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Question 1

Which of the following is most correct as a statement in defining demand for a product?

a) Total market value of demand = £12.5 million

b) Market price of £12.50

c) 2,000 units per day at £1 each in the UK

d) Potential demand for sales of 10,000 units per year

Question 2

A demand curve shows, for a given market, during a given time period, which factors?

a) Price and quantity

b) Price and time

c) Demand and supply

d) Price and elasticity

Question 3

Price elasticity of demand refers to:

a) The percentage change in price divided by the percentage change in supply.

b) The percentage change in price divided by the percentage change in volume.

c) The percentage change in volume demanded divided by the percentage change in price.

d) The absolute increase in demand.

Question 4

A product whose volume of demand increases greatly following a small reduction in price is said to be:

a) Inelastic

b) Highly inelastic

c) Highly elastic

d) Perfectly elastic

Question 5

Which of the following is an example of an "inferior" good?

a) Pawnbroking services

b) The Daily Star newspaper

c) Coca-Cola

d) Cigarettes

Question 6

A supply curve shows price on the vertical axis and volume on the horizontal. An upward shift to a higher supply curve indicates:

a) More is supplied at any given price level.

b) Less is supplied at any given price level.

c) For any given level of supply, price is lower.

d) An increase in supply, but no change in price.

Question 7

Standby air tickets are best described as an example of:

a) Cost-plus pricing

b) Marginal cost pricing

c) Full-cost pricing

d) Demand based pricing

Question 8

The maximum selling price that a firm can sustain for a product is determined by:

a) What it costs to produce

b) Competitor's prices

c) What customers are prepared to pay for it

d) Competitive parity

Question 9

The key feature of oligopolistic competition is:

a) Emphasis on price competition

b) Emphasis on product differentiation

c) Interdependence of suppliers

d) Complete absence of competition

Question 10

Regulation of prices is deemed particularly necessary for industries where:

a) Demand equals supply

b) Supply is excessive relative to demand

c) Competition results in all service providers incurring losses

d) Technology provides market entry barriers

Oxford University Press, Online Resource Centre, Chapter 09.

Chapter 09

Instructions