Economics A-Level Quiz

What is an ad valorem tax?

• A tax based on the quantity of goods sold

• A tax imposed on luxury goods only

• A direct tax on income

• An indirect tax dependent on the value of the good

What does 'ceteris paribus' mean?

• All other things remaining the same

• The market is in equilibrium

• Supply equals demand

• Prices are flexible

What is consumer surplus?

• The difference between the price the consumer is willing to pay and the price they actually pay

• The total utility derived from consumption

• The excess supply in the market

• The total amount spent by consumers

What is the definition of a command economy?

• An economy based on barter trade

• An economy with no government intervention

• An economy where resources are allocated by the state

• An economy where resources are allocated by the market

What is the economic problem?

• The problem of trade deficits

• The problem of unemployment

• The problem of inflation

• The problem of scarcity

What is a free rider principle?

• When producers charge less than the market price

• When consumers pay more than the market price

• When people benefit from resources they do not pay for

• When the government provides subsidies

What is a positive externality of consumption?

• When the private costs of producing a good are greater than the social costs

• When the private benefits of consuming a good are larger than the social benefits

• When the social benefits of consuming a good are larger than the private benefits

• When the social costs of producing a good are greater than the private costs

What is the definition of opportunity cost?

• The cost of producing one more unit of a good

• The value of the next best alternative forgone

• The total cost of production

• The cost of capital goods

What is a subsidy?

• A government payment to lower production costs

• A price ceiling set by the government

• A tax imposed on goods

• A fee charged for pollution

What is the price elasticity of demand (PED)?

• The responsiveness of supply to a change in income

• The responsiveness of demand to a change in income

• The responsiveness of supply to a change in price

• The responsiveness of demand to a change in price