Allocation of Resources Quiz
Test your knowledge of Allocation of Resources with these A-Level Economics questions.
This quiz consists of 17 questions. Scroll down to start the quiz!
Questions
Which of the following would you expect to have the most elastic demand – sports cars, milk, chocolate bars?
Sports cars
What is composite demand?
Demand for a product that has more than one use
Describe the term consumer surplus
Where a consumer is willing to pay more for a good / service than they actually do – this is the extra benefit they gain
What is the effect of a subsidy on the supply of goods and services?
It reduces a producers costs of production encouraging them to produce more causing the supply curve to shift to the right
Which of the following does not influence price elasticity of supply – stocks, time period, % of income spent on the product, factor substitution
% of income spent on the product
What is the equation for Price elasticity of supply?
% change in quantity supplied / % change in price
If the supply curve shifts to the right what does this mean?
More will be supplied at every price
What does a demand curve show?
The relationship between price and quantity demanded
If cross elasticity of demand for two goods is 0.3 what does this mean?
The goods are substitutes
If a good is inferior what would you expect to happen to demand as income rises?
Demand falls
If a product is elastic what is the best way to increase revenue?
Reduce your price
What is the equation for price elasticity of demand?
% change in quantity demanded / % change in price
If the demand curve shifts to the left is more or less demanded at each price?
Less
Which of the following does not cause a shift in the demand curve – income, advertising, price or price of substitutes ?
Price
If price increases what do would you expect to happen to quantity demanded?
It would decrease
Using demand and supply analysis analyse the impact of an increase in the demand for the underground given limited ability of the government to increase supply
Candidate draws demand and supply diagram correctly – 4 marks
Candidate shows a shift in the demand curve – 1 mark
Candidate describes impact of the shift – up to 3 marks – possible answers include that the price will go up, substitute goods e.g. buses, taxis may be used if the price rises too high, possible impact on supply
A retailer sells luxury handbags, they worry that incomes are decreasing in real terms and this impacts their sales. Using elasticity of demand explain how a change in incomes would be likely to impact the firm.
Candidate defines elasticity of demand – 1 mark
Candidate correctly identifies that luxury handbags will be likely to be elastic goods – 1 mark
Candidate explains that with elastic goods as incomes fall demand would fall by a greater amount – 2 marks
Candidate describes that this will decrease revenues for the business – 1 mark
Candidate makes a judgement as to the impact on the business – decreases revenue / profit - 1 mark
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