One advantage of a free market economy is that

competition between firms can be of benefit to consumer

It may be deduced from the data in the table that

air travel is a normal good and demand is price inelastic

The most likely effect of a severe drought which damages the peanut crop is for

price to increase and consumer surplus to decrease

Which of the following best describes the two statements above

Statement 1 is positive and statement 2 is normative

which of the following is most likely to have a high price elasticity of supply?

Wheat, because large stockpiles are available

Which of the following is most likely to reduce the occupational mobility of labour?

cut funding for training programmes aimed at the unemployed

The operation of a buffer stock scheme for wheat means that

stocks are used to reduce price fluctuations of wheat

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Edexcel Economics A Theme 1

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Questions 16

Answers

1
One advantage of a free market economy is that
government intervention can be used correct market failure
firms concentrate producing necessities rather than luxuries
competition between firms can be of benefit to consumer
Education and healthcare are funded from taxation and freely
2
Opportunity cost can be illustrated by
a movement along the demand curve for a good
a movement along a PPF
a shift in the supply curve for a good
an outward shift in PPF
3
It may be deduced from the data in the table that
increase in income will cause price of air travel to fall
decrease in the price of air travel will increase TR
air travel is an inferior good/demand price elastic
air travel is a normal good and demand is price inelastic
4
Competitive market for maize. Assuming the current price is P1, the mostly likely outcome is
price will rise
demand curve will shift to the left
quantity supplied will fall
quantities supplied and demanded will remain unchanged
5
The most likely effect of a severe drought which damages the peanut crop is for
price to remain at Pe and producer surplus to increase
both price and producer surplus to increase
price to increase and consumer surplus to decrease
Price to decrease and consumer surplus to increase
6
It can be deduced from the diagram that these two goods
are substitutes for each other
have a negative cross elasticity of demand
have a zero cross elasticity of demand
are price elastic in demand
7
This estimate suggests that tobacco is
an inferior good
price inelastic in demand
income elastic in demand
a normal good
8
Other things being equal, the data in the table suggests thatL
D
C
B
A
9
In 2012, the EC planned to extend the carbon emissions trading scheme to aircraft landing in..
B
A
D
C
10
Which of the following best describes the two statements above
Statement 1 is positive and statement 2 is normative
Both statements are positive
Both statements are normative
Statement 1 is normative and statement 2 is positive
11
Government expenditure on the scheme in this year is
£300,000
£31, 200,000
£32, 400,000
£1,200,000
12
which of the following is most likely to have a high price elasticity of supply?
Wheat, because large stockpiles are available
Organic vegetables, because they have close substitutes
IT Technicians, there is a high demand for their service
New houses, because they take a long time to build
13
At this level of output there is
government failure
market failure
an excess supply
an external cost
14
In which of the above diagrams does the movement from X to Y illustrate economic growth?
Option B
Option D
Option C
Option A
15
Which of the following is most likely to reduce the occupational mobility of labour?
Falling rail and bus fares
a fall in regional house price differences
rise in proportion of multi-skilled workers in Labour force
cut funding for training programmes aimed at the unemployed
16
The operation of a buffer stock scheme for wheat means that
stocks are released onto market when a surplus of wheat
stock levels are increased following a shortage of wheat
stocks are used to reduce price fluctuations of wheat
the price of wheat cannot rise above the minimum price set

Edexcel Economics A Theme 1 Flashcards | StudBud