Question
ECA115D/ECN105D/EA105D
TEST 1
28. In economics, the “HOW” in the production question refers to
a) The ways in which factors of production may be combined to produce output
b) The way in which firms uses principle of profit maximization
c) The way in which the state sets output targets in a command economy
d) The problem of scarcity in the economy
29. Adam Smith’s concept of the invisible hand suggests that the selfish actions of rational individuals will generate an efficient allocation of scarce resources
a) False
b) True
30. In the South African economy, the problem of “WHAT TO PRODUCE” is solved primarily by:
a) The national Planning Commission
b) The South African Reserve Bank
c) The South African Revenue Services
d) The patterns of consumers spending and direction of government
31. Problems relating to the allocation of the factors of production and the distribution of income exist:
a) In socialist economies only
b) In capitalist economies only
c) In market economies only
d) In all economies
32. Which statement best describes the economic system?
a) A network of parts interlocked to form a pattern that aims at solving the What, How and For Whom questions in the society.
b) Aims at studying the choices economic agents make under conditions of scarcity.
c) It explains how the different types of systems are interdependent.
d) Coordinating mechanism
33. Which of the following is not a common feature in classifying economic systems?
a) Property rights
b) Market capitalism
c) Planned socialism.
d) Traditional system
8
TEST 1
28. In economics, the “HOW” in the production question refers to
a) The ways in which factors of production may be combined to produce output
b) The way in which firms uses principle of profit maximization
c) The way in which the state sets output targets in a command economy
d) The problem of scarcity in the economy
29. Adam Smith’s concept of the invisible hand suggests that the selfish actions of rational individuals will generate an efficient allocation of scarce resources
a) False
b) True
30. In the South African economy, the problem of “WHAT TO PRODUCE” is solved primarily by:
a) The national Planning Commission
b) The South African Reserve Bank
c) The South African Revenue Services
d) The patterns of consumers spending and direction of government
31. Problems relating to the allocation of the factors of production and the distribution of income exist:
a) In socialist economies only
b) In capitalist economies only
c) In market economies only
d) In all economies
32. Which statement best describes the economic system?
a) A network of parts interlocked to form a pattern that aims at solving the What, How and For Whom questions in the society.
b) Aims at studying the choices economic agents make under conditions of scarcity.
c) It explains how the different types of systems are interdependent.
d) Coordinating mechanism
33. Which of the following is not a common feature in classifying economic systems?
a) Property rights
b) Market capitalism
c) Planned socialism.
d) Traditional system
8
Ask by Lowe Collins. in South Africa
Mar 19,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
28. The “HOW” in production refers to the methods of combining factors to make output.
29. Adam Smith’s invisible hand suggests that individual self-interest leads to efficient resource allocation.
30. In South Africa, what to produce is decided by consumer spending and government direction.
31. Allocation and income distribution issues exist in all types of economies.
32. An economic system is a network that addresses what to produce, how to produce, and for whom.
33. Traditional system is not a common feature in classifying economic systems.
29. Adam Smith’s invisible hand suggests that individual self-interest leads to efficient resource allocation.
30. In South Africa, what to produce is decided by consumer spending and government direction.
31. Allocation and income distribution issues exist in all types of economies.
32. An economic system is a network that addresses what to produce, how to produce, and for whom.
33. Traditional system is not a common feature in classifying economic systems.
Solution
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Beyond the Answer
In understanding the “HOW” of production, it’s fascinating to see how diverse combinations of resources can lead to innovative outputs. For example, a bakery may mix flour, water, and yeast in various proportions, then experiment with baking times, temperatures, or even incorporate modern technology to enhance efficiency. This creative process not only highlights the economic principles at play but also the art of production itself!
As for the invisible hand, it’s a fun concept to grasp! Imagine a bustling market where everyone is pursuing their own interests—a farmer selling apples, a baker providing fresh bread, and a tailor crafting clothes. All of these individuals, acting in their self-interest, contribute to a harmonious economy where resources are allocated efficiently without any central planner. It’s like a dance of supply and demand, all choreographed by individual choices!
