Economics Multiple Choice Question – 7 April 2019

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

Which of the following combinations of causes and consequences in the market for good X is correct?

Select ONE answer:

  1. Cause – A government subsidy is given to firms producing good X / Consequence – There is a movement down the supply curve for good X
  2. Cause – The price of good X decreases / Consequence – The demand curve for good X shifts to the right
  3. Cause – The price of a substitute for good X increases / Consequence – The demand curve for good X shifts to the left
  4. Cause – The wages paid to workers producing good X fall / Consequence – The supply curve for good X shifts to the right

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. A government subsidy lowers the costs of production and causes the supply curve to shift to the right. A contraction of the curve is caused by an increase in the price of good X.
  2. A change in the price of the product causes a movement along the demand curve, not a shift.
  3. If the price of a substitute good increases there will be less demand for the substitute and more demand for good X, the demand curve will shift to the right.
  4. Correct: Wages are a cost of production. As costs of production fall, a firm is able to produce more units of product X to the market. The number of units supplied increases and the supply curve shifts to the right.

 

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