MCQ WS-1

Taunggyi International School
Brainworks K12 Integrated

Secondary 5
Economics 9708
Multiple choice Questions
1. Why does a production possibility curve exist for every economy?
A Resources are unlimited.
B Resources have alternative uses.
C Some resources can be imported.
D Some resources may be unemployed.
2. Which statement is a normative statement?
A Aggregate demand will increase following a decrease in interest rates.
B A rise in unemployment will decrease inflationary pressures.
C The incentive to work will rise if benefit payments are reduced.
D Unsustainable economic growth is more harmful to the economy than hyperinflation.
3. Which combination best describes the basic economic problem?
4. What is the main reason an economy is unlikely to rely completely on market forces to
allocate resources?
A Demerit goods will be over supplied.
B Merit goods will be under supplied.
C Private goods will not be supplied.
D Public goods will not be supplied.
5. What is the opportunity cost to a person of spending $20 on a new pair of sports shoes?
A all the other things the person could have bought
B the cost of getting to the sports shop
C the current value of the person’s old pair of shoes
D the next best thing that could have been bought with the $20
6. What is the definition of effective demand?
A demand that is speculative
B demand that is supported by the ability to pay
C the relationship between price and quantity demanded
D the total amount demanded by consumers
Page 1 of 4
7. The price elasticity of demand for good X is –2.4, its income elasticity of demand is –0.4 and
the cross elasticity of demand for good X with respect to good Y is +0.8. What is the correct
description of good X?
A inferior good, price-elastic demand and substitute for good Y
B inferior good, price-inelastic demand and complement to good Y
C normal good, price-elastic demand and complement to good Y
D normal good, price-inelastic demand and substitute for good Y
8. The diagram shows two straight line demand curves, X and Y.
What is correct about curves X and Y?

A Both X and Y are unit price elastic over their whole length.
B Both X and Y have the same elasticity at every price.
C X has a higher price elasticity than Y at every price.
D Y is more likely to have substitutes than X.
9. The price elasticity of the supply of yoghurt is estimated to be +1.5. If the demand for yoghurt
rises and price rises by 20%, how much more will be supplied to the market?
A 0.3% B 3.0% C 13.3% D 30%
10. Butter is a normal good. It is in joint demand with bread and in joint supply with buttermilk. The
demand for butter increases because of a rise in consumer incomes. What are the effects of
this increase on the prices of bread and buttermilk?
Page 2 of 4
11. The diagram shows a competitive market in equilibrium with price P and quantity Q sold.
Which area represents the producer surplus?

A PWU B PVW C OUWQ D OPWQ
12. A policy that aims to reduce the degree of inequality of income will also reduce the level of
employment in a country. What is most likely to be such a policy?
A. The effective minimum wage is increased by 25%.
B. The rate of income tax paid by the lowest band of earners is reduced.
C. The government increases the level of subsidies given to producers of some merit
goods.
D. The government provides more goods that are regarded as essential.
13. What explains the underconsumption of merit goods?
A Their value is not fully understood by consumers.
B They are unproductive goods and services.
C They can only be provided by the government.
D They are only provided by private sector businesses.
14. A country uses an income tax under which the first $10 000 of income is tax-free, the next $20
000 is taxed at 20% and any income over $30 000 is taxed at a top rate of 40%. It also levies
a sales tax of 10% on most products. Which combination of tax changes is most likely to
create a more equal distribution of income in the country?
Page 3 of 4
15. The diagram shows aggregate demand (AD) curves for an economy.
Which combination is most likely to have caused the shift from AD1 to AD2?
16. What can be considered an expansionary supply-side policy?

A an increase in government expenditure on training
B an increase in sales tax
C an increase in the rate of interest
D an increase of the exchange rate
Feb/Mar 2024 Paper 12
Page 4 of 4

MCQ WS-1

Uploaded by

Copyright:

Available Formats

MCQ WS-1

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MCQ WS-1

Uploaded by

Copyright:

Available Formats

Taunggyi International School

Brainworks K12 Integrated

What is correct about curves X and Y?

Which area represents the producer surplus?

16. What can be considered an expansionary supply-side policy?

You might also like