Economics Multiple Choice Question – 20 December 2017

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

For a price-inelastic product?

Select ONE answer:

  1. Demand never changes
  2. Demand does not change with income
  3. You can always charge the highest price in the market
  4. Demand does not change with price
  5. The change in quantity demanded is proportionately less than the change in price (in percentages)

Give the equation for income elasticity of demand:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 5 – If PED is between 0 and 1 (i.e. the % change in demand from A to B is smaller than the percentage change in price), then demand is inelastic.

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Economics Multiple Choice Question – 19 December 2017

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

The price of a product is likely to be lower if?

Select ONE answer:

  1. Demand is price inelastic
  2. There is limited competition
  3. It is in a niche market
  4. The product has a USP
  5. Entry into the market is easy

Explain and justify your answer:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 5 – If entry into a market is easy then competitors can come in because there are lower barriers to entry and charge a price lower than the incumbents and capture market share which will require a matching action from the incumbents to maintain their market share.

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Economics Multiple Choice Question – 18 December 2017

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

If revenue falls after a price increase, the price elasticity of demand is?

Select ONE answer:

  1. Zero
  2. 1
  3. Less than 1
  4. More than 1
  5. Positive

What is the value of the price elasticity of demand is price inelastic:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 4 – If PED > 1, then demand responds more than proportionately to a change in price i.e. demand is elastic. For example, if a 10% increase in the price of a good leads to a 30% drop in demand. The price elasticity of demand for this price change is –3

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Economics Multiple Choice Question – 17 December 2017

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

An increase in the price of 10% has led to a fall in sales of 20%.

The price elasticity of demand is?

Select ONE answer:

  1. -2
  2. +2
  3. -0.2
  4. -0.5
  5. +0.5

Is this price elastic or price in-elastic and why:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 1 – The formula for calculating the price elasticity of demand is: Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price. If a small change in price is accompanied by a large change in quantity demanded, the product is said to be elastic (or responsive to price changes). Here PED = % change in QD of -20% / % change in P of 10% or -2.

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Economics Multiple Choice Question – 16 December 2017

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

If demand is income elastic then?

Select ONE answer:

  1. A change in income leads to a bigger change in quantity demanded (in percentages)
  2. A change in price leads to a bigger change in quantity demanded (in percentages)
  3. An increase in income increases the quantity demanded
  4. An increase in income decreases the quantity demanded
  5. A fall in income decreases the quantity demanded

What is the value of the income elasticity if the demand is income elastic:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 3 – A positive income elasticity of demand is associated with normal goods; an increase in income will lead to a rise in demand. If income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a superior good.

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Economics Multiple Choice Question – 15 December 2017

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

If the Price elasticity of demand is -0.5, then a 10% INCREASE in price will?

Select ONE answer:

  1. Increase in sales by 20%
  2. Decrease in sales by 20%
  3. Increase in sales by 5%
  4. Decrease in sales by 5%
  5. Leaves sales unchanged

How can price elasticity of demand be estimated:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 4 – The formula for calculating the price elasticity of demand is: Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price. Therefore with PED = -0.5 then an increase in price will decrease sales -0.5 * 10% by 5%.

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Economics Multiple Choice Question – 14 December 2017

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

If the demand for a product is price elastic, this means?

Select ONE answer:

  1. A change in price has no effect on the quantity demanded
  2. A change in income has no effect on the quantity demanded
  3. An increase in price increases revenue
  4. An increase in price increases profits
  5. An increase in price decreases costs

What is the normal value of price elasticity of a product, if the demand is price inelastic:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

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

The answer is 3 – The formula for calculating the price elasticity of demand is: Price Elasticity of Demand = % Change in Quantity Demanded / % Change in Price. If a small change in price is accompanied by a large change in quantity demanded, the product is said to be elastic (or responsive to price changes).

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