Month: January 2018

When the price of a normal good falls, ceteris paribus, the substitution effect leads to ________ in the quantity purchased and the income effect leads to ________ in the quantity purchased.
Select ONE answer:

1. A decrease, a decrease
2. An increase, an increase
3. An increase, a decrease
4. A decrease, an increase

What is meant by “relative price”?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2

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The “income effect” in the market for aspirin means that ….?

Select ONE answer:

1. A decrease in the price of a substitute good like acetaminophen will make aspirin takers 
feel a little poorer than they were before.
2. Aspirin is generally taken by people with higher than average incomes.
3. An increase in the price of aspirin will reduce the total purchasing power of aspirin-takers, making them able to afford fewer aspirin.
4. An increase in the price of aspirin will cause headache sufferers to look for a lower priced remedy.

What is meant by “ceteris paribus”?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3

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Suppose that the price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behaviour is an example of….?

Select ONE answer:

1. An increase in quantity supplied of eggs because of the income effect.
2. A decrease in the quantity demanded of cereal because of the substitution effect.
3. A decrease in quantity supplied of cereal because of the substitution effect.
4. An increase in quantity demanded of eggs because of the income effect.

The “law of demand” is illustrated by a ……?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2

This work is licensed under a Creative Commons Attribution 4.0 International License.

A relative price is?

Select ONE answer:

1. The number of dollars that must be given up in exchange for the good.
2. The ratio of one price to another price.
3. Not an opportunity cost.
4. Also called the money price.

What is meant by the term ‘gross profit’?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2

This work is licensed under a Creative Commons Attribution 4.0 International License.