AS Econs p1- 2023 Nov 11

What will help solve the basic economic problem?

• the control of the market system

• the efficient allocation of scarce resources

• the preservation of a healthy environment

• the elimination of hunger

Country Z operates with a production possibility curve (PPC). Currently, output is at combination 1. Which movement has zero opportunity cost in terms of the goods produced?

• 1 to 2

• 1 to 3

• 2 to 3

• 3 to 4

A country's health care is funded by taxation but can be used free of charge by patients. Which type of good is health care in this country?

• demerit good

• free good

• private good

• public good

What is least likely to increase as a result of a transition from a planned economy to a free market economy?

• prices of goods and services

• privately owned resources

• provision of merit goods

• structural unemployment

Which statement correctly describes the area of producer surplus on a demand and supply diagram?

• A) It is above the supply curve and below the equilibrium price line.

• B) It is above the supply curve and below the demand curve.

• C) It is below the demand curve and above the equilibrium price line.

• D) It is below the supply curve and above the horizontal axis.

The diagram shows a demand curve for pineapples. What happens to the value of price elasticity of demand (PED) when there is a movement from point X to point Y and what describes the value of PED at point Y?

• A) fall, elastic

• B) fall, inelastic

• C) rise, elastic

• D) unchanged, unitary

In a free market, there is a surplus of a good. Which change would cause the market to come to an equilibrium?

• A) a decrease in demand

• B) a fall in price

• C) a government minimum price

• D) an increase in supply

The cross-elasticity of demand between good P and good Q is –0.4.

The cross-elasticity of demand between good P and good R is +0.6.

Which combination of goods is most likely to be represented by this information?

• A

• B

• C

• D

The supply, S, of a product is determined by the equation

S = 10 + 10P

where P is the price of the product in $.

What is the product’s price elasticity of supply when its price rises from $1 to $2?

• A 0.5

• B 1.0

• C 2.0

• D 5.0

In the diagram, the supply curve shows the number of spaces in a car park and the demand

curves show the demand for spaces on four different days, D1, D2, D3 and D4.

The owner wishes to charge a parking fee on each of these days to allocate the spaces

according to the market mechanism.

Which pricing policy should the owner use?

• Set a fixed price at P1

• Set a fixed price at P4

• Vary prices between P2 and P3

• Vary prices between P1 and P4