NEW
Font size
WorksheetsN5 Economics of the Market
Total questions: 50
Worksheet time: 25mins
Which one of these is a good?
dentist
supermarket
trainers
teacher
Which one of these is a need?
water
milk
irn bru
coffee
Which of these is the return to the factor enterprise?
rent
wages
profit
interest
Which of the following is an example of an organisation in the secondary sector of industry?
farm
supermarket
bakery
bank
The movement from Point A to Point B on the graph shows
a decrease in demand
an increase in quantity demanded
a decrease in quantity demanded
an increase in demand
What would most likely cause the movement from S to S1?
An increase in input prices
An improvement in technology
A decrease in the price of a good
An increase in income
According to the graph what occurs at a price of £7?
There would be a surplus of 20 units
The market would be in equilibrium
There would be a surplus of 40 units
There would be a shortage of 40 units
What will happen in the rice market if buyers are expecting higher prices in the near future?
The supply of rice will increase
The demand for rice will increase
The demand for rice will decrease
The demand for rice will be unaffected
What best refers to the situation when the price of a good or service changes?
There is an extension/contraction along the demand curve
Demand shifts in the opposite direction
Demand shifts in the same direction
Supply shifts in the opposite direction
According to the graph, what are the equilibrium price and quantity?
£7, 20
£5, 40
£7,60
£3, 60
New technology advances the rate at which furniture can be assembled. Why does this change the supply?
The output rate declines
The expectations of consumers changes
There is a change in cost of production
The number of producers changes
Thousands of people leave a small town due to a factory closing down. Sales at the local grocery store are reduced. What causes this change?
Change in the number of buyers
Prices or availability of substitutes
Prices or availability of complementary goods
Change in the weather or season
Which of the following would NOT be a determinant of demand?
Tastes
Income
The prices of the inputs used to produce the good
The price of related goods
Suppose you like Banoffee Pie. Assuming all other things are constant, you notice that the price of bananas has risen. How would your demand for Banoffee Pie be affected by this?
It would increase
It would be unaffected
It would decrease
There is insufficient information given to answer this question
Which situation is likely to lead to the lowest prices?
Competition between businesses is prohibited
Several producers compete to sell goods to the public
Businesses secretly agree to share their profits
There is only one producer making the good
Which statement expresses a central idea of how the laws of demand and supply work?
Technology dictates the prices charged for goods and services
The government sets the prices for goods and services
Consumers alone set the prices for goods and services
Prices are determined by the interaction of producers and consumers
Which of the following best refers to the market equilibrium price?
The quantity demanded is the same as the quantity supplied
Surpluses depress the number of goods supplied
The government will not intervene in the market
Shortages and surpluses will have no effect on the market
If the price of a substitute to good X increases, then
The market price of good X will decrease
The demand for good X will decrease
The demand for good X will increase
The demand for good X will not change
Miss Hunter goes to Pittodrie to buy tickets for an Aberdeen game. Miss Hunter is told the game is sold out and no tickets are available. Which best explains why there are no football tickets available?
The demand for tickets was greater than supply
The supply of tickets was greater than demand
The stadium forgot to print enough tickets
The stadium charged too much money for each ticket
When companies compete in a market economy, what is usually the result?
There are frequent shortages of goods on the market
Producers refuse to sell some of their products
People pay much higher prices for goods
Consumers are able to buy goods for the best available price
What does the Latin phrase "ceteris paribus" literally mean?
there's no such thing as a free lunch
other things being equal
to respond slowly to a change in price
after this therefore because of this
Other things being equal, when the price of a good rises, the quantity of the good supplied also rises. Which of the following best refers to this situation?
The law of demand
The law of supply
The law of diminishing returns
The law of increasing costs
What would be the result if the price was £8?
A surplus of 30 units would exist and the price would tend to fall
A surplus of 60 units would exist and the price would tend to rise
A shortage of 30 units would exist and the price would tend to rise
A surplus of 60 units would exist and the price would tend to fall
Why will scarcity continue to be a problem in the future?
