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WorksheetsOCR GCSE Economics MCQ Unit 1 part 2
Total questions: 60
Worksheet time: 30mins
The price elasticity of demand for a good is unitary. What will happen if prices rise?
Expenditure on the good will fall
Expenditure on the good will rise
The quantity demanded will fall
The quantity demanded will rise
The diagram shows the demand curve for a good. Which area represents the total amount paid by consumers when the price is A?
AEB
OABC
OABD
OEBC
A market starts in equilibrium and then demand falls. Which of the following is most likely to happen?
A higher equilibrium price and equilibrium quantity
A higher equilibrium price and lower equilibrium quantity
A lower equilibrium price and equilibrium quantity
A lower equilibrium price and higher equilibrium quantity
You put £100 into a bank account at the start of the year. One year later your account is worth £105. What is the interest rate you have received?
0.5%
5%
10%
15%
The table shows the total costs of a firm. It sells its output for £5 each. How many units of output per day does the firm need to sell to maximise profits?
2
3
4
5
In a competitive market:
the government must control the price
the item that is traded must be a good
the item that is traded must be a service
there must be many sellers
Which of the following is predicted by the market forces of supply and demand?
Equilibrium can only be achieved with government intervention
Excess supply will occur if the price is below equilibrium
If quantity demanded equals quantity supplied there is disequilibrium
When there is excess demand the price will rise
The government decides to lower the rate of interest in the economy. Which of the following groups is most likely to be made worse off by this decision?
Borrowers
Large firms
Savers
Small firms
Which of the following statements is correct about a school teacher's output?
It is equal to zero because no goods are produced
It is part of the primary sector
It is part of the secondary sector
It is part of the tertiary sector
The financial sector allows consumers and producers to manage imbalances between income and expenditure by
making loans and overdrafts available
providing savings and investments
rationing the available liquidity
setting suitable interest rates
In which sector of the economy would a boat building firm be placed?
Free market
Primary
Secondary
Tertiary
Too few resources would be allocated to certain products if left to the market. Which of these is most likely to be provided by the government?
Capital goods
Electric cars
Social media
Vaccinations
What would be the best advice for a new business entering the restaurant market?
Cut the profits on its products
Extend the range of its products
Reduce its production costs
Spend money on advertising
Sundip was paid a salary of £3000. She also received a bonus of £500. Her employer deducted £875 to cover income tax and national insurance. What was Sundip's gross income?
£3500
£3000
£2625
£2125
As a business increases in size it is able to employ more specialist staff. Which economy of scale does this describe?
Increased dimensions
Managerial
Marketing
Risk-bearing
The price of a good is most likely to fall when
demand and supply both decrease
demand and supply both increase
demand decreases and supply increases
demand increases and supply decreases
The diagram shows the relationship between output and total revenue of a firm. Which statement is correct?
Total revenue increases at all levels of output
Total revenue increases from 0 to T and then falls
Total revenue increases from 0 to U and then falls
Total revenue increases from 0 to V and then falls
What is most likely to cause a decrease in the price of carrots?
A decrease in the demand for substitutes of carrots
An increase in the demand for complements of carrots
An increase in the number of farm workers
An increase in the popularity of carrots
A characteristic of a monopoly is that there is an absence of
competition
economies of scale
opportunity cost
productivity
A fishmonger reduces the price of haddock by 20%. As a result of this they sell 30 pieces of haddock instead of 20. This suggests that the demand for haddock is
perfectly price elastic
perfectly price inelastic
price elastic
unitary price elastic
What is an activity in a factor market?
Firms buying a greater quantity of finished goods
Firms employing more engineers
Firms producing output using advanced technology
Households seeking to buy more electric cars
You are the economist for a timber merchant and have been asked to advise your team leader about factors of production. Which of these is an example of capital?
A computer monitor
The business owner
The company's shares
The trees owned by the company
The table shows the total cost of production for a good.
Average costs always decrease as output increases
Average costs always increase as output increases
Average costs start to rise when 300 units are produced
Average costs start to rise when 400 units are produced
Which group would not be classed as producers?
Factory workers
Self-employed individuals
Small firms
The government
What is a function of the Bank of England?
Issuing bank notes
Making business loans
Offering savings accounts
Regulating the stock market
What best explains why some suitable people will not apply for this job? A company advertised for a new marketing manager. Two essential requirements are that the person must have marketing experience and live within easy commuting distance. Pay will depend on the level of experience.
The demand for labour is dependent on the demand for the product
The price elasticity of demand for the advertised job is inelastic
Their qualifications and experience are not in marketing
This labour market lacks perfect mobility
Price elasticity of supply measures the
percentage change in price relative to the percentage change in quantity supplied
percentage change in quantity supplied relative to a change in income
ratio of the quantity supplied to the price of the factor inputs
responsiveness of quantity supplied to a change in the price of the product
This is an example of: For most of 2021 the world supply of computer chips did not satisfy the demand for them.
economies of scale
oligopoly collusion
scarce resources
unlimited wants
Buyers and sellers of a good on a website is an example of
a market
competition
specialisation
the secondary sector
A company will need to use the services of different financial institutions. Which of the following financial institutions is the company most unlikely to use?
