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Economic Decision-Making Pre-Test

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Economic Decision-Making Pre-Test

Help a community market stall make a decision. Read each scenario carefully, use the information provided and explain your reasoning where asked. This pre-test checks what you already know; try every question.

Part A: Choices and trade-offs

At the Saturday market, Harper sells fruit cups. She has a limited budget and time, but several goals: earn a profit, satisfy customers and reduce waste.

1.Harper cannot afford every improvement she wants for the stall. Which idea best explains why she must make choices?

Resources are limited while wants can exceed what is available.
All businesses have unlimited money if they plan carefully.
Customers always want the same products.
A choice is only economic if it involves borrowing.

2.Harper uses $60 from her stall budget to buy a small refrigerated display instead of a colourful sign. State the opportunity cost of buying the display.

3.Harper is deciding whether to switch to compostable fruit cups. Which approach would best help her make a considered decision?

Choose the option with the highest price, because it must be best.
Compare likely costs and benefits, including effects on customers and waste.
Ignore costs and ask only what other stalls have chosen.
Avoid deciding until every possible outcome is certain.

4.Name two stakeholders, other than Harper, who could be affected by her packaging decision.

Part B: Use the evidence

Harper tests two packaging options for one market day. The figures below are estimates. The stall sells 100 fruit cups on each test day.

Option

Packaging cost per cup

Estimated cups sold

Standard plastic cup

$0.20

100

Compostable cup

$0.30

100

5.Using the estimates, calculate the total packaging cost for 100 cups with the compostable option.

6.If Harper sells the same number of cups at the same price with either option, the compostable packaging costs $10 more for the day than the standard packaging.

TrueFalse

7.Give one limitation of using these estimates alone to decide which packaging option Harper should choose.

Part C: Wider economic decisions

Economic decisions affect households, businesses and governments. Use your knowledge and reasoning in the final questions.

8.A news report says Australia's unemployment rate has risen. Explain one reason this information could matter to government decision-makers.

9.Which statement best describes what gross domestic product (GDP) measures?

The total value of final goods and services produced within a country over a period.
The number of people looking for work in a country.
The average amount of money held by each household.
The total value of a country's exports only.

10.Recommend whether Harper should switch to compostable cups, keep standard cups or run a longer trial. Support your recommendation with one piece of evidence from the table and one other factor she should consider.