Assume that rice is a substitute for potatoes. If there is a decrease in the supply of potatoes, what is likely to happen to the market for rice in the short run?
A Demand will decrease and the price will decrease.
B Demand will increase and the price will increase.
C Supply will decrease and the price will increase.
D Supply will increase and the price will decrease.
A
B
C
D
In the diagram, point X shows the equilibrium price and quantity for a fruit drink. The government announces that the ingredients used in the drink can be harmful. Which point, A, B, C or D, is most likely to represent the new equilibrium after consumers hear this announcement?
The table shows observations of a competitive market in equilibrium in two periods. What could explain the change from period 1 to period 2?
A an increase in the price of a complement
B an increase in the price of a substitute
C the imposition of an indirect tax on suppliers
D the imposition of a minimum price of 60 cents by a government
In the last ten years e-mail has increasingly been used in preference to postal services. Which graph shows the changes in the market for postal services?
During a certain period, 10 000 units of a normal good are sold at a price of 20c. During a later period, 12 000 units are sold at a price of 22c. What could explain this change?
A a reduction in consumers' incomes
B an increase in the cost of raw materials
C an increase in the price of a substitute commodity
D an increase in the productivity of factors of production
Which piece of information would enable you to construct the market demand curve for a product?
A the equilibrium price of the product
B the number of consumers who would purchase the product at each price
C the number of firms in the industry
D the quantity that each consumer would be willing and able to buy at each price
What is most likely to increase the demand for compact disc players?
A a fall in disposable incomes
B a fall in the price of cinema tickets
C a fall in the price of compact discs
D a fall in the price of video recorders
The diagram shows the market for computer games. The market starts in equilibrium at X. What will be the new equilibrium if the tax on computer games is increased and incomes fall?
The diagram shows the demand curve for good X. What could cause a movement along the curve from M to N?
A a change in consumer tastes in favour of X
B a decrease in labour costs of producing X
C a decrease in the demand for X
D an increase in the price of a substitute good
A firm publishes and sells books. The diagram shows a shift in the firm’s supply curve from S1 to S2. What would have caused this shift in the firm’s supply curve?
A a fall in the subsidies paid to book publishers
B a fall in the price of paper
C a rise in the real income of customers
D a rise in the wages of the firm’s workers
In the diagram, S1 and D1 are the initial supply and demand curves for tea and X is the original equilibrium. There is then a failure in the coffee harvest of a major coffee producer. Which point would represent the equilibrium position in the tea market as a result of this failure?
The market demand for a product is made up of the demand from three firms, X, Y and Z. The table shows the demand from each firm and the market supply. What is the equilibrium price in the market?
A $7
B $8
C $9
D $10
In 2008 the demand curve for new cars in the European Union 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
Worldwide, the film industry has increased its expenditure to over $1 billion each year on successful anti-piracy measures which it finances by charges on DVD products. How would this be shown in a demand and supply diagram of the market for legally produced DVDs?
In 2008 a disease killed a significant number of sheep used to produce wool. How would the short-run effect be shown on a demand and supply diagram for wool?
A a movement down the existing supply curve
B a movement up the existing supply curve
C a shift to the left of the supply curve
D a shift to the right of the supply curve
The table shows the market demand for a product and the individual supply of the three firms X, Y and Z in the industry. What is the equilibrium market price?
A $40
B $30
C $20
Rising demand for oil from China and other countries is leading to concerns that there may be a world shortage of oil. How should a change in the price of oil prevent such a shortage developing?
A Price should fall to reduce demand and encourage a search for more oil.
B Price should fall to reduce supply and encourage a reduction in fuel use.
C Price should rise to reduce demand and encourage a search for alternative fuels.
D Price should rise to reduce supply and encourage a switch to alternative fuels.
What would cause the demand for holiday accommodation in Mauritius to shift to the left?
A a fall in the exchange value of the Mauritian rupee
B poor holiday weather in Mauritius
C relaxation in planning controls on hotel construction in Mauritius
D removal of sales tax on hotel accommodation in Mauritius
18 questions 
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