ECO - PRACTICE 22/23

A good is most suitable to be provided by the market if it is

• excludable and non-rival.

• excludable and rival.

• non-excludable and non-rival.

• non-excludable and rival.

The table states the consequences of two macroeconomic policies. What correctly identifies whether the statements are normative or positive?

• A

• B

• C

• D

Which diagram illustrates unitary elasticity of supply?

• A

• B

• C

• D

A sports stadium has two prices of seats. The cheaper seats are $10 and the more expensive seats are $20. When the prices of all seats are increased by 10%, the effects on demand are a fall of 5% for the cheaper seats and a fall of 12% for the more expensive seats.

What describes the responsiveness of demand to the change in price?

• A

• B

• C

• D

Butter and buttermilk are goods in joint supply. Supply curves in both markets slope upwards to the right. Health concerns cause people to reduce their consumption of butter.

What are the initial consequences of this for supply in the markets for butter and buttermilk?

• A

• B

• C

• D

The diagram shows the demand and supply of a good.

When the market is in equilibrium, which area measures the difference between what consumers are willing and able to pay and what producers receive at that output?

• X

• Y

• X+Y

• X-Y

Why do some local governments subsidise the provision of bicycles to encourage their use?

• Consumers are afraid of having car accidents.

• Consumers are unable to afford bicycles.

• Consumers are not aware of the external benefits of using bicycles.

• Consumers ignore the external costs of using bicycles.

A specific tax is placed on the sale of bottles of lemonade. In the diagram, S is the supply curve before imposition of the tax and St is the supply curve after tax.
Which distance represents the specific tax on each bottle?

• UT

• WT

• WU

• WX

The diagram shows the demand and supply curves for a good.
The government fixes a maximum price of OP1.
What would happen?

• Consumers would have to be rationed to quantity OQ1.

• The government would have to introduce a subsidy of PP1.

• The market equilibrium quantity OQ would be demanded and supplied.

• The supply of quantity OQ2 would be guaranteed.

The diagram shows the impact of a fall in the price of oil that will lead to a fall in energy costs for many manufacturers.

• A

• B

• C

• D