Economics- P1-Nov-24-13

What is the cause of the economic problem facing the global market for gold?

• Consumer wants for gold are limited.

• Gold is a limited resource.

• Only governments can sell gold.

• There is an unlimited supply of gold.

The management of an airline decided to replace its aeroplanes with more technologically advanced aircraft. At the same time, the company retrained its pilots. Which factors of production has the airline improved?

• capital and labour

• capital and land

• labour and enterprise

• land and enterprise

The diagram shows the choices for an individual between leisure and earnings. What is the opportunity cost to the individual of the extra earnings when moving from position X to position Y?

• $10

• $40

• 3 hours of leisure per day

• 6 hours of leisure per day

The world price of cocoa has been falling while the prices of products made from cocoa have been rising. Which combination might explain this

• A

• B

• C

• D

The table shows the amounts demanded and supplied of tomatoes at different prices. The initial equilibrium is at a price of $40.

The following year, more efficient harvesting means that the supply increases by 50% at each price. What will happen to the suppliers’ total revenue?

• It will fall by $10.

• It will fall by $40.

• It will rise by $10.

• It will rise by $200.

A fall in which variable would help eliminate a market shortage?

• quantity demanded

• price

• quantity supplied

• the number of firms

When the price of meat increased from $5 to $6 per kg, Joe decreased his purchase of meat from 40kg to 20kg a month. What was Joe’s price elasticity of demand for meat?

• 0.4

• 2.0

• 2.5

• 20

In the diagram, which line represents perfectly inelastic supply?

• A

• B

• C

• D

What is external benefit?

• private benefits minus private costs

• private benefits plus social benefits

• social benefits minus private benefits

• social benefits plus social costs

What is a function of a commercial bank?

• accepting deposits

• controlling money supply

• issuing notes and coins

• lending money to the government