Tag: ACA

The basic economic problem facing all economies is?

Select ONE answer:

1. Maximising economic growth
2. Unemployment
3. Inflation
4. Allocating scarce resources

Show your workings to arrive at your answer, and explain and justify your reasons:

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

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

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > The basic economic problem is one of allocating scarce resources and economics is the study of how those scarce resources are or should be used.

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

Little Staffie Ltd produces chairs.

An economist working for the firm predicts that if average incomes rise next year, then demand for the firm’s chairs will increase in direct proportion to the rise in incomes (assuming all other factors remain unchanged).

The accuracy of the economist’s prediction depends on whether the chairs produced by Little Staffie Ltd?

Select ONE answer:

1. Are normal goods
2. Have many complementary goods
3. Have few complementary goods
4. Have few substitutes

Show your workings to arrive at your answer, and explain and justify your reasons:

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

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

The answer is 1

1. Correct == > With normal goods, if incomes rise demand for the product will rise and this will be the case regardless of the existence of either substitutes or complements.
2. Not correct
3. Not correct
4. Not correct

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

If the minimum price for a good is set by the government above the current free market equilibrium price, what will be the effect (if any) on demand for and supply of the good in the short term?

Select ONE answer:

1. Demand for the good will fall; supply of the good will rise
2. Demand for the good will rise; supply of the good will fall
3. Both demand for and supply of the good will rise
4. There will be no effect on either demand for or supply of the good

Show your workings to arrive at your answer, and explain and justify your reasons:

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

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

The answer is 1

1. Correct == > Suppliers will be encouraged to supply at that price so supply will increase, whilst at a price above the market equilibrium price, the demand will fall.
2. Not correct
3. Not correct
4. Not correct

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

Alex is a Staffordshire shopkeeper who finds that if he sets the price of a particular product called X at £9.00 per unit, he sells on average, 150 units of the product per month.

However, at a price of £10.00 per unit for X, he sells an average of 110 units of that product per month.

The price elasticity of demand for the product called X is?

Select ONE answer:

1. – 0.42
2. – 2.40
3. – 0.27
4. – 0.11

Show your workings to arrive at your answer, and explain and justify your reasons:

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

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

The answer is 2

1. Not correct
2. Correct == > Proportional change in quantity demanded = 40/150 × 100 = -26.6%. Proportional change in price = 1/9 × 100 = 11.1%. Therefore PED = -26.6/11.1 = -2.40
3. Not correct
4. Not correct

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

Big Staffie plc has recently been able to achieve significant external economies of scale.

This indicates that the market for the company’s only product has been?

Select ONE answer:

1. Static, so forcing the company to achieve economies of scale in production
2. Growing, so enabling the economies of scale to be achieved
3. Contracting, so enabling the company to cut costs in distribution
4. Volatile, meaning that internal economies of scale were unattainable

Show your workings to arrive at your answer, and explain and justify your reasons:

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

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

The answer is 2

1. Not correct
2. Correct == > External economies of scale arise by virtue of the market for the product growing, enabling greater levels of business across which to spread the company’s costs.
3. Not correct
4. Not correct

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