Tag: Tax

In the market for the Big Staffie product competitors tend not to compete through price, instead devoting substantial sums of money to raising consumer awareness through advertising.

There is some degree of differentiation between products, often achieved through branding.

There are many buyers and sellers in the market for the product.

It would appear, therefore, that the market for the Big Staffie product is one characterised by?

Select ONE answer:

1. Monopolistic competition
2. Oligopoly
3. Perfect competition
4. Monopoly

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 == > The key differentiator here is the large number of competing sellers. The earlier issues identified in the question are shared by both monopolistic competition and oligopoly, but it is the large number of sellers in the market that defines this market specifically as monopolistic competition.
2. Not correct
3. Not correct
4. Not correct

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The Big Staffie product has experienced a significant rise in factor costs during recent months.

Against this background, it can be expected that there will therefore be?

Select ONE answer:

1. A contraction in demand and supply
2. An expansion in demand and supply
3. A contraction in demand and an expansion in supply
4. An expansion in demand and a contraction in supply

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 == > When factor costs rise, demand contracts (moves along the demand curve) since the price goes up and the supply curve shifts to the left (contracts).
2. Not correct
3. Not correct
4. Not correct

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

An analyst with Big Staffie plc has constructed a supply curve for one of the company’s major products, the Little Staffie.

The curve is is, vertical straight line.

This indicates that supply of the Little Staffie is, therefore?

Select ONE answer:

1. Perfectly inelastic
2. Of unitary elasticity
3. Perfectly elastic
4. One

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 == > A vertical straight line implies that the supply of the Little Staffie is fixed, whatever price is offered.
2. Not correct
3. Not correct
4. Not correct

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

The UK government has recently imposed a maximum price on Big Staffie which is set at a level lower than its equilibrium price.

In future, therefore, it can be expected that there will be?

Select ONE answer:

1. Excess supply of the product
2. Excess demand for the product
3. No effect on supply but an increase in demand
4. No effect on demand but a decrease in supply

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 == > A price below the market equilibrium price will attract demand but deter suppliers.
3. Not correct
4. Not correct

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

The price of Big Staffie has fallen by 4% in the last quarter, whilst in the same period demand for Little Staffie where there has been no price change, has risen by 6.5%.

The cross elasticity of demand between the two products is therefore?

Select ONE answer:

1. – 1.625
2. – 0.62
3. 1.625
4. 0.62

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 == > +0.065/-0.04 = -1.625
2. Not correct
3. Not correct
4. Not correct

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