Demand Supply Market Failure Firms

Which of the following best describes price elasticity of demand?

• The responsiveness of supply to a change in price

• The responsiveness of quantity demanded to a change in price

• The responsiveness of demand to a change in income

• The responsiveness of supply to a change in income

If the price of a good increases and the demand is price elastic, what is likely to happen to total revenue?

• It will increase

• It will decrease

• It will stay the same

• It will double

Which of the following would cause a rightward shift in the supply curve for apples?

• A decrease in the number of apple farmers

• A poor harvest due to bad weather

• A technological improvement in apple farming

• An increase in the price of apples

What is meant by market equilibrium?

• When demand is greater than supply

• When supply is greater than demand

• When quantity demanded equals quantity supplied

• When prices are falling

Which of the following is a cause of market failure?

• Perfect competition

• Externalities

• Efficient allocation of resources

• High profits

Which market structure is characterised by a single seller?

• Perfect competition

• Oligopoly

• Monopoly

• Monopolistic competition

What is the main role of firms in the economy?

• To set government policy

• To produce goods and services

• To print money

• To control inflation

If a government imposes a tax on a good, what is the likely effect on the supply curve?

• It shifts to the right

• It shifts to the left

• It becomes vertical

• It does not change

Which of the following is an example of a negative externality?

• A vaccination programme

• Pollution from a factory

• A public park

• Free education

If the price of a substitute good increases, what is likely to happen to the demand for the original good?

• It will decrease

• It will increase

• It will stay the same

• It will become perfectly elastic