Hydrchvy Answer key

DLH International School
Grade 11
Economics
Quarter 1
Answer
Key
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Multiple Choice Questions (MCQs) :

1) b) The government should increase the minimum wage.
2) a) The opportunity costs of different production choices
3) b) The decisions made by individual households and firms
4) b) Consumer choice drives production decisions
5) a) Wants are unlimited, but resources are limited
6) b) Unattainable with current resources
7) c) Both market forces and government intervention influence
decisions
8) c) Supply and demand
9) c) Inflation is caused by an increase in the money supply
10) c) Mixed Economy
11) a) & b)
12) a) Land, labor, capital, and entrepreneurship
13) a) The maximum possible output combinations of two goods
14) c) A firm's pricing strategy
15) b) Objective analysis based on facts
16) b) Businesses and consumers
17) b) Inflation in a country

True or False
1)False
Explanation: Trade-offs can occur whenever a choice is made between
alternatives, not just when money is involved.
2)True
Explanation: A point on the Production Possibilities Curve (PPC)
represents the efficient and full use of resources.
3)False
Explanation: Microeconomics focuses on individual and firm-level
decisions, while topics like national income, inflation, and
unemployment are generally part of macroeconomics.
4)True
Explanation: In a market economy, the forces of supply and demand
determine prices and production.
5)False
Explanation: In a mixed economy, both the government and private
sector participate in economic decision-making.
6)True
Explanation: A point inside the PPC shows that resources are not being
used efficiently.

7)False
Explanation: A mixed economy includes both private and public
ownership of resources.
8)False
Explanation: Scarcity applies to all countries because resources are
limited, regardless of the country's wealth.
9)True
Explanation: Normative statements are based on opinions or value
judgments, rather than factual analysis.
10)False
Explanation: In a command economy, prices are set by the government,
not by supply and demand.
11)False
Explanation: Incentives can refer to rewards or motivations that
encourage behavior, but satisfaction from consumption is usually called
utility.
12)True
Explanation: Marginal cost is the additional cost of producing one more
unit of a product.
13) False
Explanation: Underutilization means producing less than the economy
is capable of with its available resources.
14) True

Explanation: In a traditional economy, community and group interests

often take precedence over individual desires.
15) False
Explanation: In a command economy, individual consumer wants are
typically less emphasized in favor of government-set priorities.
16) True
Explanation: In a market economy, decisions are based on individual
choices rather than government direction.
17) True
Explanation: Authoritarian systems often require strict obedience, with
limited political freedom.
18) False
Explanation: Scarcity exists because resources are limited, not
unlimited.
19)True
Explanation: Trade-offs involve giving up one option in order to choose
another.
20)False
Explanation: A command economy is driven primarily by government
decisions, not by consumer preferences or private enterprise.
21)False
Explanation: Microeconomics deals with individual and firm-level
decisions, while macroeconomics focuses on the overall economy.

22)False
Explanation: In a command economy, resource allocation is determined
by the government, not by private firms and individuals.
Complete the Following

1. Opportunity cost is the value of the **next best** alternative
forgone when a choice is made.
2. The PPC demonstrates the concept of **opportunity cost** by

showing trade-offs between two goods.
3. In a command economy, economic decisions are made by the

**government**.
4. Positive economics is based on **facts** and can be tested for

accuracy.
5. The field of macroeconomics is concerned with large-scale

economic factors such as **inflation** and **unemployment**.
6. The PPC curve shows the trade-offs between producing two

goods, reflecting the concept of **opportunity cost**.
7. In a market economy, prices act as signals that help allocate

**resources**.
8. A command economy is typically characterized by government

control over **resources or price**.

9. Macroeconomics studies the overall economy, including issues

like **economic growth** and **inflation**.
10. The concept of scarcity arises because resources are

**limited** and human wants are **unlimited**.
11. A point on the PPC shows **efficiency ** of resources, while a

point inside the PPC shows **underutilization**.
12. In a market economy, the forces of **supply** and

**demand** determine the price of goods and services.
13. The opportunity cost of any decision is the **next best**

alternative that is forgone.
14. A command economy is one in which the **government**

makes all major economic decisions.
15. The basic business problem is **scarcity**.
16. **Economics** is the study of how individuals and societies

satisfy their unlimited wants with limited resources.
17. The factors of production are **land**, **labor**, **capital**,

**entrepreneurship**.
18. Choices people make are shaped by **utility**, **incentives**,

**economize**.

19. Economizing means making decisions that maximize

**benefits** while minimizing **costs**.
20. Cost-benefit Analysis is a decision-making process that

weighs (compare) the **benefits** against the **costs** of a
decision.
21. **Marginal benefit** is the extra benefit or satisfaction from

using one more unit of a product.
22. The one goal of the **traditional** economy societies is

survival.
23. A **command economy** is an economic system in which the

government makes all economic decisions.
24. In a **market** Economy, consumers and producers drive the

economy.
25. Scarcity means that resources are **limited**, while human

wants are **unlimited**.
26. In a command economy, decisions about what to produce and

how to produce it are made by the **government**.

