Take this Exam: A-Level Economics: Demand, Supply and Equilibrium | Zestly

Question 1

If the demand for a good is perfectly inelastic, what happens to the equilibrium price and quantity if the supply curve shifts to the left?

Accepted Answer

Price increases, and quantity remains constant.

Question 2

Which of the following events would cause an increase in both the equilibrium price and the equilibrium quantity of a good?

Accepted Answer

An increase in consumer income for a normal good.

Question 3

In the context of the price mechanism, what is meant by the 'rationing' function?

Accepted Answer

Prices rise to distribute scarce goods to those most willing and able to pay.

Question 4

Which of the following would lead to a rightward shift of the supply curve for a manufactured good?

Answer

An improvement in production technology.

Answer

An increase in the price of the good.

Answer

A decrease in the cost of labor.

Answer

An increase in the tax on the good.

Question 5

If a market is in equilibrium, which of the following statements is true regarding consumer and producer surplus?

Answer

Consumer surplus is always equal to producer surplus.

Answer

Total surplus is minimized at the equilibrium point.

Answer

Total surplus is maximized at the equilibrium point.

Answer

Consumer surplus is zero at the equilibrium point.