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Question 1

Which of the following is not part of the opportunity cost of a university education for a full time student?

a) Any tuition fees payable

b) Cost of food

c) Income forgone from not working full time

d) Cost of textbooks

Question 2

Which of the following perspectives tends to put more faith in the free operation of markets as a way of bringing about economic efficiency?

a) The neo-classical view

b) The interventionist or structuralist view

c) The radical or Marxist view

d) The Green or environmentalist view

Question 3

The demand curve for a product will shift outwards to the right when:

a) The price of a substitute good rises

b) Consumers expect the price of the good to fall in the future

c) Consumer incomes fall

d) The price of the product itself falls

Question 4

If we observe a decrease in the price of good x the most certain explanation is:

a) The demand for x has increased or the supply has decreased or both

b) The demand for x has increased or the supply has increased or both

c) The demand for x has decreased or the supply has increased or both

d) The demand for x has decreased or the supply has decreased or both

Question 5

If the demand for a good is relatively price inelastic and its price rises the revenue will:

a) Fall

b) Remain constant

c) Rise

d) Depends on how supply responds

Question 6

If a 10% rise in price causes a 5% fall in the quantity demanded…

a) The price elasticity of demand is -5

b) The price elasticity of demand is -2

c) The price elasticity of demand is -0.5

d) The price elasticity of demand is -0.2

Question 7

Which of the following options is not an example of "market failure"?

a) Failure of a firm to maximize its profits

b) Failure to produce merit goods

c) Failure to produce public goods

d) Failure to account for externalities

Question 8

Which of the following is an example of a primary form of business activity?

a) Hairdressing

b) Automobile Production

c) Banking

d) Forestry

Question 9

Which of the following statements is most likely to be true?

a) As incomes rise the demand for agricultural goods in general will fall

b) As incomes rise the percentage of total income spent on agricultural goods in general tends to fall

c) As incomes rise the percentage of total income spent on agricultural goods in general tends to rise

d) As incomes rise total spending on agricultural products in general will fall

Question 10

The price of a good will tend to rise if:

a) The current price is above the equilibrium

b) The current price is below the equilibrium

c) The quantity demanded is less than the quantity supplied

d) There is a reduction in the costs of a substitute commodity

Oxford University Press, Online Resource Centre, Chapter 02.

Chapter 02

Instructions