MCQs I got wrong (APT's 540 MCQs - 4.1.1, 4.1.2, 4.1.3, 4.1.8)

10. When making economic decisions, the government is least likely to take account of:

A) The wages in particular industries

B) How the defence budget is spent

C) Possible changes in average incomes

D) The impact on exports

A

19. The core function of the factor of production known as enterprise includes:

A) Organising resources

B) Motivating employees

C) Risk taking

D) Sellling to customers

C

7. The hypothesis of diminishing marginal utility implies that, when the price of a good falls, in order to restore their equilibrium, the consumer must:

A) Refrain from consuming the good altogether

B) Consume more of the good

C) Consume the same amount of the good

D) Consume less of the good

B

19. Which one of the following is an example of a 'rule of thumb' leading to a bias in decision-making regarding a consumer's regular purchase of a bottle of wine:

A) The fact that it is the second cheapest one in the shop

B) The utility they have calculated they will derive from consuming the wine

C) The recommendation of an impartial wine expert

D) The fact that they have consumed and enjoyed the same wine previously

A

6. Barclays have noticed that when HSBC recently increased their overdraft rates by 1.5% to 9%, demand for their own overdrafts increased by 200 per week from 3,300 per week. To two decimal places, the cross elasticity of demand for Barclays overdrafts is:

A) +0.30

B) +0.33

C) +3.03

D) +3.30

A

18. A rightward parallel shift in a supply curve would occur when business costs:

A) Fall by £3 a unit

B) Rise by 3%

C) Fall by 10%

D) Rise by £3 a unit

A

28. The model of supply and demand is based on several assumptions. Which one of the following options provides three correct assumptions?

A) Competitive Markets, No one is a price taker, Buyers and sellers form clearly defined separate groups

B) Buyers and sellers have limited information, Well defined property rights, Competitive markets

C) No one is a price taker, Buyers and sellers form clearly defined separate groups, Well defined private property rights

D) Buyers and sellers form clearly defined separate groups, Well defined private property rights, Competitive Markets

D

29. Demand for oil for chemicals has led to an increase in the price of petrol. This relationship is an example of products in:

A) Joint supply

B) Joint demand

C) Composite demand

D) Competitive demand

C

30. Examples of government failure would exclude:

A) Rent controls, which reduce the supply of low-coust housing

B) A minimum wage rate, which results in higher unemployment

C) A congestion change, which covers the cost of the negative externality created by the congestion

D) A tobacco tax, which increases smuggling from overseas

C

2. All economic decision-makers are forced to choose because:

A) Resources are infinite

B) Every choice has an opportunity cost

C) Wants are finite

D) Resources are finite

D

11. The introduction of high definition television can be expected to result in the following, with exception of:

A) Increased demand for new TV sets

B) Increased supply of second hand TV sets

C) Increased price of second hand TV sets

D) Increased demand for satellite television services

C

27. Governments may fail to address market failure because:

A) The opportunity cost of any decision is high

B) Their intervention will lead to a net welfare benefit

C) The accounting of social costs and benefits is challenging and lacks precision

D) Market forces leads to a socially efficient allocation of resources

C

6. The graph below shows the demand for lemons:

A steep demand curve with a fall in price and rise in quantity.

The fall in price and increase in the quantity demanded of lemons could have been caused by:

A) A fall in the price of a substitute for lemons, oranges

B) A rise in the price of lemonade

C) A reduction in the price of a complement for lemons, fish

D) Favourable weather leading to a record harvest

D