Month: July 2019

A firm employs 60 workers, paying each worker £520 a week.

To attract an extra worker, the firm raises the wage of each worker to £540 a week.

What is the marginal cost of employing the 61st worker?

Select ONE answer:

1. £20
2. £540
3. £1,740
4. £32,940

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 3

1. This is the rise in pay each of the original workers receives.
2. This is the new wage.
3. Correct: the rise in total wages is £32,940 – £31,200 or £540+(60 * £20)
4. This is the new total wage bill

 

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The table below shows the market for a product before the imposition of an indirect tax.

What would be the change in the equilibrium price if a tax of £4 was imposed?

Select ONE answer:

1. £1
2. £2
3. £3
4. £4

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: The initial equilibrium price is £16. When an indirect tax of £4 is imposed, the firms would receive the sale price minus the tax. So now at £20, they will supply what they previously supplied at £16. This will create a new supply curve. The new equilibrium price is now £17, a rise of £1. Consumers are bearing £1 of the tax and the firms £3.
2. Incorrect
3. Incorrect
4. Incorrect

 

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Which of the following combination of statements about a public good is correct?

Select ONE answer:

 

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 3

1. Correct – Incorrect
2. Correct – Incorrect
3. Correct – Correct: Public goods involve non-excludability, therefore, it is impossible to charge an individual for use. They are also non-rival so one person per se does not reduce the availability for others.
4. Incorrect – Incorrect

 

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A firm has total variable costs of £36 000.

Its average fixed cost is £6 and its average total cost is £9.

What is the firm’s total output?

Select ONE answer:

1. 2,400
2. 4,000
3. 6,000
4. 12,000

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 4

1. This is the total variable cost divided by average fixed cost plus average total cost.
2. This is the total variable cost divided by the average total cost.
3. This is the total variable cost divided by average fixed cost
4. Correct: average total cost minus average fixed cost gives the average variable cost. In this case, this is £9 – £6 = £3. Total variable cost divided by average variable cost equals output: £36,000/£3 = 12,000.

 

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Product X has a price elasticity of demand (PED) of – 3.0. Product Y has a PED of – 0.2.

Which combination of characteristics is correct?

Select ONE answer:

 

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 3

1. An equal shift to the left of the demand and supply curves will leave the equilibrium price unchanged.
2. An equal shift to the left of the demand and supply curves will reduce the quantity traded.
3. Correct: A decrease in supply on its own will push up the price but this would be offset by the downward pressure on the price resulting from a decrease in demand. Both lower supply and lower demand will reduce the quantity traded.
4. If less is supplied and demand there will fewer products bought and sold.

 

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