Comparison
1. Compare the concepts of scarcity and opportunity cost.
Concept Scarcity Opportunity Cost

Limited resources versus The value of the next
Definition
unlimited wants best alternative forgone
Fundamental economic A consequence of
Nature
problem making choices
2. Compare microeconomics and macroeconomics, and give one

example of a key issue studied in each.
Aspect Microeconomics Macroeconomics

Individual behavior and
Focus Overall economy
markets
Pricing strategies of National unemployment
Example
firms rates
3. Compare positive economics and normative economics, providing

examples for each.

Aspect Positive Economics Normative Economics

Objective, fact-based Subjective, opinion-
Nature
analysis based statements
"The government should
"The unemployment rate
Example lower the unemployment
is 5%."
rate."
4. Scarcity leads to 3 economic questions. Write the questions and

compare the answers in developing countries and high-tech
countries.
The three economic questions are:

1. **What to produce?**
2. **How to produce?**
3. **For whom to produce?**
Economic Question Developing Countries High-Tech Countries
Focus on advanced
Focus on basic goods
What to produce? technology (e.g.,
(e.g., food, clothing)
electronics)
Capital-intensive and
How to produce? Labor-intensive methods
automated methods
Target lower-income Cater to higher-income
For whom to produce?
populations consumers
5. Compare a market economy with a command economy in terms of

resource allocation and decision-making.
Aspect Market Economy Command Economy
Centralized decision-
Determined by supply
Resource Allocation making by the
and demand
government

Centralized, with
Decentralized, driven by
Decision-Making government dictating
individual choices
production
Short-Answer Questions:
1. **Define the concept of scarcity and explain why it is a
fundamental problem in economics. **
Scarcity: the situation that exists when there are not enough
resources to satisfy human wants. (The difference between the limited
resources and the unlimited needs).
it forces individuals and societies to make choices, leading to the need
for economic systems to allocate resources efficiently.
2. **What is opportunity cost? Give an example of how it affects

decision-making in everyday life.**
Opportunity Cost: is the value of what you give up when you choose one
option over another. It represents the benefits from the next best alternative
that you didn’t choose.
3. **Explain the concept of trade-offs. How does it relate to

opportunity cost?**
● The alternative you give up when you make an economic choice

(decision) is called a trade-off.
A Trade-off: is the alternative (choice) people give up when they make
choices.
4. **What might cause a shift in the PPC curve?**

A shift in the PPC: occurs when
Outward Shift:

o an economy has addition of new resources (additional land to a country,

immigration), or the more efficient use of available resources due to technology
(technology has made the use of land, labor and capital more efficient).
The addition of new resources or the more efficient use of the available resources
means that the country could produce more goods and services.
5. **Define microeconomics and macroeconomics. Provide one

example of a microeconomic issue and one of a macroeconomic
issue.**
● Microeconomics: is the study of individuals, families, and businesses in an

economy.
looks at the smaller picture, focusing on individual people, businesses, and

markets
● Macroeconomics: is the study of the economy as a whole.
looks at the big picture of an entire economy. It focuses on the overall

economy of a country or the world.

6. **What is the difference between positive and normative

economics? Provide an example of each.**
Positive Economics: studies economic behavior as it is (not as it should
be).
It deals with objective analysis and facts without making judgments.
Normative Economics: involves judgements of what economic behavior
ought to be. It involves subjective judgments and opinions about what the
economy should be like.
It often reflects personal values or opinions about economic policy. It
describes what should be done based on opinions or beliefs about fairness,
equity, or efficiency.
7. **How does a mixed economy incorporate elements of both
market and command economies?
A mixed economy combines elements of free markets and government
intervention. It allows for private enterprise while enabling the government
which plays an important role in protecting the private property rights which
keeps Produce’s motivation and consumer’s trust
8. **In which type of economic system do you think innovation is

most likely to occur? Explain your answer.**
Innovation is most likely to occur in a market & mixed economy because
competition drives firms to develop new products and improve efficiencies to
attract consumers.
9. **In the PPC curve, what do points inside, on, and outside the
curve represent?**

● Points inside the curve represent underutilization of resources,

meaning the factory could produce more of both products with the
same resources.
● Points on the curve represent efficient production, where the factory

is using all its resources effectively to produce the maximum possible
amount of both goods.
● Points outside the curve represent unattainable production levels

given the current resources and technology.
10. **Scarcity leads to 3 economic questions. What are these

questions?**
The three questions are:
1. What to produce?
2. How to produce?
3. For whom to produce?
These questions are fundamental in determining how societies allocate
scarce resources effectively.’
very important.. b m [h’[]m--p[[
1. Mention the features of a Market economy, and explain them.

