Tag: Topic 17

Little Staffie is a normal good which has become increasingly unfashionable during the past year.

What changes to supply, demand and market price should this change in consumer tastes have created?

Select ONE answer:

1. No impact on the demand curve, but a fall in market price and a fall in quantity supplied
2. A shift in the demand curve to the right, a fall in market price and a fall in quantity supplied
3. A shift in the demand curve to the left, a fall in market price and a fall in quantity supplied
4. No impact on the demand curve, no impact on the supply curve but a fall in market price

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 == > A normal good which has become increasingly unfashionable will see its demand curve shift to the left, a fall in market price and a fall in quantity supplied.
4. Not correct

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A particular brand of cheese is classified as an inferior good.

A business consultant called Keith has made the two statements about that brand of cheese.

Statement 1 Demand for the cheese will rise as incomes rise.

Statement 2 Demand for the cheese only exists because of the effects of advertising.

Are the statements true or false?

Select ONE answer:

1. Statement 1 – True and Statement 2 – False
2. Statement 1 – False and Statement 2 – True
3. Statement 1 – True and Statement 2 – True
4. Statement 1 – False and Statement 2 – False

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 == > Both statements are false. Demand for an inferior good will fall with rises in income as consumers shift to better quality goods that they can now afford with their higher incomes. Demand for the inferior product could exist because of its price and the level of incomes, not just because of advertising.

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An increase in the price of Y, a complement of X in consumption, will….?

Select ONE answer:

1. Increase the demand for Y and decrease the d e m a n d for X
2. Decrease the demand for Y and increase the demand for Y
3. Increase the demand for both Y and X
4. Decrease the demand for both Y and X

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 == > If X is a complement of Y then they tend to be consumed together, so if demand for Y falls as a result of the increase in its price then demand for X will also fall.

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Which of the following is an example of complementary goods?

Select ONE answer:

1. Milk and orange juice
2. Pepsi and Coca-Cola
3. French fries and tomato sauce
4. Lamb and beef

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 == > Complementary items are goods that tend to be bought and used together, so that an increase in demand for one is likely to cause an increase in demand for the other. Milk / Orange + Pepsi / Coke + Lamb / Beef are substitutes for each other rather than complementary goods.
4. Not correct

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

If potatoes are a Giffen good, then an increase in the price of potatoes will cause?

Select ONE answer:

1. An increase in demand for potatoes
2. A decrease in demand for substitutes for potatoes
3. A decrease in demand for potatoes
4. An increase in demand for substitutes for potatoes

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 == > If potatoes are a Giffen good, then an increase in the price of potatoes will cause an increase in demand for potatoes
2. Not correct
3. Not correct
4. Not correct

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