TUTORIAL 1
GT11103 ECONOMICS
Sem 2, 2023/2024
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Part A: Structure Questions
1) Define economics and describe its branches of study.
Answer: Economics is the social science that studies the choices made by individuals,
businesses, government, and entire societies as they cope with scarcity. It has two branches,
microeconomics and macroeconomics. Microeconomics is the study of the choices made by
individuals and businesses, the way they interact, and the influence that governments exert on
these choices. Macroeconomics is the study of the aggregate (total) effects on the national
economy and the global economy of the choices that individuals, businesses, and governments
make.
2) What do economists mean when they discuss "scarcity"?
Answer: Scarcity occurs whenever people's wants exceed the ability of the available resources to
meet these wants. Because people's wants are effectively infinite—it is always possible to
imagine more good things to want to have—wants will always exceed what can be produced
with the available resources, and so scarcity will always be present.
3) What is the relationship between wants, factors of production, scarcity, and choices? Discuss
the relationship for an individual and for a society.
Answer: A person faces scarcity whenever his or her wants exceed what he or she can obtain
using his or her resources. Because the person cannot fulfill all of his or her wants, the person is
forced to choose which wants will be satisfied and which wants will remain unsatisfied. The
same results hold true for a society. All societies face scarcity because people's wants are
essentially infinite, so that the factors of production available are not sufficient to fulfill
everyone's wants. Because of this fact, societies must make choices about which (and whose)
wants will be satisfied and which (and whose) wants will remain unsatisfied.
4) Your friend, Kiki is preparing for this exam and in your practice session makes the following
statement: "Instead of attending economics class for two hours, Kiki could have played tennis or
watched a movie. Therefore, the opportunity cost of attending class is the tennis and the movie
she had to give up." Is your friend's analysis correct or not? Explain your answer.
Answer: Your friend's analysis is incorrect. The opportunity cost of an action is the highest-
valued alternative forgone, not all alternatives forgone. Kiki's opportunity cost of studying for
her exam is either the tennis or the movie, whichever she would have done had she not studied.
5) What are the topics in economics that widely discuss and illustrate tension between self-
interest and social interest? Choose two topics and illustrate them.
Answer: you may find the discussion from the lecture notes and reference books.
Part B: Multiple Choice Questions
1) The study of economics
A. focuses mainly on individual consumers.
B. arises from the fact that our wants exceed available resources.
C. recognizes that scarcity does not affect rich nations.
D. deals mainly with microeconomics.
2) Macroeconomics differs from microeconomics in that:
A. macroeconomics studies the decisions of individuals.
B. microeconomics looks at the economy as a whole.
C. macroeconomics studies the behavior of government while microeconomics looks at private
corporations.
D. macroeconomics focuses on the national economy and the global economy.
3) Which of the following is NOT an investment in human capital?
A. A business student takes a seminar in using a laptop computer.
B. A student purchases a laptop computer.
C. A computer science student learns how to repair a laptop computer.
D. A computer science student takes a course on programming a laptop computer.
4) After you graduate, you have decided to accept a position working at Bank Negara for
RM45,000.00 a year. The two other offers you received were working for Parkson for RM38,000
and working for Ernst and Young consulting for RM42,000. Of these two offers, you would have
preferred the job at Ernst and Young. What is the opportunity cost of accepting the position at
the Bank Negara?
A) the RM45,000 you are paid for working at Bank Negara.
B) the RM42,000 you would have been paid working for Ernst and Young.
C) the RM38,000 you would have been paid working for Parkson.
D) the RM42,000 you would have been paid working for Ernst and Young and the RM38,000
you would have been paid working for Parkson.
Answers:
1. B
2. D
3. B
4. B
