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Supplementary objective test questions

CHAPTER 2 – MICROECONOMICS II – THE MARKET SYSTEM

2.1 The term ‘mixed economy’ implies all of the following conditions EXCEPT
which ONE?

A The allocation of resources is partly through the price system.

B Some producers have an incentive to advertise their products.

C There is some government planning of the use of resources.

D All industries have a mix of small and large companies.

2.2 Theatre attendances fell last year even though prices of admission also fell.
Which one of the following on its own could explain this?

A There was an increase in the supply of theatre seats but no change
affecting demand conditions

B There was an increased demand from consumers for visits to the theatre as
the quality of TV deteriorated

C There was a reduction in prices of cinema seats as many new multiplex
cinemas opened up

D There was an increase in the cost of putting on plays

2.3 The price of a product falls from £100 to £99 and the quantity demanded
rises from 1,000 to 1,100. Which one of the following is a true statement
about the value of demand elasticity (as measured at the initial price and
quantity)?

A Elasticity is –10

B Elasticity is –0.1

C Elasticity is –1

D Elasticity is +100

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