Aqa As Level Economics Econ 1 January 2009

25 Questions | Total Attempts: 79

Settings
Please wait...
Economics Quizzes & Trivia

Questions and Answers
  • 1. 
    Choice is an important element in the basic economic problem because
    • A. 

      Wants increase with income.

    • B. 

      Incomes are distributed unequally.

    • C. 

      High demand leads to high prices.

    • D. 

      Limited resources have alternative uses.

  • 2. 
    A misallocation of resources is most likely to occur in monopoly if
    • A. 

      Other firms enter the industry.

    • B. 

      Higher prices are charged than under competitive conditions.

    • C. 

      Market output increases.

    • D. 

      There are economies of scale.

  • 3. 
    An economy is always productively efficient if it
    • A. 

      Continually increases its average standard of living.

    • B. 

      Maximises investment in capital goods.

    • C. 

      Is operating with full employment of labour.

    • D. 

      Can only produce more of one good by producing less of another.

  • 4. 
    • A. 

      Demand for the good

    • B. 

      Subsidies granted to producers

    • C. 

      The rate of growth of labour productivity

    • D. 

      The elasticity of supply of the good

  • 5. 
    Negative externalities exist in a market for a good giving rise to a misallocation of resources. This misallocation is most likely to have resulted from
    • A. 

      The product being over-priced.

    • B. 

      Over-production of the product.

    • C. 

      Too little consumption of the product.

    • D. 

      Too few resources devoted to producing the product.

  • 6. 
    In a buffer-stock scheme
    • A. 

      An organisation might buy in the open market to maintain a minimum price in the market for a product.

    • B. 

      Governments restrict supplies of a product coming onto an open market in order to lower prices of the product.

    • C. 

      Buffer stocks are kept to sell if the price of a product starts to fall

    • D. 

      Buffer stocks are sold when there are surpluses in the market.

  • 7. 
    • A. 

      The wages of apple pickers.

    • B. 

      Real incomes in the economy.

    • C. 

      The price of substitutes.

    • D. 

      The popularity of apples.

  • 8. 
    • A. 

      A fall in demand for holidays in China.

    • B. 

      No change in demand for holidays in Peru.

    • C. 

      A 14% increase in demand for holidays in Italy.

    • D. 

      A 2% increase in demand for holidays in Spain.

  • 9. 
    Which one of the following situations would lead to an increase in equilibrium price?
    • A. 

      Demand is perfectly inelastic and a firm’s labour costs fall.

    • B. 

      Demand is perfectly elastic and a firm’s labour costs rise.

    • C. 

      Supply is perfectly elastic and the price of a substitute good falls.

    • D. 

      Demand is perfectly inelastic and a firm’s labour costs rise.

  • 10. 
    Which one of the following is true?
    • A. 

      A positive statement is one which can be tested against the facts.

    • B. 

      A positive statement is one which never contains words such as ‘could’ or ‘should’.

    • C. 

      A normative statement is one which can be scientifically proven to be true or false.

    • D. 

      A normative statement is one which never contains words such as ‘is’ or ‘will’ or ‘always’.

  • 11. 
    • A. 

      A

    • B. 

      B

    • C. 

      C

    • D. 

      D

  • 12. 
    The price mechanism helps to allocate resources efficiently because
    • A. 

      It results in lower rewards being paid to factors of production when demand for the output they produce increases

    • B. 

      It will lead to a distribution of output amongst individuals on the basis of greatest need.

    • C. 

      The prices of non-renewable resources will tend to rise as the stock of such resources nears depletion.

    • D. 

      It will always ensure that competition between firms prevents high profits being earned.

  • 13. 
    The cross elasticity of demand between two complementary products is always
    • A. 

      Negative.

    • B. 

      Positive.

    • C. 

      Zero.

    • D. 

      Greater than 1.

  • 14. 
    • A. 

      OHJR.

    • B. 

      FHJL.

    • C. 

      OFLR.

    • D. 

      EGKM.

  • 15. 
    Which one of the following is an appropriate form of government intervention for the problem identified?
    • A. 

      The introduction of pollution permits to limit positive externalities

    • B. 

      The use of a buffer-stock scheme to stabilise the price of a public good

    • C. 

      The imposition of a maximum price for a merit good

    • D. 

      The provision of a subsidy for a product which generates negative externalities

  • 16. 
    Which one of the following is associated with a missing market?
    • A. 

      A monopoly restricting output

    • B. 

      The production of a negative externality

    • C. 

      A firm deciding to produce a private good

    • D. 

      A government subsidising agricultural production

  • 17. 
    At current levels of output, the marginal social benefit of a good is greater than its marginal private benefit. As a result, there are likely to be
    • A. 

      Positive externalities in consumption.

    • B. 

      Positive externalities in production.

    • C. 

      Negative externalities in consumption.

    • D. 

      Negative externalities in production.

  • 18. 
    • A. 

      Equilibrium price and quantity would remain at OP1 and OQ1.

    • B. 

      It would encourage suppliers to increase production from OQ1 to OQ2.

    • C. 

      The amount sold would increase from OQ1 to OQ2.

    • D. 

      The market price would fall from OP1 to OPmin.

  • 19. 
    An airline announces that it is ‘slashing fares on all of its flights’. Given a fare reduction of 35%, what would be the expected percentage rise in demand for those flights if the company has estimated their price elasticity of demand is -2.0?
    • A. 

      17.5

    • B. 

      175.0

    • C. 

      7.0

    • D. 

      70.0

  • 20. 
    ‘Electricity suppliers are required to buy a growing amount of electricity from renewable energy generators. By 2010, this must amount to at least 10 per cent of total electricity bought from all generators. Green energy generators are paid more for their electricity because there is a scarcity of supply of electricity generated from renewable resources.’ It can be deduced from the data above that
    • A. 

      The government is subsidising the production of renewable energy.

    • B. 

      The social cost of electricity generated from renewable resources is greater than the private cost.

    • C. 

      The government is subsidising the negative externalities arising from the production of ‘green energy’.

    • D. 

      Electricity suppliers are paying higher average prices for their electricity because some of the electricity is generated from ‘green sources’.

  • 21. 
    • A. 

      The free market price will be too high.

    • B. 

      There will be over-production of the good of HJ.

    • C. 

      The free market output will be too high.

    • D. 

      There will be under-consumption of the good of HJ.

  • 22. 
    • A. 

      The benefits of monopoly power.

    • B. 

      The benefits of increased specialisation.

    • C. 

      Diseconomies of scale.

    • D. 

      Increased productive efficiency.

  • 23. 
    • A. 

      The production of potatoes be subsidised.

    • B. 

      A tax be imposed on consumers of potatoes.

    • C. 

      Potatoes be released from the buffer stock.

    • D. 

      Potatoes be purchased for the buffer stock.

  • 24. 
    • A. 

      Only W and Y

    • B. 

      Only V, W and X

    • C. 

      Only V, W, X and Y

    • D. 

      V, W, X, Y and Z

  • 25. 
    One reason why specialisation raises labour productivity is because
    • A. 

      Specialisation shifts the production possibility boundary to the left.

    • B. 

      Labour replaces capital to produce goods and services.

    • C. 

      Specialisation requires an economy to produce on its production possibility boundary.

    • D. 

      The division of labour makes it cost-effective to provide workers with specialist equipment.