Basic Economic Problem Topical Past Paper Questions

We dug through a bunch of past papers and have prepared topical past paper questions, complete with a mark scheme for IGCSE Economics Unit 1 - The Basic Economic Problem.

The mark scheme can be accessed at the end of the page. No cheating!

Which combination of terms gives the general definition of the economic problem?
A) bigger families, less food, starvation
B) falling supply, rising demand, shortage
C) higher population, fewer jobs, unemployment
D) limited resources, unlimited wants, scarcity
What is the best example of the existence of the economic problem?
A) A government provides accommodation for all those who are homeless.
B) A police force has a lengthening list of unsolved crimes.
C) Janitha hands her homework in at the last permitted deadline.
D) Musa completes his journey without putting petrol in his car.
The government of a prosperous country announced that it would offer free food to its citizens for a year.
What would be the effect of this measure?
A) Agricultural resources would become unlimited.
B) Human wants would become finite.
C) More resources would be devoted to food production.
D) The basic economic problem would be solved.
What is the basic economic problem?
A) finite resources and limited wants
B) finite resources and unlimited wants
C) infinite resources and limited wants
D) infinite resources and unlimited wants
Economics textbooks often start by identifying the existence of the basic economic problem.
What is it that makes this problem ‘basic’?
A) It affects all economies and individuals.
B) It is the most urgent target of government economic policy.
C) It only affects low-income developing economies.
D) It relates to the production of raw materials in the primary sector
What is the cause of economic scarcity?
A) limited wants with limited resources
B) limited wants with unlimited resources
C) unlimited wants with limited resources
D) unlimited wants with unlimited resources
Why will the economic problem never be solved?
A) People will always want more products than can be produced.
B) People will never agree on what is the best economic system.
C) There will always be an uneven distribution of income.
D) There will always be some people unemployed.
A country with a low income per head discovers large quantities of oil, which eventually makes everybody better off.
Why is the basic economic problem of scarcity not solved by this discovery?
A) People may not get jobs in the oil industry.
B) People’s wants are always changing and increasing.
C) Prices of oil can fluctuate on the world market.
D) Production of oil can damage the environment.
Economics is primarily concerned with
A) allocating scarce resources for unlimited wants.
B) controlling unemployment and inflation.
C) determining the level of government expenditure.
D) studying how new wants and economic resources can be produced.
Every business organisation faces the problem of satisfying wants.
What is the reason why wants are not fully satisfied?
A) An economy can only produce a limited amount of goods and services.
B) Governments cannot print enough money to pay for goods and services.
C) There is an over-production of goods and services by business organisations.
D) Workers are too skilled for the requirements of jobs available
What is meant by the economic problem?
A) how to achieve efficiency with the existence of fixed resources and limited wants
B) how to allocate resources between public and private sectors
C) how to balance unlimited wants against finite resources
D) how to decide which methods to use to exploit all resources
What makes choice an important element in the basic economic problem?
A) Increased demand leads to higher market prices.
B) Limited resources have many alternative uses.
C) Reaching a market equilibrium may take a long time.
D) Scarce economic resources are distributed equally.
Which terms summarise the nature of the economic problem?
A) finite resources and limited wants
B) finite resources and unlimited wants
C) infinite resources and limited wants
D) infinite resources and unlimited wants
Which economic change would increase the problem of scarcity?
A) a decrease in fish stocks
B) a discovery of a new oil field
C) an increase in labour productivity
D) a reduction in waste
A friend said his French grandmother kept switching off the lights but left the tap running. His Namibian relative left the lights on while shouting at him to turn off the water.
Which availability of resources and level of prices would make economic sense of these consumer actions?