Needs will decrease in the future
Prices will rise
Resources will always be finite
World population will fall
Define opportunity cost.
The value gained from choosing a good or service
The value foregone from the next best alternative
The value foregone from the next two best alternatives
The value foregone from all other alternatives
Why does scarcity exist?
There are not sufficient resources to meet everyone's wants
Each year workers tend to produce less than previously
Machines wear out in time
There is a limit to people's wants
What is the basic economic problem?
The value foregone from the next best alternative
The fact that the world has infinite resources but humans have finite wants
Too many resources
The fact that the world has finite resources but humans have infinite wants
Suppose you have a £20 Apple Gift Card with which you can buy (download) songs and videos. Songs cost £1 each and videos cost £2 each. What is the opportunity cost of one video?
An increase in cost as more videos are purchased
It is £1
It is constant and equal to 1/2 song
It is constant and equal to 2 songs
The downward slope of the demand curve
Represents the Law of Demand
Indicates how demand changes when incomes rise and the good is a normal good
Shows that as the price of a good rises, consumers increase the quantity they demand
Indicates how the quantity demanded changes when incomes rise and the good is a normal good
What factor could have caused the demand to decrease as shown?
Expectation that prices will increase
Increase in market share
A decrease in the price of a substitute
Incomes have increased
Which of the following will cause an increase in demand for snowboards?
A decrease in consumer income
A decrease in the population
More costly production methods
A decrease in the price of lift passes at resorts in the Alps
A new study has shown that avocados are extremely healthy. The demand for avocados has increased due to a change in
Price of a substitute good
Tastes and preferences
Market size
Price of a complementary good
Which of these best describes the Law of Demand?
Prices will go up for certain goods when quantity demanded goes up and vice versa
If prices go up, quantity demanded will also go up and if prices go down, quantity demanded will also go down
There is no Law of Demand, each situation is unique and demand and prices cannot be predicted
If prices go up the quantity demanded will fall, and if prices go down the quantity demanded will go up
Total cost equals
Total variable costs minus total fixed costs
Total fixed cost plus total variable costs
The best definition of variable costs is
They vary over time
They vary with the number of units produced
They vary with the prices charged by suppliers
They vary with tax rates set by the government
The formula for average cost is
Total cost / total revenue
Output / total cost
Total cost / output
Total revenue / output
The total revenue of a business is
quantity of units sold multiplied by the selling price
equal to total costs
the same as profit
quantity of units produced times unit production cost
Which of the following calculations would you use to find total costs?
Fixed costs + Variable costs
Selling price - Fixed costs
Total fixed costs / variable cost per item
Total fixed costs / Selling price - variable cost
The best definition of fixed costs are those that do not vary with
number of workers
output
time
seasons
The amount a firm receives after all costs have been paid is known as
Marginal revenue
Revenue
Profit
Marginal profit
If variable costs are £6 per unit, then total variable costs of producing 7,000 units will be
£2,100
£70,000
£42,000
£7,000
Higher productivity is important as it
Increases average costs
Lowers profits
Reduces average costs
Reduces the firm's ability to compete internationally
Total cost of producing 35 sweatshirts is £70. Average cost per sweatshirt is
£2
£0.50
£70
£4
Which one of the following costs is most likely to be a variable cost for a fast food restaurant?
The machinery used to cook the food
The rent of the restaurant
The salary of the manager
The cost of the food supplies
Profit it equal to
Total cost - Total revenue
Total revenue - Total cost
Revenue + Fixed costs
Fixed cost + Variable cost - Total revenue
If costs rise the supply curve
Stays the same
Shifts to the right
Shifts to the left
The break-even level of output is that number of units where
Variable costs equal fixed costs
Total costs equal revenue
Variable costs equal revenue
Profit is at its highest level
The reward for saving and the cost of borrowing is
Capital
Interest
Profit
Investment
Why do women have to save more money than men for their retirement?
They tend to live longer on average
Women still earn less than men in some jobs
Women take time off their jobs to have/raise children
All of the above
Expending money with the aim of achieving a profit is called
Budgeting
Profiting
Investing
Debiting
