Tag: Tax

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.

Which ONE of the following is associated with the conditions of perfect competition?

Select ONE answer:

1. Suppliers are price-makers
2. A single selling price
3. Differentiated products
4. Heavy advertising helps gain extra market share

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 == > Suppliers are price-takers meaning that they can sell as much as they supply but only if they sell at the market-determined equilibrium price. Differentiated products and advertising are market imperfections, creating imperfect rather than perfect competition.
3. Not correct
4. Not correct

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

Which ONE of the following is associated with the conditions of perfect competition?

Select ONE answer:

1. Suppliers are price-makers
2. Differentiated products
3. Consumers lack influence over market price
4. Heavy advertising helps gain extra market share

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 3

1. Not correct
2. Not correct
3. Correct == > Suppliers are price-takers meaning that they can sell as much as they supply but only if they sell at the market-determined equilibrium price. Differentiated products and advertising are market imperfections, creating imperfect rather than perfect competition.
4. Not correct

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

Which ONE of the following is associated with the conditions of perfect competition?

Select ONE answer:

1. Suppliers are price-makers
2. Differentiated products
3. Heavy advertising helps gain extra market share
4. Suppliers earn ‘normal’ profits

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 == > Suppliers are price-takers meaning that they can sell as much as they supply but only if they sell at the market-determined equilibrium price. Differentiated products and advertising are market imperfections, creating imperfect rather than perfect competition.

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