What will cause the demand curve for domestically produced cars to shift to the left?

A an increase in the costs of production of domestically produced cars

B a reduction in taxes on the purchase of cars

C a reduction in the tariff on imported cars

D a reduction in the tax on petrol

The diagrams show changes in the market for a good. Which diagrams represent ‘a change in the quantity demanded’?

A 1 and 2

B 1 and 3

C 1 only

D 3 only

The diagram shows the demand curve for a product with unitary price elasticity. What will happen with such a curve?

A A fall in price will bring about an increase in expenditure on the product.

B A fall in price will bring about an increase in sales but a fall in expenditure on the product.

C As the price rises, expenditure on the product stays the same.

D As the price rises, expenditure on the product rises and then falls.

In the diagram D and S are the demand and supply curves of a good. What could cause the supply curve to shift in the short run to S1?

A a change in consumer preferences

B a decrease in the price of a complementary good

C a fall in the cost of raw materials

D a government warning that consumption of the good can damage health

A refinery which processes oil into petrol (gas) is faced with the following conditions. 1 It is working at full capacity. 2 Its petrol storage tanks are full. 3 It has received delivery of a new fleet of petrol tankers to transport its petrol. 4 It requires six months to train new workers to qualify in safety procedures. Which of the conditions will tend to make the supply of petrol relatively price inelastic?

A 1 and 2

B 1 and 4

C 2 and 3

D 3 and 4

The table gives estimates of the price elasticities and cross elasticities of demand for bus and rail travel. What would be the change in the volume of rail travel resulting from a 1% increase in bus fares?

A an increase of 0.16%

B an increase of 0.43%

C a reduction of 0.13%

D a reduction of 0.37%

An industry is comprised of three firms, R, S and T which produce product X. By how much is a rise in the price of product X from $22 to $36 likely to increase the market supply of X?

A 27

B 77

C 104

D 22

A firm estimates that the price elasticity of supply of its product is 0.4. Should the firm be concerned by this figure?

A No, as it implies that the firm will be able to raise revenue by raising price.

B No, as it suggests there are few substitutes for the product.

C Yes, as it indicates that the firm is not able to adjust supply easily when demand changes.

D Yes, as it means that demand for its product is increasing at a slow rate.

What could cause a shift in the supply curve of good X and a movement along its supply curve?

How would an economist establish the market demand curve for a private good?

A by adding consumer surplus to total expenditure

B by combining individual demand curves horizontally

C by combining the price elasticity of individual demands

D by multiplying price by quantity demanded

The diagram shows the market for new houses. What would cause the change in the market equilibrium position from X to Y?

A a fall in income tax and a rise in building costs

B a fall in interest rates and increased efficiency in house-building

C a fall in population and a rise in taxes on building materials

D a rise in building subsidies and a fall in incomes

In the diagram, S1 is the original supply curve and D is the original demand curve. If supply shifts to S2, which area represents the change in consumer surplus?

A PQVT

B PQW

C PRVT

D TVW

When demand for a good falls, its price falls. What is the function of the price fall?

A to eliminate shortages

B to reduce consumer surplus

C to send a signal to producers

D to stimulate a further fall in demand

When is a rise in the price of a product likely to cause more resources to be allocated to its production?

A if demand increases when the supply curve is perfectly inelastic

B if the demand curve shifts to the right when the supply curve is inelastic

C if supply increases when the demand curve is perfectly inelastic

D if the supply curve shifts to the left when the demand curve is elastic

The table shows demand and supply schedules for red peppers. The equilibrium price is initially 15 cents per kg. The government pays a subsidy of 10 cents per kg to producers. What will be the new equilibrium price charged to consumers?

A 5 cents

B 10 cents

C 15 cents

D 20 cents

In a free market in disequilibrium, which combination of price and quantity will lead to a fall in price and a contraction in output to reach equilibrium?

A P1Q1

B P1Q3

C P3Q1

D P3Q3

It was estimated in 2010 that milk had an income elasticity of demand of –0.6. What can be concluded about milk from this information?

A It accounts for only a small proportion of household expenditure.

B It has very few substitutes.

C Household expenditure on milk will decrease if the price of milk increases.

D It is an inferior good.

During a period of falling incomes in Germany in 2009, demand for jewellery declined. There was, however, a rise in demand for frozen foods. How would the effect on the demand for the two products be illustrated?

The diagrams show possible demand curves for four commodities. Which diagram shows a completely inelastic demand curve?

The diagram shows the supply curve for a good. What is the price elasticity of supply when the price rises from $2 to $4?

A 0.2

B 0.5

C 1

D 2

The diagram shows a market for wheat that is in equilibrium. Which area represents the total revenue for wheat farmers?

A OTXY

B OVXZ

C OVXY

D OWXY

The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. New, more efficient boats with lower running costs are then used. Which point represents the new equilibrium?

Which statement could explain a decrease in the demand for natural rubber?

A Demand for car tyres has increased.

B New techniques of producing substitutes for rubber have been introduced.

C Productivity of rubber plantations has increased.

D The area of land on which rubber is grown has increased.

A farmer pays a landowner for the use of a field. What is the income to the landowner called?

A interest

B profit

C rent

D wages