MCQ WS-2

Taunggyi International School
Brainworks K12 Integrated

Secondary 5
Economics 9708
Multiple choice Questions- WS-2
Feb-Mar 2023 9708/12
1. A good is most suitable to be provided by the market if it is
A excludable and non-rival.
B excludable and rival.
C non-excludable and non-rival.
D non-excludable and rival.
2. What is the definition of long run?
A the time period when all factors of production are specialised
B the time period when all factors of production are variable
C the time period when all key inputs into production are variable
D the time period when at least one factor of production is fixed
3. The table states the consequences of two macroeconomic policies. What correctly identifies
whether the statements are normative or positive?
Page 1 of 8
4. The diagram shows the production possibility curve for wheat and corn.
What can be deduced from the diagram?

A As the price of corn falls, more of it is demanded.
B Resources used in producing corn are more efficient than in producing wheat.
C The opportunity cost of producing corn falls when moving from M to N.
D The opportunity cost of producing corn is constant when moving from M to N.
5. A supply curve is represented by the equation
quantity supplied = 10 + 5P
where P = the price of the product.
Which price rise would cause the quantity supplied to double?
A $1 to $2 B $1 to $3 C $1 to $4 D $1 to $5
6. Which diagram illustrates unitary elasticity of supply?
Page 2 of 8
7. In which case is the price system not a possible method of allocating resources?
A in the distribution of foodstuff among the population
B in the hiring of workers by employers
C in the ownership of land for agricultural use
D in the provision of public goods by the government
8. A sports stadium has two prices of seats. The cheaper seats are $10 and the more expensive
seats are $20. When the prices of all seats are increased by 10%, the effects on demand are
a fall of 5% for the cheaper seats and a fall of 12% for the more expensive seats. What
describes the responsiveness of demand to the change in price?
9. Which statement correctly describes the shape of the demand curve for a normal good?
A. It shows an inverse relationship between income and quantity demanded.
B. It shows an inverse relationship between the price of the good and quantity
demanded.
C. It shows a positive relationship between the price of the good and quantity
demanded.
D. It shows a positive relationship between income and quantity demanded.
10. Why does the basic economic problem of scarcity apply to both the rich and the poor?
A The choices people make are not dependent on income inequalities.
B Consumers pay the same prices for goods and services to satisfy their wants.
C Human wants exceed what can be produced from available resources.
D Natural resources are unevenly distributed amongst nations.
11. Butter and buttermilk are goods in joint supply. Supply curves in both markets slope upwards
to the right. Health concerns cause people to reduce their consumption of butter. What are the
initial consequences of this for supply in the markets for butter and buttermilk?
Page 3 of 8
12. The diagram shows the demand and supply of a good.
When the market is in equilibrium, which area measures the difference between what
consumers are willing and able to pay and what producers receive at that output?
Ax By Cx+y Dx–y
13. Why do some local governments subsidise the provision of bicycles to encourage their use?
A Consumers are afraid of having car accidents.
B Consumers are unable to afford bicycles.
C Consumers are not aware of the external benefits of using bicycles.
D Consumers ignore the external costs of using bicycles.
May/June 2023 9708/11
1. What is ‘a produced means of further production’?
A capital
B enterprise
C labour
D land
2. A hospital management board decides to reallocate $800 000 from its $1.2m new buildings
budget to spend on cancer care. What is the opportunity cost of this decision?
A a cost of $400 000
B a cost of $800 000
C the cost of healthcare for cancer patients
D the loss of some new buildings
Page 4 of 8
3. The diagram shows the change in a country’s production possibility curve from XX to YY.
What would explain this change?

A Consumers chose to consume more food and less drink.
B Government taxed food production and subsidised drink production.
C Productivity rose in food production and fell in drink production.
D There were more imports of food and more exports of drink.
4. A factory manufactures chairs. The manufacturing process is divided into a number of tasks.
What is a likely disadvantage of this division of labour?
A decrease in motivation
B decrease in output
C decrease in productivity
D decrease in quality of the final product
5. Which row correctly describes the relationship between two goods implied by the value of the
cross elasticity of demand?
6. What does consumer surplus measure?

A. the excess profit earned by the producer of a good
B. the opportunity cost to the consumer of not buying a good
C. the price the marginal consumer is willing to pay for a good
D. the consumer’s gain from purchasing a good at a price below what they are willing
to pay.
Page 5 of 8
7. When the price of good X is $2.00, the quantity supplied is 100 000. The price elasticity of
supply of good X is 0.8 in the short run and 1.4 in the long run. The price of good X increases
to $2.20. What is the increase in the quantity supplied of good X between the short run and
the long run?
A 6000 B 60 000 C 114 000 D 140 000
8. The diagram shows the European market for diesel fuel and the original equilibrium is at M.
Europeans want low-emission cars and therefore the demand for diesel fuel has decreased
from D1 to D2.
Which area represents the new producer surplus for companies supplying diesel fuel?
A GMNH B JGM C JHN D JNR
9. In which situation is the demand for a product said to be price elastic?
A The quantity demanded responds to a change in price.
B An increase in price brings about a decrease in the quantity demanded.
C An increase in price induces consumers to spend more on the product.
D A decrease in price brings about an increase in revenue.
Page 6 of 8
10. Golf club membership fees in Singapore have risen as a result of restrictions on travel to
cheaper golf courses in neighbouring countries and the closure of some local courses. The
supply of golf club memberships is determined by the current number of courses. If the original
equilibrium was at X, which point shows the result of these changes?
11. The diagram shows the demand and supply curves for solar energy in India. The initial
equilibrium point is at X. The Indian government increases the subsidy to solar energy
producers. At the same time, there is a rise in the price of alternative sources of energy.
What is the new equilibrium position?
Page 7 of 8
12. A specific tax is placed on the sale of bottles of lemonade. In the diagram, S is the supply
curve before imposition of the tax and St is the supply curve after tax.
Which distance represents the specific tax on each bottle?

A UT B WT C WU D WX
13. Demand for medical face masks exceeds supply during a disease outbreak. What is the most
likely cause of this excess demand?
A Some consumers do not have effective demand.
B The demand for medical face masks is price inelastic in the short run.
C The price of medical face masks is fixed below the equilibrium price.
D The supply of medical face masks is inelastic in the short run.
14. The diagram shows the demand and supply curves for a good.
The government fixes a maximum price of OP1.

What would happen?
A Consumers would have to be rationed to quantity OQ1.
B The government would have to introduce a subsidy of PP1.
C The market equilibrium quantity OQ would be demanded and supplied.
D The supply of quantity OQ2 would be guaranteed
Page 8 of 8

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Taunggyi International School

Brainworks K12 Integrated

What can be deduced from the diagram?

What would explain this change?

6. What does consumer surplus measure?

Which distance represents the specific tax on each bottle?

The government fixes a maximum price of OP1.

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