Econ G10 MCQ Ch 1-6

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?

• diseconomies of scale

• market forces

• opportunity cost

• specialization

The diagram shows production possibility curves (PPC) for an economy that produces two goods, sweet potatoes and onions. Initially, the economy is operating on PPC1.

Which combination of changes could shift PPC1 to PPC2?

• change 1: a fuller use of existing resources in onion farms
  change 2: a reduction in the price of sweet potatoes

• change 1: a reduction in the price of onions
  change 2: a larger population in the country

• change 1: an increase in the price of sweet potatoes
  change 2: an increased consumer preference for onions

• change 1: an increase in the training of onion farmers
  change 2: a greater use of technology on onion farms

A government decides to move towards a market economy by selling state-owned enterprises.

What is a possible motive for this?

• to create greater income equality

• to extend government control of the economy

• to increase efficiency of production

• to take account of external costs

What is a disadvantage of a market economy?

• Consumer choice is ignored

• Consumers may lack information

• Government subsidies encourage efficiency

• There is no incentive to work

The shoppers in a country become worried about a sudden and dangerous rise in air pollution and so buy more food in case they have to stay at home. As the air pollution spreads, supermarket staff fall ill and the supermarkets struggle to keep their shelves full of food. X was the initial equilibrium in the market for food in supermarkets. What will be the new equilibrium as a result of the above situation?

• A

• B

• C

• D

Workers are awarded a pay rise but do not increase their productivity. Workers do not buy the product that they produce. How would this change be shown on a demand and supply diagram for the product?

• The demand curve will shift to the left.

• The demand curve will shift to the right.

• The supply curve will shift to the left.

• The supply curve will shift to the right.

The diagrams show changes in market conditions. Which diagram shows a shortage at price P?

• 
• 
• 
• 

Which factor can influence the price elasticity of supply of a product?

• the degree of necessity of the product

• the level of spare capacity in the industry

• the price of substitutes

• the proportion of income spent on the product

The owner of a hotel in Malaysia finds that the price elasticity of demand (PED) for accommodation

in the area is –1.7. If the hotel owner decreases the price of a room by 5%, how would the demand for a room change?

• It would decrease by 8.5%

• It would decrease by 2.9%

• It would increase by 2.9%

• It would increase by 8.5%

To reduce traffic congestion, a government decides to build a new road. There is a toll charge on the new road. What is the main purpose of this government intervention?

• to address the problem of market failure

• to discourage people from using public transport

• to ensure the supply of transport through the free market

• to obtain revenue from the levy of a toll