Economics AS Level Units 1 to 4

Which outcome depends upon the division of labour?

• A decrease in boredom at work

• A decrease in comparative advantage

• A decrease in efficiency

• A decrease in opportunity cost

The fundamental economic question is how to meet unlimited wants with limited resources. What is an example of limited resources?

• Insufficient consumer goods in the local shops

• Insufficient jobs to allow full employment

• Insufficient machinery to produce electrical goods

• Insufficient tax revenue to finance building a school

Which statement is not a positive economic statement?

• An increase in the rate of income tax decreases the wish to save

• An increase in the rate of income tax has a greater impact the greater the level of income

• An increase in the rate of income tax causes more hours of work to be supplied

• An increase in the rate of income tax is the fairest way to finance the national health service

The combinations of output of goods X and Y shown in the table could all be produced using the existing resources in a country to their maximum capacity.
Which statement about the opportunity cost of good Y in terms of good X is correct?

• It decreases as the output of Y increases

• It is always below 1Y=1X

• It is constant throughout the range of output shown

• It is never above 1Y=2X

What would be an opportunity cost of growth in an economy?

• The faster growth of services than of manufacturing

• The need for an increased level of imported raw materials

• The need for greater government intervention

• The reduction of consumption if growth requires investment

A theatre increases the price of its tickets from $10 to $15. As a result, its total receipts decrease from $10 000 to $6000
Withing what range does the price elasticity of demand for theatre tickets lie?

• 0.2 to 0.5

• 0.6 to 1.0

• 1.1 to 1.4

• 1.5 to 2.0

Producer surplus is the difference between?

• The consumer surplus from the good and the producers' total cost of suppling the good

• The highest price that the consumer would be willing to pay for the good and the price the producer actually sold it for

• The lowest price that the producer would accept for the good and the price the producer actually sold it for

• The quantity that the producers manufacture in a week and the amount sold to consumers in that week

The diagram shows the demand for, and supply of, carrots.
What is true at price P1?

• There will be a shortage of carrots

• There will be a surplus of carrots

• There will be an increase in the sale of carrots

• There will be market clearing of carrots

The cross elasticity of demand between two products, X and Y, is negative. What would be the immediate effect of a rise in the price of product Y?

• Quantity demanded of product X will fall

• Supply of product X will rise

• The cross elasticity of demand will rise

• The price of product X will rise

Which statement about market disequilibrium is correct?

• Price is likely to change

• Supply is equal to demand

• The government must intervene

• There must be shortages