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- 1. Multiple Choice
What would be an opportunity cost of growth in an economy?
the faster growth of services than of manufacturing
the need for an increased level of imported raw materials
the need for greater government intervention
the reduction of consumption if growth requires investment
- 2. Multiple Choice
The diagram shows the relationship between the price and the total expenditure on a good.
The income elasticity of demand for the commodity is unity.
The income elasticity of demand for the commodity is zero.
The price elasticity of demand for the commodity is unity
The price elasticity of demand for the commodity is zero
- 3. Multiple Choice
Over the last ten years the price elasticity of demand for tea in many countries has risen. What is the most likely cause of this change in price elasticity?
a decrease in the incomes of consumers
a decrease in the number of complements to tea
an increase in the amount of tea supplied
an increase in the number of substitutes for tea
- 4. Multiple Choice
What would be the price elasticity of supply of cell (mobile) phones if their price rose from US$100 to US$110 and the quantity supplied rose from 200 to 250?
0.2
0.4
2.5
5.0
- 5. Multiple Choice
A product has a high price elasticity of supply. What might explain this?
The product has a high opportunity cost.
The product has a non-perishable nature.
The product is classed as an inferior good.
The product is considered to be a luxury.
- 6. Multiple Choice
The demand for houses in London has caused house prices to rise considerably in the last five years. Many people cannot now afford to buy a house. What can be concluded from this?
On a demand and supply diagram for houses there has been a movement up the demand curve.
On a demand and supply diagram for houses there has been a movement up the supply curve.
The price elasticity of demand for houses is greater than one.
The price elasticity of supply of houses is zero.
- 7. Multiple Choice
Which statement about maximum and minimum prices is correct?
With an effective maximum price for a product, a shortage will develop.
With an effective maximum price for a product, the market price will rise.
With an effective minimum price for a product, rationing will be necessary.
With an effective minimum price for a product, the market price will fall.
- 8. Multiple Choice
A country has a target rate of inflation of 2.5% and has recently experienced the actual rate rising to 6%, with unemployment falling to very low levels. Which policy option is most likely to be implemented?
an increase in government expenditure on training
an increase in indirect taxes on demerit goods
an increase in import tariffs
an increase in interest rates
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