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

The population of a country is 20 million in 2020. The number of dependents is 6 million. The number of people who are employed is 10 million. What is the percentage of people who are employed in the country?

Which statement about factors of production is correct?

A Capital is the amount of money borrowed from a bank.

B Labour is output made by an employee.

C Land includes commercially grown rice crops.

D Profit is the reward for enterprise.

What identifies a finite resource?

A The resource does not renew itself.

B The supply of the resource is greater than demand.

C There is no opportunity cost for the resource.

D There is unlimited supply of the resource.

Governments often try to influence the supply of factors of production in their economies. Which factor’s supply is a government least likely to be able to increase?

A capital

B enterprise

C labour

D land

A person works at home making small cakes. She can make 30 cakes an hour and works for four hours a day. The total cost of the ingredients is $50 and she sells the cakes for $2 each. What is the opportunity cost if she takes a working day for a holiday?

A $50

B $240

C 30 cakes

D 120 cakes

What is an example of a public good?

A a theatre performance

B an injection to prevent influenza

C road signs and road markings

D the collection of rubbish by a local authority

Which statement about economics is not correct?

A Economic actions can produce unexpected side effects.

B Economic thinking is usually based on logical reasoning at the margin.

C The use of scarce resources to produce a good always has a cost.

D The value of a good or service involves a purely objective judgement.

The government of a prosperous country announced that it would offer free food to its citizens for a year. What would be the effect of this measure?

A Agricultural resources would become unlimited.

B Human wants would become finite.

C More resources would be devoted to food production.

D The basic economic problem would be solved.

What confirms that scarcity exists?

A A product has an opportunity cost.

B The demand for a product has risen.

C The government has set a minimum price for a product.

D The supply of a product has fallen.

The definition of AS is which of the following?

Why does the AS curve slope upwards?

A shift in the AD curve will have what impact on AS?

Which of the following changes will cause the AS curve to shift?

An increase in wages will cause what impact to the AS curve?

The long run aggregate supply curve is influenced by which of the following factors? Choose three.

This graph represents which view of LRAS?

When the economy has plenty of spare capacity and LRAS is elastic, an increase in AD will lead to what impact on prices?

When the economy is close to the full employment level of national income and LRAS is inelastic, an increase in AD will lead to what impact on prices?

An increase in the quantity and / or quality of factors of production will have what impact on the LRAS curve (and / or PPF)?

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A worker can make 10 hats or 5 pairs of shoes in a day. In the market, three hats can be sold at the same price as two pairs of shoes. The worker should make

A hats only.

B shoes only.

C 4 hats and 3 pairs of shoes daily.

D 6 hats and 2 pairs of shoes daily.

Which characteristic of money is most essential if it is to serve effectively as a store of value?

A divisibility

B liquidity

C portability

D scarcity

The Indian government operates a pension scheme. Which statement about this scheme would be classed as normative?

A To be eligible, individuals must be above the age of 60 and live below the poverty line.

B In January 2020, eligible individuals aged over 70 received 500 rupees per month.

C In 2018, the Supreme Court said the government must review pension payments because they are unrealistic.

D In January 2020, the Indian government announced that it might increase the payment to 1000 rupees per month.

What is not a function of money?

A It is a medium of exchange.

B It is a store of value.

C It is a unit of account.

D It is a measure of satisfaction.

The producer of a good with a price-elastic demand observes that a rise in its price is accompanied by a rise in total revenue. What might explain this?

A The good is an inferior good.

B The rise in price was due to an increase in demand for the good.

C The supply of the good was inadequate to meet the demand.

D The supply of the good was price-inelastic.

Why does an individual’s demand curve generally slope downwards to the right?

A The additional satisfaction an individual gets from consuming most goods decreases as consumption increases.

B The additional satisfaction an individual gets from consumption decreases as income rises.

C The individual has finite income which is used to attempt to satisfy many wants.

D For most goods the price charged by producers falls as the quantity purchased increases.

When will the price mechanism not function as a system for allocating goods?

A when the government bans advertising

B when the government maintains an effective maximum price

C when there is a limited supply of the good

D when there is a powerful company able to set the market price

The diagram shows a production possibility curve for an economy that is producing at point P. Which quantity of X is given up to produce the quantity of Y shown?

A 40

B 50

C 100

D 110

What is a normative economic action based on?

A fact

B market forces

C opinion

D price changes

A production possibility curve shows the combinations of outputs an economy can produce using all available resources. At which points on the diagram are all available resources used?

A W and X only

B W, X and Z only

C W, X, Y and Z

D Z and Y only

The production possibility curves (PPCs) show the abilities of four economies to produce wheat and rice. Which PPC has the lowest opportunity cost for producing wheat?

What is the main characteristic of a planned economy?

A All goods and services are produced by privately-owned firms.

B All goods and services are produced by state-owned firms.

C Privately-owned firms produce private goods and state-owned firms produce public goods.

D The price mechanism allocates scarce resources through the actions of buyers and sellers.

Four students have to complete a table showing the functions of money. Which student is correct?

What can be concluded about the roles of demand and supply in a free market?

A They allocate resources to the greatest needs.

B They ensure that goods and services are distributed equally.

C They are both significant in setting the market price.

D They ensure that everyone can benefit from the good or service provided.

Which list has the most words that are more likely to relate to a positive statement than to a normative statement?

A describe, better, should, value, emotion

B bias, objective, ought, opinion, tastes

C contestable, is, motive, subjective, moral

D actual, ethics, fact, was, testable

An economy produces combinations of computers and food as shown on the diagram of a production possibility curve (PPC). If all available resources were used, which two points on the PPC diagram show the maximum combinations of computers and food that the economy can produce?

A W and X

B X and Y

C Y and Z

D Z and W

‘An increase in consumption by one person leaves the benefits available to others undiminished’. Which good does this statement define?

A a demerit good

B a merit good

C a private good

D a public good

The diagram shows a production possibility curve for a farmer. The original position is X. If the farmer switches some of his land from producing pears to producing apples, which point represents his new position?

A student buys a flute for $80 but then is unable to learn to play it. It has a resale value of $50, while the shop retail price of the same type of flute has risen to $95. What is the present opportunity cost to the student of keeping the flute?

A $30

B $50

C $80

D $95

India is failing to reach its full economic potential because of poor rail, road and electricity infrastructure, and a lack of skilled civil engineers. Which factors of production need to be increased?

A capital and land

B enterprise and capital

C labour and capital

D land and enterprise

Which list has the most words that are more likely to relate to a positive statement than to a normative statement?

A describe, better, should, value, emotion

B bias, objective, ought, opinion, tastes

C contestable, is, motive, subjective, moral

D actual, ethics, fact, was, testable