Accounting Multiple Choice Question – 12 November 2017

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

Which formula is used to calculate the overhead absorption rate?

Select ONE answer:

  1. Actual overheads / actual activity
  2. Actual overheads / budgeted activity
  3. Budgeted overheads / actual activity
  4. Budgeted overheads / budgeted activity
  5. Budgeted overheads / managed activity

What is the purpose of the overhead absorption rate?……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 4 – Overhead absorption rates are our attempt at coming up with the best ‘guess’ of how much overhead should be given to a product. In traditional costing systems, the rates are likely to be based on machine hours or labour hours. The process is a little more refined in activity based costing, but the intention is still the same: we are trying to find an equitable way of sharing out the overheads to products and are therefore looking for a method that relates the absorption base to the incidence of the overheads (establish a ‘causal link’). If a business is machine intensive, machine hours would be the most appropriate base as the overheads would be related to machine usage. But this is taking a very wide view: it would be better to break the business down into separate departments and choose individual rates for each department. In order for the business to move along and not wait a full year before it can sell its products we need to forecast the overheads and forecast the total hours to be used when making all of our products (assuming a traditional system), in other words we work with budgeted figures when calculating the overhead absorption rates. The formula to use is Overhead absorption rate = budgeted overhead/budgeted activity.

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Economics Multiple Choice Question – 11 November 2017

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

The price elasticity for a product is -2.5. The firm sells 2,000 units. What would you expect the new sales to be following a 10% price increase?

Select ONE answer:

  1. 1,500
  2. 2,000
  3. 2,500
  4. 2,200
  5. 1,800

Show your workings to arrive at your answer, and explain and justify your reasons?
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 1 – Normal formula is PED = % change QD / % change P. We know PED = -2.5 & % change in P is 10%. Substituting in this formula we know -2.5 = -x% / 10% where needs to be a higher % therefore this must be -25% / 10% to equal -2.5. 25% of 2,000 units sold is 500 units. 500 less units sold from a 10% increase in price means 2,000 – 500 i.e. new quantity sold will be 1,500 units.

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Economics Multiple Choice Question – 10 November 2017

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

Price elasticity of demand measures?

Select ONE answer:

  1. % change in quantity demanded compared to % change in price
  2. % change in quantity supplied compared to % change in price
  3. % change in price compared to % change in supply
  4. % change in quantity demanded compared to % change in income
  5. % change in quantity demanded compared to % change in advertising

Explain what is meant by price-inelastic demand:
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 1 – The price elasticity of demand measures the sensitivity of the quantity demanded to changes in the price. Demand is inelastic if it does not respond much to price changes, and elastic if demand changes a lot when the price changes. Necessities tend to have inelastic demand.

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Economics Multiple Choice Question – 9 November 2017

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

Demand for a good is said to be effective only when it is associated with?

Select ONE answer:

  1. Knowledge of the characteristics of the good
  2. Willingness and ability to pay for the good
  3. Consumer expenditure
  4. Sufficient disposable income to pay for the good
  5. The existence of an adequate supply of the good

What are the determinants of supply?
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This is multiple choice question is suitable for Economics KS5 classes.

The answer is 2 – At first glance all these answers might seem reasonable. Look at 1 – People do indeed make better choices when they are well informed about a good, but you don’t effectively purchase just because you know about it. Now look at 4 – Having sufficient disposable income (after tax) is essential but not sufficient, as you may not like the good at all but if you have sufficient income and are willing to pay for it, then the demand is effective. But we haven’t mentioned 5 – If the good isn’t supplied consumers can’t purchase, but its provision isn’t sufficient to make consumers purchase. 3 – is a pure distraction.

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Economics Multiple Choice Question – 8 November 2017

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

Which of the following is not held constant when a demand curve is drawn?

Select ONE answer:

  1. Consumer expenditure
  2. Consumers’ money incomes
  3. Consumers’ tastes
  4. The price of the good itself
  5. The prices of complementary goods

Explain and justify your answer through sketching and annotating a supply and demand curve diagram?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 4 – This is a very straightforward question if you have a basic grasp of the topic. You are not given a diagram but sketching one for yourself will make the question easy. Sketch a demand curve. If you have done it correctly you have the price of the good up the vertical axis and the quantity demanded along the horizontal axis. The demand curve, then, shows the relationship between the price of the good and quantity demanded, all other things being held equal, or ceteris paribus as we sometimes say. As you lower the price you move along the curve and see the higher quantities now being demanded. The price of the good itself is varying as you do so. All other things affecting demand, including the factors described in 1, 2, 3 and 5 are held constant.

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Economics Multiple Choice Question – 7 November 2017

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

Which of the following is a normative statement?

Select ONE answer:

  1. Increased government spending cannot reduce unemployment
  2. The imposition of import tariffs will reduce unemployment
  3. A policy of controlling inflation which results in increased unemployment is undesirable
  4. The level of social security benefits is the primary factor influencing the level of unemployment
  5. Increased government spending will lead to higher taxes

Give and explain 3 positive economic statements?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 3 – You should know the basic distinction between normative and positive statements. This question tests whether you can apply that knowledge. At first, it seems that you have to have a huge level of knowledge. It covers various aspects of employment policy, inflation, and even international trade policy. But don’t panic. It isn’t very hard if you know the meaning of normative and positive. Recall that a positive statement is one that can, in principle, be tested by reference to evidence. A normative statement cannot be so tested.  Now look at option 1 again – You do not have to have a view about the effect of government spending on employment, you just have to recognise that in principle it is possible to test this assertion by examining data relating to government spending and unemployment levels. Exactly the same argument applies to statement 2 – In this case, the evidence is very strong. Import tariffs tend to increase unemployment, but the issue is not whether the statement is correct – It is whether it is testable. Statement 4 & 5 are also clearly testable in principle. Now look at 3 once more – The word ‘undesirable’ is the key, as the word begs the question: desirable in whose eyes? Statement 3 can’t be tested by evidence.

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Economics Multiple Choice Question – 6 November 2017

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

Which of the following conditions must be satisfied if a good is to be supplied through the market?

Select ONE answer:

  1. There are a large number of buyers and sellers
  2. There are no restrictions on the entry of new firms into the industry
  3. The goods supplied by different suppliers are homogeneous
  4. Those unwilling to pay for the good can be excluded from the benefits
  5. There are lots of market signals

Give the advantages and disadvantages of a centrally planned economy?

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

The answer is 4 – The key to this question is in understanding the term ‘market’. It does not say ‘supplied through a perfectly competitive market’. Consider answers 1, 2, and 3. These are all necessary if a good is to be supplied under conditions of perfect competition. But now look again at 4 – If a producer cannot exclude people from the benefits of his output he cannot oblige them to pay. This is a feature of a public good of course.

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