Building society
Central bank
Commercial bank
Insurance company
A company will need to use the services of different financial institutions. Which of the following financial institutions is the company most unlikely to use?
Building society
Central bank
Commercial bank
Insurance company
Which of the following is an example of an external economy of scale?
Bulk-buying
Financial
Location
Risk-bearing
How does the production of a service differ from the production of a good?
It is intangible
No capital is required
No labour is required
Specialisation is not possible
The table shows the relationship between the price of a good and the quantity demanded. Which of the following statements is correct?
It shows that less is demanded when incomes rise
It shows that price and quantity demanded are inversely related
It shows that price elasticity of demand is equal to 1
It shows that the equilibrium price must be £20
A market is an oligopoly if
each of the firms in the market has only a few customers
each of the firms in the market makes many products
most of the market is supplied by a small number of firms
there is only one firm in the market
The demand for a firm's product is price inelastic. Which of the following statements must be true?
A decrease in price will lead to excess supply
A decrease in price will reduce the quantity sold
An increase in price will decrease profits
An increase in price will increase revenue
Opportunity cost can be defined as
the loss as a result of missing a bargain
the minimum average cost of producing a good
the price of a good or service
the sacrifice of the most desired alternative
If interest rates rise
consumers pay less for credit
firms can invest more cheaply
people will save less
the government pays more to fund its debt
Which of the following is an example of a factor market?
A toy company hires more workers to increase production
A toy company sells a new toy to a consumer
Beth sells her second-hand car to Jack
The government provides healthcare free for all users
A feature of an efficient market is that
any costs of environmental damage are met equally by all consumers
firms are unable to make any profit
the prices of products are set at a level that all consumers can afford
the prices of products reflect the worth of resources used in their production
Which of the following is a feature of a monopoly?
An inability to supply the market
Collusion between rivals
High barriers to entry
Low prices
Alpha Company borrows £1000 at 5% interest for a year. How much will Alpha Company have to pay back at the end of the year?
£5
£50
£500
£1050
Money is different from other assets because it
can be stored by banks
is convenient to carry
is generally acceptable as a medium of exchange
is made of durable metal
Money is different from other assets because it
can be stored by banks
is convenient to carry
is generally acceptable as a medium of exchange
is made of durable metal
If supply is price inelastic, the value of price elasticity of supply will be
greater than one
greater than the price elasticity of demand
infinity
less than one
The table shows a firm's total costs. Which of the following statements is correct?
The firm gains economies of scale as output increases from 10 to 20 units
The firm gains economies of scale as output increases from 20 to 30 units
The firm gains economies of scale as output increases from 30 to 40 units
There are no economies of scale over any range of output
Net pay may be less than gross pay because of
government subsidies
indirect taxes
interest payments
pension contributions
In a market system, decisions about what to produce are determined by the interdependence of
consumers and government
consumers and producers
government and workers
producers and workers
The demand for apples is the amount of them that consumers are willing and able to buy at a given
cost
income
price
supply
Which of the diagrams above shows a demand curve which is perfectly price elastic?
W
X
Y
Z
For an exchange to take place which of the following is essential?
At least one buyer and one seller
Government permission to trade
Specialisation
The payment of money
Which of the following will cause the supply curve of carrots to shift to the left?
A decrease in income tax
A decrease in the costs of the machinery used to farm carrots
An increase in the demand for carrots
An increase in the wages of carrot farmers
Which of the following is not a financial institution?
A bank
A building society
An insurance company
The government
An increase in productivity will always lead to
A fall in average costs
A fall in total costs
An increase in profit
An increase in specialisation
The pay of a senior manager in a large business is £50,000 per year. A junior manager is paid £25,000 per year. What might explain this difference in pay?
Junior managers are members of a trade union but senior managers are not
Junior managers have to work more overtime than senior managers
The senior manager's work adds more value to the firm than the junior manager's work
The supply of senior managers is high relative to the demand for their services
Which of the following is likely to lead to an increase in the demand for air travel?
A fall in consumer incomes
A fall in the price of cars
An increase in the price of air travel
An increase in the popularity of overseas holidays
In which of the following markets is there a monopoly?
There are many buyers and many sellers of a good
There are many buyers and one seller of a service
There is one buyer and many sellers of a good
There is one buyer and many sellers of a service
The table shows the value of the output of an economy. Which of the following statements is true for this economy?
The primary sector is the largest
The tertiary sector is the largest
The tertiary sector is the same size as the primary sector
The value of the primary sector is £70 billion
Factors of production are combined to produce
consumer wants
opportunity costs
output
resources
Raspberries and strawberries are substitute goods. The demand curve for strawberries will shift to the left if there is
a fall in the price of raspberries
a fall in the price of strawberries
a rise in the price of raspberries
a rise in the price of strawberries
