Microeconomics quiz

Multiple choice questions from january series

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  • Created by: Sophie
  • Created on: 27-04-13 18:25

1. the income elasticity of demand for bus travel is -2.0. this means that

  • as unemployment falls, more people will use their local buses
  • a 10% increase in fares will lead to a 20% decrease in passengers
  • bus travel is an inferior good
  • buses are likely to have a negative cross elasticity of demand
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2. one reason why specialisation raises labour productivity is because

  • labour replaces capital to produce goods and services
  • the division of labour makes it cost-effective to provide workers with specialist equipment
  • specialisation shifts the production possibility boundary to the left
  • specialisation requires an economy to produce on its production possibility boundary

3. what is a defining characteristic of a merit good?

  • it may be provided by the free market but not in sufficient quantities
  • it tends to be provided by the govt because of the problem of non-exludability
  • once the good had been supplied to one consumer, there is no extra cost in supplying it to others
  • it is always provided free to consumers

4. which one is an appropriate form of govt intervention for the problem identified

  • the provision of a subsidy for a product which generates negative externalities
  • introduction of pollution permits to limit positive externalities
  • imposition of a max price for a merit good
  • the use of buffer-stock scheme to stabilise the price of a public good

5. a misallocation of resources is most likely to occur in monopoly if

  • there are economies of scale
  • other firms enter the industry
  • higher prices are charged than under competitive conditions
  • market output increases

Comments

davidsalter

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This 10 question multiple choice quiz tests several aspects of unit 1 micro economics and could provide a relief from intensive reading as well as a guide to areas still needing revision.

Nimrahkhan

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Not easiest resource but 0k for basic revision

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