1- Private property rights give individuals ownership and
control (enforced by law) over resources, land, or products and
ideas allowing them to benefit from their use or sale.
2- LIMITED GOVERNMENT INTERVENTION : Market is

controlled by supply and demand forces, there is no need for
government intervention
3- VOLUNTARY EXCHANGE IN MARKETS when buyer and

seller agree to do business together they engage in
4- COMPETITION AND CONSUMER SOVEREIGNTY

Competition: Actions sellers acting independently do to get
buyers to purchase their products by offering the best deal
Consumer Sovereignty: consumer has the ultimate control
over what is produced because they are free to buy what they
want and reject what they don’t want
5- SPECIALIZATION: Allowing people and business to

specialize in what they do the best


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DLH International School

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Multiple Choice Questions (MCQs) :

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‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

Explanation: In a traditional economy, community and group interests

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

Complete the Following

2. The PPC demonstrates the concept of **opportunity cost** by

3. In a command economy, economic decisions are made by the

4. Positive economics is based on **facts** and can be tested for

5. The field of macroeconomics is concerned with large-scale

6. The PPC curve shows the trade-offs between producing two

7. In a market economy, prices act as signals that help allocate

8. A command economy is typically characterized by government

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

9. Macroeconomics studies the overall economy, including issues

10. The concept of scarcity arises because resources are

11. A point on the PPC shows **efficiency ** of resources, while a

12. In a market economy, the forces of **supply** and

13. The opportunity cost of any decision is the **next best**

14. A command economy is one in which the **government**

15. The basic business problem is **scarcity**.

16. **Economics** is the study of how individuals and societies

17. The factors of production are **land**, **labor**, **capital**,

18. Choices people make are shaped by **utility**, **incentives**,

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

19. Economizing means making decisions that maximize

20. Cost-benefit Analysis is a decision-making process that

21. **Marginal benefit** is the extra benefit or satisfaction from

22. The one goal of the **traditional** economy societies is

23. A **command economy** is an economic system in which the

24. In a **market** Economy, consumers and producers drive the

25. Scarcity means that resources are **limited**, while human

26. In a command economy, decisions about what to produce and

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

Concept Scarcity Opportunity Cost

2. Compare microeconomics and macroeconomics, and give one

Aspect Microeconomics Macroeconomics

3. Compare positive economics and normative economics, providing

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

Aspect Positive Economics Normative Economics

4. Scarcity leads to 3 economic questions. Write the questions and

The three economic questions are:

5. Compare a market economy with a command economy in terms of

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

2. **What is opportunity cost? Give an example of how it affects

3. **Explain the concept of trade-offs. How does it relate to

● The alternative you give up when you make an economic choice

4. **What might cause a shift in the PPC curve?**

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

o an economy has addition of new resources (additional land to a country,

5. **Define microeconomics and macroeconomics. Provide one

● Microeconomics: is the study of individuals, families, and businesses in an

looks at the smaller picture, focusing on individual people, businesses, and

● Macroeconomics: is the study of the economy as a whole.

looks at the big picture of an entire economy. It focuses on the overall

‫ رسالتنا األولى وعالمنا الخاص‬..‫بناء اإلنسان‬

6. **What is the difference between positive and normative

2. The PPC demonstrates the concept of opportunity cost by

4. Positive economics is based on facts and can be tested for

11. A point on the PPC shows efficiency of resources, while a

12. In a market economy, the forces of supply and

13. The opportunity cost of any decision is the next best

14. A command economy is one in which the government

15. The basic business problem is scarcity.

16. Economics is the study of how individuals and societies

17. The factors of production are land, labor, capital,

18. Choices people make are shaped by utility, incentives,

21. Marginal benefit is the extra benefit or satisfaction from

22. The one goal of the traditional economy societies is

23. A command economy is an economic system in which the

24. In a market Economy, consumers and producers drive the

25. Scarcity means that resources are limited, while human

4. What might cause a shift in the PPC curve?