WHALES 30 on 30 AS Economics Paper 1: Markets

What is consistent with an individual demand curve that slopes down from left to right?

A As price falls, a person switches away from rival products towards the product.

B As price falls, a person’s willingness and ability to buy the product will decline.

C As price rises, a person becomes less sensitive to price changes.

D As price rises, a person’s opportunity cost of purchasing the product falls.

• A

• B

• C

• D

What will cause the demand curve for domestically produced cars to shift to the left?

A an increase in the costs of production of domestically produced cars

B a reduction in taxes on the purchase of cars

C a reduction in the tariff on imported cars

D a reduction in the tax on petrol

• A

• B

• C

• D

The diagrams show changes in the market for a good. Which diagrams represent ‘a change in the quantity demanded’?

A 1 and 2

B 1 and 3

C 1 only

D 3 only

• A

• B

• C

• D

The diagram shows the demand curve for a product with unitary price elasticity. What will happen with such a curve?

A A fall in price will bring about an increase in expenditure on the product.

B A fall in price will bring about an increase in sales but a fall in expenditure on the product.

C As the price rises, expenditure on the product stays the same.

D As the price rises, expenditure on the product rises and then falls.

• A

• B

• C

• D

In the diagram D and S are the demand and supply curves of a good. What could cause the supply curve to shift in the short run to S1?

A a change in consumer preferences

B a decrease in the price of a complementary good

C a fall in the cost of raw materials

D a government warning that consumption of the good can damage health

• A

• B

• C

• D

A refinery which processes oil into petrol (gas) is faced with the following conditions. 1 It is working at full capacity. 2 Its petrol storage tanks are full. 3 It has received delivery of a new fleet of petrol tankers to transport its petrol. 4 It requires six months to train new workers to qualify in safety procedures. Which of the conditions will tend to make the supply of petrol relatively price inelastic?

A 1 and 2

B 1 and 4

C 2 and 3

D 3 and 4

• A

• B

• C

• D

The table gives estimates of the price elasticities and cross elasticities of demand for bus and rail travel. What would be the change in the volume of rail travel resulting from a 1% increase in bus fares?

A an increase of 0.16%

B an increase of 0.43%

C a reduction of 0.13%

D a reduction of 0.37%

• A

• B

• C

• D

An industry is comprised of three firms, R, S and T which produce product X. By how much is a rise in the price of product X from $22 to $36 likely to increase the market supply of X?

A 27

B 77

C 104

D 22

• A

• B

• C

• D

A firm estimates that the price elasticity of supply of its product is 0.4. Should the firm be concerned by this figure?

A No, as it implies that the firm will be able to raise revenue by raising price.

B No, as it suggests there are few substitutes for the product.

C Yes, as it indicates that the firm is not able to adjust supply easily when demand changes.

D Yes, as it means that demand for its product is increasing at a slow rate.

• A

• B

• C

• D

What could cause a shift in the supply curve of good X and a movement along its supply curve?

• A

• B

• C

• D