IB SL EXAM MC

Economics is the study of*

• income allocation in a context of changing wants.
• how limited resources can be allocated between competing uses to satisfy unlimited wants.
• how social welfare can be increased in a context of limited resources.
• how unlimited resources can be allocated to satisfy limited wants.

Which one of the following is a ‘positive’ economic statement?**

• The social costs associated with present levels of car usage are too high.
• The imposition of road pricing will discourage car usage.
• Road and petrol taxes should be increased to discourage car usage.
• Alternatives to the car, such as public transport, should be subsidised.

Which one of the following would be an example of market failure?*

• The presence of abnormal profits in the short run.
• Sudden changes in demand leading to business failures.
• The presence of traffic congestion caused by the increased use of motor cars.
• Low levels of research and development.

  If the government introduces a guaranteed minimum price of $95 for good X, when equilibrium price is $75 the most likely effect will be 

• a cut in production of good X 
• the government would increase revenue from good X
• an oversupply of good X 
• none of the above 

 if the price of tea, a substitute, fell and the wages of coffee workers rose? would result in **

• decrease demand for coffee and a decrease in suppy for coffee
• decrease demand for coffee and a decrease in suppy for coffee
• increase demand for coffee and an increase in suppy for coffee
• increase demand for coffee and a decrease in suppy for tea

the changing share of income distribution in an economy is best shown on a *

• phillips curve 
• gini curve 
• lorenze curve 
• marshall lerner curve 

a supply curve which is drawn perfectly horizontal is *

• elastic 
• perfectly elastic 
• inelastic 
• perfectly inelastic 

           The price elasticity of demand for a good is likely to be low when*

• it is habit-forming.
• spending on it constitutes a large proportion of total spending.
• it has several close substitutes.    
• it is considered to be non-essential.

The income elasticity of demand for a good measures the responsiveness of*

• income to changes in price.
• price to changes in income.
• income to changes in demand.    
• demand to changes in income.    

Number of buyers and sellers Few
 Entry barriers Some
 Nature of product Similar but differentiated
 Type of competition Non-price*

• monopolistic.
• oligopolisitc.
• competitive.
• a monopoly