IB economics mc

In a four-sector economy, which of the following is assumed always to increase when GDP increases?***

• I
• G
• M
• X

A free good in economics is considered to be one that
I.  has no opportunity cost.
II.  is supplied free of charge by the public agencies.
III.  is produced by the state. **

• I only
• i and II only 
• II and III only
• I, II and III

Cans of beans are sold at a lower price in Supermarket X than Supermarket Y.  As a result, Maria decides to buy her beans from Supermarket X.  Economic theory would suggest that this is an example of **

•  rational behaviour.
• brand loyalty.
• the law of supply
• positive behaviour

All of the following are common features of both centrally planned economies and market economies except   *

•    privatised property rights.
• use of a central bank.
• use of taxes.
• wage differentials.

After a serious pollution incident at sea, a government introduces stricter safety measures for oil tankers.  The table below represents four possible combinations of market responses.**

• Movement along the Demand Curve, Shift of the Supply Curve
• Movement along the Supply Curve Shift of the Demand Curve
• Shift of the Demand Curve Shift of the Supply Curve
• Movement along the Demand Curve Movement along the Supply Curve

What is the most likely effect of a law which establishes a minimum wage above the market rate in the predominantly competitive economy? **

•  Fewer people will be employed.
• Firms substitute more labour for capital.
• Most producers will experience efficiency gains.
• Costs of production will necessarily increase.

 Merit goods, such as health care and education *

• are always supplied through the market.
•  have identical characteristics to public goods.
• would be oversupplied if provided by the market.
• have positive externalities.

Private road transport has large negative externalities.  Which one of the following is least likely to internalise the externality? *

• Subsidies to public transport
• Higher fuel duties
• Road pricing
• Higher ownership taxes for private vehicles

The quantity demanded of an inferior good will increase as
I.  the price falls.
II.  income falls.
III.  supply falls. **

•  I only
• I and II only
• ii and III  only 
• I II and III

The supply of organically produced food tends to be price inelastic in the short run because **

• the land on which it is grown must be free of fertilisers for a number of years.
• it is more expensive than non-organic food.
• some consumers are increasingly concerned about the health effects of chemicals on food.
• there is limited availability of close substitutes.