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.

Economics

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.

 

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

Author: stuart001uk2014

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

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s