Economics Quiz2

The diagram shows a production possibility curve (PPC) and a number of output combinations for tea and coffee. Which combinations of tea and coffee could the economy currently produce?

• U, V, W, X

• U, V, X, Y

• U, V, X, Z

• V, X, Y, Z

What is a disadvantage of a market economy?

• Consumer choice is ignored.

• Consumers may lack information.

• Government subsidies encourage efficiency.

• There is no incentive to work.

What is the definition of price elasticity of demand?

• the responsiveness of quantity demanded of a product to a change in income of consumers

• the responsiveness of quantity demanded of a product to a change in the price of a complementary product

• the responsiveness of quantity demanded of a product to a change in the price of that product

• the responsiveness of quantity demanded of a product to a change in the price of a substitute product

Which advantage do coins have that makes them more suitable than paper banknotes to act as money?

• They are more divisible.

• They are more durable.

• They are more portable.

• They are more recognisable.

Which statement about different income groups is correct?

• High-income groups do not need to borrow money.

• High-income groups save less money than low-income groups.

• Low-income groups find it easier to borrow than high-income groups.

• Low-income groups save a smaller percentage of their income than high-income groups.

The table shows the rate of income tax paid at different income levels. What describes this type of tax?

• indirect

• progressive

• proportional

• regressive

What is the definition of the unemployment rate?

• the benefits and allowances paid by the government to people without a job

• the number of people without a job but seeking a job as a percentage of the labour force

• the rate of change in the number of people who have not worked over the last year

• the total number of people not working when the data was calculated

What is most likely to cause inflation?

• a reduction in exports

• a reduction in government spending

• an increase in the rate of interest

• an increase in trade union power

The production possibility curve (PPC) shows the hours per day a student has for either entertainment or revision. (hours) The student revises for 3 hours a day. As exams approach, the student decides to revise for 9 hours a day. What is the opportunity cost of this decision?

• 3 hours of revision

• 6 hours of entertainment

• 6 hours of revision

• 9 hours of entertainment

Helium is a gas that is limited in supply because it takes thousands of years to form. The US government holds 35% of the world's supply of helium and has been selling its stocks. Helium is essential in medical scanners. It is also used for party balloons, which is a wasteful alternative use of a valuable good. Which two concepts apply to this statement?

• demand and supply, government subsidy

• excess demand, resource allocation

• opportunity cost, private monopoly

• public sector, factors of production