Economics Multiple Choice #2

Which is not a factor of production?

• a farm

• a farmer

• a farmer’s bank account

• a second-hand tractor

Heavy rain caused floods in an area of a country. What may be an opportunity cost of repairing the damage caused?

• the allocation of government funds to the area instead of on a new airport

• the cost of providing shelter for those made homeless

• the decline in the tourist industry in the area

• the loss of profits from businesses affected by the flood

The diagram shows a production possibility curve for cars and furniture.

A recession causes a decrease in production in both cars and furniture. Which movement would represent this change?

• X to W

• X to Y

• Z to W

• Z to Y

In response to an increase in price from $5 per kilo to $6 per kilo a chicken farmer increased supply from 400 kilos to 500 kilos per week. What is the price elasticity of supply?

• 0.8

• 0.9

• 1.2

• 1.25

The diagram shows the demand for chocolate. What could cause the movement from point X to point Y?

• a change in tastes

• a fall in the price of chocolate

• an increase in income

• a successful advertising campaign for chocolate

A bee-keeper maintains hives of bees to produce honey. The bees can pollinate neighbours’ fruit

trees but also give a painful sting to gardeners.

If both of these events occur, how will costs and benefits be affected?

• External benefits will fall and social costs will fall.

• External costs will rise and social benefits will fall.

• Social costs and social benefits will fall.

• Social costs and social benefits will rise.

In 2015 there was a significant fall in the world price of petrol (gasoline). What would not have been a cause of the price fall?

• the continuing global recovery from the world economic recession

• the increasing exploitation of US oil reserves

• the re-entry of Iranian producers to the world oil market

• the shorter journeys from using the new Suez Canal

Which statement about financial matters is correct?

• Commercial banks’ main activity is the finance of international trade.

• Paper banknotes possess all the desirable properties needed to act as money.

• Stock exchanges trade mainly in second-hand stocks and shares.

• The central bank acts as the lender of last resort to companies facing bankruptcy.

What is most likely to be used to support a claim for wage increases in an industry?

• a decrease in the industry’s sales

• a decrease in the need for specialist training

• an increase in cheap imports of a rival product

• an increase in wages in a similar industry

From the initial equilibrium point of X, which letter indicates the new equilibrium point in a market for normal goods?

• A

• B

• C

• D