Correct Answer: A. opportunity cost of producing one commodity for another

Explanation

(a)Opportunity cost means the alternative forgone in order to satisfy a particular want. It refers to the satisfaction of one want at the expense of another want. It arises as a result of scarce resources to satisfy numerous wants and desires, e.g. the opportunity cost of purchasing a textbook, to a student, is the shirt he should have bought which he sacrificed to get the textbook. Opportunity cost means real cost and it is different from money cost. The real cost of the text-book is the shirt forgone.

(b)(i)Importance of opportunity cost to individuals:It helps individuals to make judicious use of their scarce resources to satisfy unlimited wants. For example, a farmer can use a piece of land for planting cocoa or coffee. If he grows cocoa because of the present economic value of cocoa, the opportunity cost of cocoa is the coffee forgone.

(ii) Importance of opportunity cost to the Government: It helps the government in deciding which sector will receive more resources. It helps the government in making decision on how to spend its revenue in carrying out its numerous projects, e.g. the government may allocate more resources to defence or infrastructure.

(iii) Importance of opportunity cost to the firms:It helps the firms or industry in making decision on which resources to use in production and the method of production to be used, i.e. capital intensive or labour intensive.

Correct Answer: B. shift of the supply curve to the left or to the right

Correct Answer: A. production of specialized goods

Explanation

Division of labour is the separation of a work process into a number of tasks, with each task performed by a separate person or group of persons. This leads to specialization as people get to work on specific tasks and become efficient and expertise in that area. In this regards, division of labour allows the agents/people to focus on areas of advantage due to natural factors and skill levels.

Correct Answer: C. deflation

Correct Answer: C. gross national product

Explanation

Gross national product is the total value of goods produced and services provided by a country during one year, equal to the gross domestic product plus the net income from foreign investments. GNP calculation includes income earned by domestic residents abroad minus the income of foreigners earned in the domestic economy. GNP is calculated by taking the sum of personal consumption expenditures, private domestic investment, government expenditure, net exports and any income earned by residents from overseas investments, minus income earned within the domestic economy by foreign residents.

Correct Answer: A. precautionary demand

Correct Answer: A. there are difficulties in coordinating production

Explanation

Diseconomies of scale happen when a company or business grows so large that the costs per unit increase. One of the reasons for Diseconomies of scale Loss of direction and co-ordination of production activities. It is harder to ensure that all workers are working for the same overall goal as the business grows. It is more difficult for managers to supervise their subordinates and check that everyone is working together effectively, as the spans of control have widened. A manager may be forced to delegate more tasks, which while often motivating for his subordinates, leaves the manager less in control.

Correct Answer: B. Profit

Correct Answer: B. stagflation

Explanation

Stagflation is a condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation. It can also be defined as inflation and a decline in gross domestic product (GDP).