The Multiple Choice Questions Blog

The diagram below represents the demand and supply curves for good Y (which is a foodstuff). A recent report suggests that the good has positive externalities in consumption. However, a poor harvest this autumn has resulted in a reduced output.

 

Which ONE of the following changes to demand, supply and price would occur due to these changes in the market conditions?

Select ONE answer:

Explain your answer in a diagram:
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2 – Demand will go up due to the report, but supply will go down due to the poor harvest, leading to an increase in price.

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Which ONE of the following is an example of an external diseconomy of scale?

Select ONE answer:

1. Lower levels of motivation among workers
2. Firms experiences loss of managerial direction
3. Shortage of input factors for an entire industry
4. Poorer communication with a larger workforce
5. Higher levels of staff turnover in a business

Draw the representation of a ‘diseconomies of scale’?
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 3 – DEFINITION of ‘External Diseconomies Of Scale’ External factors beyond the control of a company increases its total costs, as output in the rest of the industry increases. The increase in costs can be associated with market prices increasing for some or all of the factors of production.

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A firm producing good A finds that it has a fixed cost of £10,000. It calculates that its variable costs when producing 200 units of good A are £8 per unit. What is the average total cost (ATC) at an output of 200 units?

Select ONE answer:

1. £60
2. £8
3. £50
4. £52
5. £58

Justify your answer?
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 5 – fixed costs of £10,000 divided by 200 units =£50 per unit. The variable cost for 200 units is £8 per unit. Average total cost is, therefore, £50 + £8 = £58

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The price of a small chocolate bar increased from 50 pence to 55 pence per bar. The manufacturers found that the demand for their bar decreased by 5%. What is the price elasticity of demand (PED) for the chocolate bar?

Select ONE answer:

1. -1
2. -2
3. -0.5
4. -5
5. -10

Justify your answer?
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 3 – Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded—or supplied—divided by the percentage change in price. i.e. -5% (decrease in quantity demanded) / (55/50 = 10% increase) = -0.5

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Which ONE of the following economic agents is most likely to desire profit maximisation within a firm?

Select ONE answer:

1. The managers
2. The customers
3. The local government
4. The owners
5. The press

Give 3 alternative ‘aims’ of firms?
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 4 – Usually, in economics, we assume firms are concerned with maximising profit. Higher profit means higher dividends for shareholders.

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