MIS-EXM4-24-Y10-1.1

1. 1. The Chinese government is concerned about the level of poverty and the need for more resources in low-income regions of the country. As a result, it is increasing its expenditure in those regions and reducing it in high-income regions. Which economic concept does this government policy illustrate?

• A diseconomies of scale

• B market forces

• C opportunity cost

• D specialisation

2. 2. An airline needs people and equipment. These can be divided into factors of production. What is allocated to its correct factor of production?

• A

• B

• C

• D

3. The diagram shows a production possibility curve (PPC) for country Z. Government policy is to move the economy from point X to point Y on the PPC.

What is the most likely effect of this policy?

• A Living standards rise in the short run.

• B More capital goods are produced.

• C Prices of consumer goods increase.

• D Total output increases.

4. The table shows examples of changes in an economy. Which combination has two microeconomic changes?

• A

• B

• C

• D

5. The diagram shows the supply of motor vehicles.

What will cause a shift in the supply curve from S1 to S2?

• A a decrease in the profits of suppliers

• B a fall in the real incomes of customers

• C a more efficient assembly line using robots

• D a rise in the cost of motor vehicle components

6. The diagram shows the demand for and supply of plastic bags. The original equilibrium price is P.

How would the introduction of a unit tax on plastic bags be shown?

• A Demand would shift to D2.

• B Demand would shift to D3.

• C Supply would shift to S2.

• D Supply would shift to S3.

7. What is the significance to firms of price elasticity of demand?

• A It allows firms to measure the effect of a change in the price of their competitors.

• B It allows firms to measure their ability to change production due to a change in price.

• C It allows firms to predict the change in costs of production.

• D It allows firms to predict the effect of a change in price on their total revenue.

8. In a free market, market failure causes a misallocation of resources. What is not an example of market failure?

• A external costs of production

• B internal diseconomies of scale

• C over-consumption of demerit goods

• D under-consumption of merit goods

9. Which organisations can directly fund the growth of firms?

• A

• B

• C

• D

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

• A They are more divisible.

• B They are more durable.

• C They are more portable.

• D They are more recognisable.