Past paper Econ Practice

What is the payment received for the use of capital?

• interest

• profit

• rent

• wage

Which type of good would be over-consumed because of information failure?

• demerit

• inferior

• merit

• public

What does the phrase 'ceteris paribus' mean?

• All the resources used are of equal quality

• Everything else remains uncahanged

• The price mechanism rations scarce goods

• The variable under consideration is held constant

Government wishes to raise the farmers incomes without raising the price of food to consumers.Which policy should it use?

• a maximum price below the market price for food

• a minimum price below the market price for food

• a payment of a subsidy to farmers to produce food

• a release of government food stocks onto the market

What could explain a shift of an upward-sloping curve to the right?

• an increase in firms' unit labour costs

• an increase in the number of firms in the industry

• an increase in the price of the good

• an indirect tax imposed on the good

When will it NOT be possible to use price as a rationing mechanism?

• when a good has a number of close substitutes

• when a good is an inferior good

• when the demand for a good is perfectly inelastic

• when the quantity of a good is in fixed supply

Money is paid by the government to an unemployed worker in the form of benefit. Why is this called a transfer payment?

• The payment is from taxes paid by employed workers

• The payment is without the production of goods&services taking place

• The payment is made from government savings not current income

• The payment must be spent as directed by the government

What is necessary for demand for a good to be effective?

• The consumer must have the ability to buy the product

• The consumer must receive consumer surplus

• The good must be sold in the private sector of the economy

• There must be a successful advertising campaign

What will definitely lean to an improvement in the terms of trade?

• Export prices fall whilst import prices rise

• Export prices rise by the same amount as import prices

• Export prices rise slower than import prices

• Export prices rise whilst import prices stay the same

Why is the price elasticity of demand for particular brand of coffee likely to be higher than the price elasticity of demand for coffee in general?

• Coffee in general takes up a higher proportion of consumers' income

• Consumers may be very loyal to a particular brand of coffee

• There are more substitutes for a particular brand of coffee than for coffee in general

• Total demand for coffee is higher than for any one brand