answer
In economics, capital means man-made goods used to produce other goods. Money is not capital. If she buys a machine with it, the machine is capital.
Harder questions
Use the Tanjung Island PPC data for questions 8 to 10.
| Point | Boats | Rice (tonnes) |
|---|---|---|
| A | 0 | 60 |
| B | 10 | 56 |
| C | 20 | 48 |
| D | 30 | 36 |
| E | 40 | 20 |
| F | 50 | 0 |
8. What is the opportunity cost per boat of moving from C to D, and from D to E? What does the comparison show?
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C to D: rice falls 48 to 36, a loss of 12 for 10 boats, so 1.2 tonnes per boat. D to E: 36 to 20, a loss of 16 for 10 boats, so 1.6 tonnes per boat. The cost per boat rises, showing increasing opportunity cost: resources become less suited to the good being expanded.
9. Tanjung produces 30 boats and 45 tonnes of rice. Is this attainable? Explain.
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At 30 boats the maximum rice is 36 tonnes. 45 tonnes is higher, so the point lies outside the curve and is unattainable with current resources and technology.
10. A new irrigation system raises the maximum rice from 60 to 75 tonnes, with boats unchanged. Household data: 200 valley farmers go from RM1,000 to RM1,400 a month; 300 fishing households stay at RM1,000; 100 hill labourers go from RM800 to RM700. Evaluate “Everyone benefits”, using average income.
Show answer
Before: (200 × 1,000 + 300 × 1,000 + 100 × 800) ÷ 600 = 580,000 ÷ 600 = about RM967. After: (200 × 1,400 + 300 × 1,000 + 100 × 700) ÷ 600 = 650,000 ÷ 600 = about RM1,083.
Average income rises, so the shift raises potential output and the average. However, hill labourers lose RM100 and fishing households gain nothing. So the claim is not supported: gains are uneven, and the average hides the loss for one group.
If you got these wrong
| Error type | Questions | Go to |
|---|---|---|
| Listed every option or gave a price as the cost | 1, 6 | Identify the next most valued alternative |
| Treated a want as demand | 3 | Distinguish a want from an effective demand |
| Misfiled a resource or called money capital | 4, 5, 7 | Classify a productive resource |
| Gave the level, not the change, or misread inside and outside points | 8, 9 | Explain a movement on a production possibility model |
| Claimed all groups gain | 10 | Interpret an outward shift |
| Scarcity idea unclear | 2 | Module overview |
The percentage-base explorer and the ratios with interpretation limits tool can help with the numbers in questions 8 and 10.
If one error type keeps returning, a teacher in online one-to-one Economics tuition can write new questions aimed at that point.