.5.objective

Question 1 If demand increases in a market this willusually lead to: a) A higher equilibrium price and output b) A lower equilibrium price and higher output c) A lower equilibrium price and output d) A higher equilibrium price and lower output Question 2 An increase in income will: a) Lead to a movement along the demand curve b) Shift the supply curve c) Shift the demand curve d) Lead to an extension of demand Question 3 A reduction in the costs of production will: a) Lead to a movement along the supply curve b) Shift the demand curve c) Shift the supply curve d) Lead to an extension of supply Question 4 A shift in supply will have a bigger effecton price than output if demand is: a) Income elastic b) Income inelastic c) Price elastic d) Price inelastic Question 5 Assuming a downward sloping demand curve and upward sloping supply curve, a higher equilibrium pricemay be caused by: a) A fall in demand b) An increase in supply c) Improvements in production technology d) An increase in demand Question 6 If the price was fixed below the equilibrium price there would be: a) Excess supply b) Excess demand c) Equilibrium d) Downward pressure on prices Question 7 A movement along the demand curve may be caused by: a) A change in income b) A change in the number of buyers c) A change in advertising d) A shift in supply Question 8 A subsidy paid to producers: a) Shifts the supply curve b) Shifts the demand curve c) Leads to a contraction in supply d) Leads to an extension of supply Question 9 A movement along the supply curve may be caused by: a) A change in technology b) A change in the number of producers c) A shift in demand d) A change in costs Question 10 The price mechanism cannot: a) Act as a signal b) Act as an incentive c) Act as a rationing device d) Shift the demand curve