The discovery of a new gas field off the Western Australian coast would result in

an increase in supply, creating a lower price for gas.

A contraction in demand is caused by

an increase in the price of the good

A normal good is defined as a good for which demand increases as

the income of consumers increases

A “price floor” will create

A surplus in supply as producers attempt to maximise profits

Two things underpinning the Law of Demand are:

The income effect / the substitution effect

A shift to the left of a demand curve could be due to a

a rise in the price of a complement

Two non-price factors affecting supply are:

technology /costs of production

Which of the following would not affect the price elasticity of demand for a product?

the amount supplied by producers

The Law of Demand states

As the price of a good rises, people buy less

A price change will indicate

a movement along the demand curve

How will price change eliminate a shortage?

As the price rises, the Qd decreases while the Qs increases

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ATAR Economics Unit 1 Revision Mid Unit Test

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Short revision of ATAR Unit 1, Year 11 Economics. WA

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Questions 25

Answers

1
An increase in both the demand and the supply for tomatoes will cause the tomato market:
price to decrease
quantity to increase
price to increase
quantity to decrease
2
The discovery of a new gas field off the Western Australian coast would result in
a decrease in supply, creating a higher price for gas.
an increase in supply, creating a lower price for gas.
an expansion of supply, creating a higher price for gas.
a contraction of supply, creating a lower price for gas.
3
Which is incorrect? A competitive market is characterised by:
firms are price takers
two to three dominating firms
very similar products (homogeneous)
easy entry into the market
4
A contraction in demand is caused by
a negative change in market sentiment
an increase in the unemployment rate
a decrease in the number of consumers
an increase in the price of the good
5
A producer decides to increase the price on its inelastic good. Total revenue will?
It will stay the same.
It will fall.
It will rise.
It will fluctuate.
6
A normal good is defined as a good for which demand increases as
the number of consumers of the good increases
its price decreases
the income of consumers increases
the price of a substitute increases
7
A “price floor” will create
A shortage in the production of output in relation to demand
A surplus in supply as producers attempt to maximise profits
An efficient allocation of resources and an undersupply
A contraction in supply as producers react to lower prices
8
Which of the following is not a non-price factor affecting demand?
Levels of disposable income
The price of unrelated goods
Demographic factors
Expectations of consumers
9
What immediate effect will a large increase in petrol prices have on motor scooters?
increase bus transportation usage
decrease bus transportation usage
increase their price
increase their demand
10
The statement, "high taxes on alcohol cause people to drink less", is:
purely gossip
a normative statement
both a positive and normative statement
a positive economic statement
11
Two things underpinning the Law of Demand are:
Expectations of consumers / the income effect
The income effect / the profit motive
The profit motive / the substitution effect
The income effect / the substitution effect
12
If the price of going to the movies increased, what would happen to the demand of popcorn?
decrease
stay the same
become more inelastic
increase
13
Which would be considered complements?
popcorn and movies
coke and pepsi
toothpaste and cars
pizza and homework
14
According to the law of supply, an increase in price _____________ the quantity supplied
interrupts
increases
decreases
stimies
15
A shift to the left of a demand curve could be due to a
rise in the price of a substitute
a rise in the price of a complement
fall in the price of the good
fall in the quantity supplied
16
Which of the following would cause a contraction in demand for petrol?
a fall in the price of petrol
a rise in the price of petrol
a switch to electric powered cars
a decrease in the level of real incomes
17
Two non-price factors affecting supply are:
technology /costs of production
technology / expectations of consumers
Prices of other goods a firm produces / demographic factors
expectations of producers / demographic factors
18
Which of the following is considered a necessity?
orange juice
bell-bottom jeans
bread
alcohol
19
Which of the following would not affect the price elasticity of demand for a product?
the amount supplied by producers
the time it takes for consumers to respond to a price change
the number of substitutes available
the proportion of income required to purchase the product
20
The change in price is 7%, the change in demand is 5%. This shows:
The good is inelastic
The good is a compliment
The good is inferior
The good is elastic
21
The Law of Demand states
The buying intentions of people
As the price of a good falls, people buy less
The more supplied, the lower the price
As the price of a good rises, people buy less
22
Which of the following products would have the lowest price elasticity of demand?
passenger motor vehicles
leisure airline travel
petrol
restaurant meals
23
A good for which the demand is unitary elastic, has a price elasticity coefficient:
Less than one
Less than zero
Greater than one
Equal to one
24
A price change will indicate
a movement along the demand curve
an increase or decrease in demand
an increase or decrease in supply
a change in elasticity
25
How will price change eliminate a shortage?
As the price falls, the Qd decreases while the Qs increases
As the price rises, the Qd decreases while the Qs increases
As the price rises, the Qd increases while the Qs decreases
As the price falls, the Qd increases while the Qs decreases

ATAR Economics Unit 1 Revision Mid Unit Test Flashcards | StudBud