Economics Multiple Choice Question – 6 April 2019

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Economics

The diagram below represents a situation in which consumers have underestimated the benefits associated with the consumption of a product. The current demand is D and the current supply curve is S.

Diagram 14

Which of the following changes in demand and supply would reduce this under-consumption?

Select ONE answer:

  1. Demand – Extension / Supply – Increase / Price – Decrease
  2. Demand – Increase / Supply – Contraction / Price – Increase
  3. Demand – Decrease / Supply – Contraction / Price – Increase
  4. Demand – Contraction / Supply – Increase / Price – Decrease

Show your workings to arrive at your answer, and explain and justify your reasons:……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple choice question is suitable for Economics KS5 classes.

The answer is 1

  1. Correct: An increase in supply, reduction in price and extension in supply would result in a greater quantity being consumed.
  2. An increase in demand would increase price but supply would have to extend and not contract to result in a reduction in under-consumption.
  3. A decrease in demand would cause the price to fall rather than increase and will increase the problem of under-consumption.
  4. An increase in supply would cause a decrease in price but an extension in demand rather than a contraction and an extension in demand would be needed to reduce under-consumption.

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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