Which of the following creates a shift in the supply curve?

An increase in the cost of land.

Which of the following is an example of market failure?

An intelligent student not going to Oxford due to the cost

The supply of coffee beans is inelastic because...

Coffee bushes take time to grow

Free markets operating at allocative efficiency ensure that ...

Resources are allocated in the best interests of society

CO2 emissions from the burning of fossil fuel are an example of...

A complete failure of the price mechanism and free market

Money, like the Euro, is an acceptable medium of exchange and works because of ...

Faith, because people believe in it

What does PED measure?

The responsiveness of quantity demanded to a change in price

What is a free rider?

People that benefit from public goods without contributing.

Sell-by dates on fresh meat and vegetables are an example of...

Legal restrictions to correct market failure

Which of the following goods is most likely to have highly inelastic demand?

A litre of petrol (95 octaine fuel)

What is the consumer surplus on a diagram?

The area below the demand curve.

Which of the following is NOT a solution to market failure in higher education?

Privatising free public universities

What kind of market failure tobacco is considered to be?

negative consumption externality

Which is NOT a possible policy to correct the market failure created by alcohol?

Government provision of alcohol as a public good

The diagram below illustrates...

The effect of an increase in income tax (direct tax)

What kind of externality is illustrated in the diagram below?

Negative production externality

The diagram below illustrates what kind of market failure?

Positive consumption externality

The EU has floor prices on all agricultural goods to...

guarantee a minimum income to farmers

What is a common pool resource?

Land that is not owned by anyone and so free for the taking

What is the definition of a public good?

non-rivalrous and non-excludable goods

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IB micro-economics

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IB economics Micro-economics

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Questions 31

Answers

1
Which of the following creates a shift in the supply curve?
An increase in the cost of land.
Employing more labour to work the capital.
Cleaning and maintaining the capital.
An increase in competition in the market.
2
An indirect tax is one that...
consumers pay on what they receive as income
consumers pay on what they buy
comsumers pay on all imported goods
consumers pay to local government via the central government
3
Which of the following is an example of market failure?
Hesburger going bankrupt because of Burger King & McDonald's
An intelligent student not going to Oxford due to the cost
Picking mushrooms and berries for personal consumption
Starbucks not openning an outlet near by.
4
On the diagram, what is the producer surplus?
D
C
A
B
5
The supply of coffee beans is inelastic because...
Coffee is a necessity
Coffee bushes take time to grow
Coffee harvest depends on the weather
Coffee has no substitutes
6
Free markets operating at allocative efficiency ensure that ...
Everybody has everything that they want and need
Everything is awesome
Resources are allocated in the best interests of society
Resource allocation is unsustainable
7
CO₂ emissions from the burning of fossil fuel are an example of...
The efficiency of the price mechanism
A complete failure of the price mechanism and free market
Sustainable use of scarce resources
Allocative efficiency in the free market
8
Money, like the Euro, is an acceptable medium of exchange and works because of ...
Language, it has value written on it.
Faith, because people believe in it
Sense perception, it looks, feels, smells and ftastes right
Reason, the quantity is tightly controlled by central banks
9
When primary products have an inelastic YED, which of the following is NOT true?
producers loose revenue in recessions
They have inelastic PED and PES
The goods are all necessities
their prices are very volatile, go up and down alot
10
What does PED measure?
The slope of the demand curve.
The responsiveness of quantity demanded to a change in price
Responsiveness of price to a change in the quantity demanded
How steep the demand curve is.
11
Which of the following is a primary product?
Oil
Chocolate
House
Smartphone
12
What is a free rider?
People who pay no taxes
People that benefit from public goods without contributing.
Motorcycle riders on private roads
A person riding illegally
13
Sell-by dates on fresh meat and vegetables are an example of...
Legal restrictions to correct market failure
Government interference in the free market's efficiency
Legal restrictions on an allocatively efficient market
Government interference creating a market failure
14
Which of the following is NOT a factor influencing demand?
The price of complementary goods
The income of consumers
the price of substitute goods
The price of labour
15
Which of the following goods is most likely to have highly inelastic demand?
A litre of petrol (95 octaine fuel)
A Norweigian Air flight ticket
A Mars Bar
A Hesburger
16
What is the consumer surplus on a diagram?
The area between the demand and supply curves.
The area below the demand curve.
The areaabove the demand curve.
The area below the equilibrium; price multiplied by quantity
17
What kind of price control does the diagram illustrate?
Minimum price
Ceiling price
Equilibrium price
Maximum price
18
When YED is negative, the good in question...
is a necessity
doesn't actually exist
is an inferior good
is a normal good
19
What does the pink triangle represent on the diagram below?
The welfare loss to society
The loss of revenue and profit being experienced
The loss of producer surplus
The loss of consumer surplus
20
Which of the following is NOT a solution to market failure in higher education?
Government support to pay private university tuition fees
Privatising free public universities
Building and expanding free public universities
Government subsidy to private universities
21
What kind of market failure tobacco is considered to be?
positive production externality
negative production externality
positive consumption externality
negative consumption externality
22
Which is NOT a possible policy to correct the market failure created by alcohol?
Taxing alcohol sales
Government provision of alcohol as a public good
Banning alcohol sales
Educational programmes and advertising against alcohol
23
The diagram below illustrates...
The effect of an increase in VAT (sales or indirect tax)
The effect of an increase in income tax (direct tax)
The effect of successful marketing and advertising campaign
The effect of an increase in the cost of producing thingies
24
Which of the following is an example of a ceiling price?
Oil prices of over $150/barrel
Milk prices in the EU
Rent controls in Berlin
Minimum wages in Finland
25
What kind of externality is illustrated in the diagram below?
Negative production externality
Positive consumption externality externality
Negative consumption externality
Positive production externality
26
PED is unity when...
PED is precisely minus one half, -0.5
PED is precisely zero, 0
PED is tending towards minus infinity, -∞
PED is precisely minus one, -1
27
The diagram below illustrates what kind of market failure?
Negative consumption externalities
Negative production externalities
Posuiytive production externalities
Positive consumption externality
28
Which of the following goods does the Finnish government subsidise?
Solar panels
Petrol
Smartphones
Chocolate bars
29
The EU has floor prices on all agricultural goods to...
guarantee a minimum income to farmers
compete with USA, China and othe countries.
make farming more sustainable (ecological)
produce all the food Europe needs and demands
30
What is a common pool resource?
Land that is not owned by anyone and so free for the taking
Land that can be walked all over by anybody
A public good available to everybody
A good provided for free by the government
31
What is the definition of a public good?
Goods provided by the government
non-rivalrous and non-excludable goods
Goods that have no opportunity cost
Goods provided for free

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