A price that a product cannot be sold for more than

Which statement is false about Free Market economies?

There is a limited choice of goods and services

Positive statements...

...can be refuted or supported.

Scarcity occurs because...

...wants and needs are unlimited but resources are limited

When will the incidence of tax fall wholly on the consumer?

When supply is perfectly elastic

In reference to rational decision making, which of the following is false?

Consumers aim to maximise income

A increase in the price of the good will cause the demand curve to...

do nothing! There will be a movement along the demand curve.

Which of the following would cause the demand curve to shift left?

A rise in price of a complement good

Which of the following statements is false?

Complements have positive cross elasticities

A shift left in the supply curve causes a market to be in disequilibrium at the original market price because

consumers cannot buy as much as they would like.

Many agricultural products are subject to large fluctuations in price. This is because the

supply of agricultural products is price inelastic in the short run.

The price elasticity of demand will determine whether...

a change in the price will change revenue/expenditure

The demand for cocoa is derived from the demand for chocolate. When the demand for chocolate falls, there's

movement along the supply curve for cocoa.

Opportunity cost is...

...the next best alternative forgone

A government decides to increase its subsidy to rail services. The subsidy is most likely to be successful if

demand for rail is price elastic

In mixed economies...

more resources are allocated by the gov than in free markets

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AQA AS Economics - Micro

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Autumn term, Christmas revision

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Questions 30

Answers

1
Maximum prices are set below the free market price. True or false?
True
False
2
Maximum price
A price that a product cannot be sold for more than
price floor
A price that a product cannot be sold for less than
was imposed on alcohol in Scotland in 2018
3
Which of the following is not a factor of production?
Capital
Enterprise
Labour
Technology
4
Calculate the total subsidy the govt. grants
40
96
80
360
5
Which statement is false about Free Market economies?
There is a limited choice of goods and services
Hong Kong and the USA are the closest examples
There are high levels of inequality
Resources are allocated by the price mechanism
6
Positive statements...
...can be refuted or supported.
cannot be tested
...cannot be refuted or supported.
...deal with value judgements.
7
Scarcity occurs because...
...wants and needs are infinite but resources are unlimited
...wants and needs are unlimited but resources are limited
...wants and needs are limited but resources are infinite
....wants are needs are finite but resources are unlimited
8
When will the incidence of tax fall wholly on the consumer?
When supply is perfectly elastic
When demand is perfectly elastic
9
Which of the following is not a determinant of PES?
Price of the good or service
Availability of substitutes
Ease of factor substitution
Time available to supply the good/service
10
Normative statements...
...deal with value judgements.
...can be refuted or supported.
are based on statistics
...can be proven true or false.
11
The cross elasticity of demand for chips with respect to the price of rice is positive. It can be concluded that
they are normal goods.
they are substitute goods.
they are inferior goods.
they are jointly demanded.
12
In reference to rational decision making, which of the following is false?
Consumers aim to maximise income
Governments aim to maximise welfare of citizens
Firms aim to maximise profits
Consumers aim to maximise utility
13
A increase in the price of the good will cause the demand curve to...
shift to the left
do nothing! There will be a movement along the demand curve.
shift to the right
14
An extension of demand is when...
the quantity demanded falls
the demand curved shifts out
the quantity demanded rises
the demand curve shifts in
15
Which of the following would cause the demand curve to shift left?
A rise in price of the good
A rise in real incomes
A rise in price of a substitute good
A rise in price of a complement good
16
Which of the following statements is false?
Normal goods have positive income elasticities
Complements have positive cross elasticities
Inferior goods have negative income elasticities
Substitutes have positive cross elasticities
17
A shift left in the supply curve causes a market to be in disequilibrium at the original market price because
firms experience an increase in their stocks of the good.
consumers no longer wish to buy the same quantity.
firms are willing to supply more of the good.
consumers cannot buy as much as they would like.
18
Many agricultural products are subject to large fluctuations in price. This is because the
supply of agricultural products is price inelastic in the short run.
demand for agricultural products is price elastic in the short run.
supply of agricultural products is price elastic in the long run.
demand for agricultural products is income inelastic in the long run.
19
The price elasticity of demand will determine whether...
a change in the price will change revenue/expenditure
a change in demand will change price
a change in price will change supply
20
The demand for cocoa is derived from the demand for chocolate. When the demand for chocolate falls, there's
shift left of the supply curve for cocoa.
movement along the demand curve for cocoa.
shift right of the demand curve for cocoa.
movement along the supply curve for cocoa.
21
Opportunity cost is...
not to be expressed in monetary terms
...the next best alternative
...the next best alternative forgone
...the best alternative that is chosen
22
A government decides to increase its subsidy to rail services. The subsidy is most likely to be successful if
demand for rail is price inelastic
they reduce the tax on petrol at the same time
demand for rail is price elastic
there's high and positive YED for rail
23
Which of the following is not a function of the price mechanism?
Incentives
Rationing
Price determination
Signalling
24
VAT is an example of...
a specific tax
an ad valorem tax
25
In mixed economies...
there is no welfare state
all resources are allocated by the price mechanism
more resources are allocated by the gov than in free markets
all resources are controlled by the government
26
Economic growth will...
...shift the PPF inwards
...shift the PPF outwards.
...mean production is taking place inside the PPF
...cause a movement along the PPF
27
Excess demand occurs at a price level...
above the equilibrium
below the equilibrium
28
The PPF does not show...
...the demand of two goods
...the maximal potential output of an economy
...what an economy could produce
...the opportunity cost of producing one good over another
29
A good has a PES=+0.8. The Qs = 200 units at the price of £800. If the price rises to £1000 then the Qs would
increase to 250 units.
increase to 240 units.
increase to 360 units.
decrease to 160 units.
30
Who invented the term 'the invisible hand'?
John Maynard Keynes
Adam Smith
Karl Marx
Friedrich Hayek

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