Micro test

What would be an opportunity cost of growth in an economy?

• the faster growth of services than of manufacturing

• the need for an increased level of imported raw materials

• the need for greater government intervention

• the reduction of consumption if growth requires investment

The diagram shows the relationship between the price and the total expenditure on a good.

• The income elasticity of demand for the commodity is unity.

• The income elasticity of demand for the commodity is zero.

• The price elasticity of demand for the commodity is unity

• The price elasticity of demand for the commodity is zero

Over the last ten years the price elasticity of demand for tea in many countries has risen. What is the most likely cause of this change in price elasticity?

• a decrease in the incomes of consumers

• a decrease in the number of complements to tea

• an increase in the amount of tea supplied

• an increase in the number of substitutes for tea

What would be the price elasticity of supply of cell (mobile) phones if their price rose from US$100 to US$110 and the quantity supplied rose from 200 to 250?

• 0.2

• 0.4

• 2.5

• 5.0

A product has a high price elasticity of supply. What might explain this?

• The product has a high opportunity cost.

• The product has a non-perishable nature.

• The product is classed as an inferior good.

• The product is considered to be a luxury.

The demand for houses in London has caused house prices to rise considerably in the last five years. Many people cannot now afford to buy a house. What can be concluded from this?

• On a demand and supply diagram for houses there has been a movement up the demand curve.

• On a demand and supply diagram for houses there has been a movement up the supply curve.

• The price elasticity of demand for houses is greater than one.

• The price elasticity of supply of houses is zero.

Which statement about maximum and minimum prices is correct?

• With an effective maximum price for a product, a shortage will develop.

• With an effective maximum price for a product, the market price will rise.

• With an effective minimum price for a product, rationing will be necessary.

• With an effective minimum price for a product, the market price will fall.

A country has a target rate of inflation of 2.5% and has recently experienced the actual rate rising to 6%, with unemployment falling to very low levels. Which policy option is most likely to be implemented?

• an increase in government expenditure on training

• an increase in indirect taxes on demerit goods

• an increase in import tariffs

• an increase in interest rates