OCR Economics - Part 1 - Supply and Demand

What is market demand?

• Adding together all individual demand

• Adding together direct and indirect demand

• Changes in prices at each quantity

• Consumers’ willingness and ability to buy

A flower seller increases her prices by 10% and finds that it has no effect on the amount that she sells.

This suggests that demand for the flowers is

• Perfectly price elastic

• Perfectly price inelastic

• Price inelastic

• Unitary price elastic

What usually leads to a rightward shift in the demand curve?

• An increase in consumers’ incomes

• A technological improvement which reduces the costs of production

• The government introduces a tax on the product

• The supply curve shifts to the right

The demand for apples is the amount of them that consumers are willing and able to buy at a given

• Cost

• Income

• Price

• Supply

Which of the following refers to the role of the consumer

• Acts as the end-user of a good or service

• Acts to protect buyers of goods and services

• Can decide what goods and services to supply

• Can introduce regulations about goods and services

What is meant by unlimited wants?

• Goods which do not have an opportunity cost

• Resources which are essential for survival

• The ability to buy whatever is required

• The infinite desire for goods and services

Which diagram shows a supply curve with a unitary elasticity of supply?

• W

• X

• Y

• Z

What does enterprise require the individual to organize?

• Factors of production to minimize the opportunity cost

• Market for the factors of production

• Production and to bear the risks of the project

• Risk involved in borrowing the necessary finance

The market supply curve for goods and services normally slopes upwards. Which of the following best explains the reason for this?

• Average costs of production fall as output increases

• Higher prices attract new firms to the market

• Opportunity costs of not producing rise as output increases

• Production costs fall as output increases so profits rise

Excess demand is corrected in a market by changes in

• Price

• Quantity

• Resource allocation

• Taxes