Abdul earns $50 000 a year working as a teacher. He owns a house valued at $250000 and has shares worth $20 000. He has a current bank account with a balance of $1500 and $200 in his wallet. In his house there is a jar containing $100, which he has saved to spend on his forthcoming holiday. What is the value of Abdul’s liquid assets? 

A $200 

B $300 

C $1800 

D $21 500

Which type of good is healthcare? 

A demerit 

B free 

C merit 

D public

Which is a normative statement? 

A If interest rates fall consumption is likely to increase. 

B If interest rates fall consumption will definitely increase. 

C Interest rates and consumption are usually inversely related. 

D The rate of interest should be reduced.

In a free market there is a surplus of a good. Which change would cause the market to come to an equilibrium? 

A a decrease in demand 

B a fall in price 

C a government minimum price 

D an increase in supply   

What is most likely to increase the quantity of houses supplied? 

A a policy to help house buyers on modest incomes 

B a restriction on the level of rent that can be charged 

C a rise in the tax on materials used for building houses 

D the removal of a subsidy to house builders

 The diagram shows two demand curves and two supply curves for a product. Which equilibrium point is most likely to represent the long-run equilibrium in the market?

The diagram shows an economy’s production possibility curve.
It has been employing its resources in the ratio of 80% consumer goods production and 20% capital goods production.

What will be the result if it decides to double its output of capital goods? 

A a gain of 20 capital goods 

B a gain of 40 capital goods 

C a loss of 200 consumer goods 

D a loss of 600 consumer goods 

Which comment relating to the introduction of charges for previously free medical treatment is normative?

 A Fewer people will be able to afford treatment. 

B It will be unfair on lower income groups. 

C Richer citizens will pay the higher charges. 

D Workers’ health and productivity will fall.

The demand for a product is affected by a number of influences. What will cause a movement along its demand curve? 

A a rise in consumers’ income 

B a rise in the popularity of the product 

C a rise in the population 

D a rise in the price of the product

Good X is a substitute for good Y and a complement to good Z. What would happen after a fall in the price of good X? 

A Only the demand for X will rise. 

B Demand for X, Y and Z will rise. 

C Demand for Y will fall and for Z will rise. 

D Demand for Y will rise and for Z will fall.

The equation for the quantity demanded (QD) for a product is QD = 400 – 20P where P = price in dollars. The quantity supplied (QS) is given by QS = 100 + 40P. What change will occur if the price rises from $5 to $6? 

A the market will move from equilibrium to shortage 

B the market will move from equilibrium to surplus 

C the market will move from shortage to surplus 

D the market will move from surplus to shortage

What would cause the demand curve for vegetables to shift from D1 to D2 as shown?

A a change in supply from Q1 to Q2 

B a poor harvest due to unfavourable weather 

C a price change from P1 to P2 

D an increase in real incomes

The demand curve for new cars in a country shifted to the left. Which change could have caused such a shift? 

A an increase in real disposable income 

B an increase in the cost of borrowing 

C an increase in the price of new cars 

D an increase in the price of train travel

What is correct about market supply? 

A Market supply can increase only when all individual firms increase their output. 

B Market supply is effective when consumers have sufficient income to buy the good. 

C Market supply is the result of aggregating the supply of all individual firms. 

D Market supply of an inferior good falls as price increases

A good is provided by the government. Consumption by one person does not affect the amount of the good available for others. Which type of good must this be? 

A complementary good 

B merit good 

C private good 

D public good

Scarcity means that goods need to be rationed between competing consumers. Which basis for rationing is the most likely to result in the most equal distribution of goods? 

A consumer preference 

B market price 

C political decision 

D seller preference

The price of computer chips used in the manufacture of personal computers has fallen. This will lead to _________ personal computer?

A. a decrease in the quantity supplied of

B. a decrease in the supply of

C. an increase in the quantity supplied of

D. an increase in the supply of

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

 D1 and S1 are the initial demand and supply curves for a normal product. They then change to D2 and S2.

Which pair of changes would result in the market equilibrium for the product changing from X1 to X2? 

A a fall in the price of a raw material used in the manufacturing and a decrease in the price of a complementary good 

B an increase in average consumer incomes and an increase in the level of an indirect tax imposed 

C an increase in the price elasticity of demand for the product and a fall in its price elasticity of supply 

D a rise in the population and an increase in the price of labour used in manufacturing

A market is in equilibrium at point X. The government then subsidises both consumers and producers by direct payments. What will be the new equilibrium position? 

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

Which types of good are distinguished from one another by the presence or absence of opportunity cost? 

A demerit and merit goods 

B economic and free goods 

C inferior goods and normal goods 

D private and public goods

Farmers using traditional methods lack access to finance and often employ family members on a part-time basis. If working practices in agriculture could be improved, how would this be likely to be shown on the production possibility curve?

A by a movement from R to T 

B by a movement from S to R 

C by a movement from S to T 

D by a movement from T to R

What is ‘a produced means of further production’? 

A capital 

B enterprise 

C labour 

D land