GCE A-Level - Higher 2 (H2) · Economics (9570)

Decision-Making Process of Economic Agents: Practice Questions

5 multiple-choice questions marked as you go, and 2 written questions with worked solutions. All on Decision-Making Process of Economic Agents.

7 questions10 marksFree, no account

Question 1

1 mark

When a firm makes a decision to increase its production level, a marginalist approach implies that the firm will:

Question 2

1 mark

When a government decides to allocate more resources to the development of public infrastructure, it must consider the perspectives and trade-offs involved. Which of the following represents an unintended consequence of such a decision?

Question 3

1 mark

A government is deciding whether to implement an infrastructure project. It compares the marginal social benefits (\(MSB\)) and marginal social costs (\(MSC\)) of the project at various scales. According to the marginalist principle, what is the economically optimal scale of the project?

Question 4

1 mark

Which of the following is the primary objective of a rational consumer in the decision-making process?

Question 5

1 mark

A consumer is considering whether to purchase an additional unit of a luxury good. Given that the consumer is rational and follows the marginalist principle, which condition must be met for the consumer to proceed with the purchase?

Question 6

2 marks

State the primary objective of a rational consumer and a rational producer in the decision-making process.

Write your answer out first, then check it against the worked solution.

Question 7

3 marks

Explain how a rational firm uses the marginalist principle to determine the level of output that maximises its total profit.

Write your answer out first, then check it against the worked solution.

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