MCQ Practice Micro MOCK / EXAM 2

In 2019, a department store saw a decrease in the demand for eyeglasses. 

Which of the following is the most likely cause of this decrease in demand?

• A.     A decrease in the price of eyeglasses due to falling production costs.

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  B.     Technological advancements making alternative vision correction methods more appealing.

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  C.     Government regulations restricting the sale of eyeglasses.

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  D.    Fashion trends promoting the use of eyeglasses as a style accessory.

Which government policy would best protect the environment?

• A.     Exploiting natural resources

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  B.     Removing controls on industry

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  C.     Increasing tax on fuel.

• D. Decreasing tax on fuel.

In a free market economy, the economic problem of which goods should be produced is usually solved by:

• A.     Consumers expressing their tastes and preferences in their pattern of spending.

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  B.     Households completing business surveys to reveal their preferred products.

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  C.     Firms planning their activities to meet production targets set by government.

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  D.    Entrepreneurs producing their own goods to satisfy their own needs and wants.

Which of the following is most likely to reduce the benefits of specialisation?

• A.     A reduction in government regulations.

• B.     An increase in competition.

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  C.     Taxes on pollution.

• D.    Trade conducted by bartering.

Which of the following explains how market failure might occur in a free market economy?

 

 

 

 

 

 

 

 

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  A.     A net welfare loss results from intervention by the government.

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  B.     Firms enter the market in response to higher prices.

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  C.     Goods with positive externalities are underprovided.

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  D.    Prices rise when there is excess demand.

A demand curve is drawn on the assumption that:

• A.     Quantity demanded always increases as price falls.

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  B.     Changes in price do not influence supply.

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  C.     Factors affecting demand, other than price, can change.

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  D.    Factors affecting demand, other than price, remains constant.

The graph below shows the demand and supply curves for a good provided solely by a free market.

Currently, output is at Q₁. However, there is a misallocation of resources resulting in market failure.

The socially optimal level of production is Q₂. Which of the following statements is correct?

• A.     A merit good.

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  B.     A public good.

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  C.     A good with negative externalities in production.

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  D.    A good with positive externalities in production.

A production possibility curve shows various combinations of the output of:

• A.     What consumers would like to consume

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  B.     What producers would like to produce

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  C.     What an economy can produce

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  D.    What should an economy produce

The table below provides information about the market for fresh cut flowers.

What is the equilibrium price for a kilogram of fresh cut flowers?

 

• A.     £5

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  B.     £10

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  C.     £30

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  D.    £35

In an economy, competitive firms supply electricity that is generated using coal-fired power stations.

 

If the government tries to reduce pollution by imposing an indirect tax on the firms, this would:

 

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  A.     Shift the market demand curve to the left.

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  B.     Shift the market demand curve to the right.

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  C.     Shift the market supply curve to the left.

• D.    Shift the market supply curve to the right.