Option	In France	In Namibia
A	Adequate water supplies	Expensive electricity
B	Cheap electricity	Adequate water supplies
C	Expensive electricity	Scarce water supplies
D	Scarce water supplies	Cheap electricity

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What is not one of the basic questions in Economics?
A) For whom will goods be produced?
B) How will goods be produced?
C) How will goods be transported?
D) What goods will be produced?
What is the basic economic problem facing all societies?
A) how to achieve price stability
B) how to keep employment levels high
C) the extent to which incomes should be redistributed
D) what will be produced, how and for whom
A hospital cannot treat all the people that need medical care.
This is an example of
A) excess supply.
B) limited wants.
C) scarcity.
D) unlimited resources.
Which economic question is least likely to arise as a result of scarcity?
A) For whom shall we produce?
B) How shall we produce?
C) What shall we produce?
D) When shall we produce?
What is the basic economic problem facing all economies?
A) inequality of income
B) insufficient resources
C) low economic growth
D) shortages of skilled labour
Which statement best explains why drought is an economic problem?
A Drought cannot be controlled.
B Rainfall is unreliable.
C The effects of drought involve the government.
D Water is a scarce good
To help reduce the price of oil, new supplies are needed. However, in 2013, objectors opposed attempts to explore new sites because of the environmental damage the exploration might cause.
How does this illustrate the basic economic problem?
A) Oil is a limited resource.
B) Oil is expensive.
C) The exploration involves demand and supply.
D) There are external costs involved in production.
A tractor factory runs out of important components and has to stop production.
How does this illustrate the economic problem?
A) The factory lacks a competitive advantage.
B) The factory lacks economies of scale.
C) There are limited wants.
D) There is evidence of scarce resources.
Which combination of resources and wants causes the economic problem?

Option	Resources	Wants
A	Limited	Limited
B	Limited	Unlimited
C	Unlimited	Limited
D	Unlimited	Unlimited

Every business organisation faces the problem of satisfying wants. What is the reason why wants are not fully satisfied?
A) An economy can only produce a limited amount of goods and services.
B) Governments cannot print enough money to pay for goods and services.
C) There is an over-production of goods and services by business organisations.
D) Workers are too skilled for the requirements of the jobs available.
What is meant by the economic problem?
A) how to achieve efficiency with the existence of fixed resources and limited wants
B) how to allocate resources between public and private sectors
C) how to balance unlimited wants against finite resources
D) how to decide which methods to use to exploit all resources

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You might have noticed by now that this question gets asked quite a lot. Better to keep getting it right every single time so that you are well prepared!

What makes choice an important element in the basic economic problem?
A)Increased demand leads to higher market prices.
B) Limited resources have many alternative uses.
C) Reaching a market equilibrium may take a long time.
D) Scarce economic resources are distributed equally.

Unit 1 - The Basic Economic Problem Mark Scheme

Question	Answer
1	D
2	B
3	C
4	B
5	A
6	C
7	A
8	B
9	A
10	A
11	C
12	B
13	B
14	A
15	C
16	C
17	D
18	C
19	D
20	B
21	D
22	A
23	D
24	B
25	A
26	C
27	B

How many did you get correct? If you did well on it, good job! Keep practicing more past paper questions like these!

If you weren't satisfied with your performance, don't fret, we suggest going back to our revision guide and spending some time understanding the key concepts that you got incorrect.

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Question	Answer
1	D
2	B
3	C
4	B
5	A
6	C
7	A
8	B
9	A
10	A
11	C
12	B
13	B
14	A
15	C
16	C
17	D
18	C
19	D
20	B
21	D
22	A
23	D
24	B
25	A
26	C
27	B

Question	Answer
1	D
2	B
3	C
4	B
5	A
6	C
7	A
8	B
9	A
10	A
11	C
12	B
13	B
14	A
15	C
16	C
17	D
18	C
19	D
20	B
21	D
22	A
23	D
24	B
25	A
26	C
27	B

Question	Answer
1	D
2	B
3	C
4	B
5	A
6	C
7	A
8	B
9	A
10	A
11	C
12	B
13	B
14	A
15	C
16	C
17	D
18	C
19	D
20	B
21	D
22	A
23	D
24	B
25	A
26	C
27	B