The University of Adelaide.

Economics for Management.

First Assignment Multiple Choice.
Below are twenty multiple-choice questions. Read each question carefully and from the alternatives
available choose the one alternative which you consider best answers the question and mark it on the
multiple choice answer sheet by placing a ring around the appropriate letter alongside the question
number. If you change your preference please indicate your final choice by writing the letter on the far right
hand side of the answer sheet in addition to circling your new choice.

Question 1:
In every economic system, choice must be made because resources are:
J.
Unlimited and human wants are limited.
K.
Limited and human wants are unlimited.
L.
Limited and human wants are limited.
M. Unlimited and human wants are limited.
Question 2:
Scarcity
J.
Occurs because of unlimited wants and limited resources available to fulfill these
wants.
K.
Is found only in developing nations.
L.
Is not a problem for the wealthy people in society.
M. Occurs because there are too many people.
Question 3:
Refer to the data given below.
Production possibilities
(options)
Capital goods
Consumer goods

A
5
0

B
4
5

C
3
9

D
2
12

E
1
14

F
0
15

If the economy is producing at production option C, the opportunity cost of the tenth unit of consumer goods
will be:
J.
4 units of capital goods
K.
2 units of capital goods
L.
3 units of capital goods
1

M.

of a unit of capital goods

Question 4:
Which of the following will not cause the demand for product X to change?
J.
A change in the price of close-substitute product Y.
K.
An increase in consumer incomes.
L.
A change in the price of X.
M. A change in consumer tastes.

Page 1 of 7

The University of Adelaide.

Economics for Management.
First Assignment Multiple Choice.

Question 5:
In which of the following instances will total revenue decline?
J.
Price rises and supply is elastic.
K.
Price falls and demand is elastic.
L.
Price rises and supply is inelastic.
M. Price rises and demand is elastic.
Question 6:
When there are many close substitutes available for a good, demand tends to be:
J.
Perfectly inelastic.
K.
Relatively inelastic
L.
Perfect elastic
M. Relatively elastic.
Question 7:
If you are willing to pay $10.00 for a pizza and you only pay $8.00, what does the difference between
$10.00 and $8.00 represent?
J.
Total benefit.
K.
Consumer surplus.
L.
Marginal benefit.
M. Average benefit.
Question 8:
The discovery of a new hybrid motor car would tend to increase the supply of motor cars. Under what
conditions would car manufacturers realise an increase in revenue?
J.
If the supply of cars is elastic
K.
If the supply of cars is inelastic
L.
If the demand for cars is inelastic
M. If the demand for cars is elastic
Question 9:
Knowledge of price elasticity of demand is important to producers because it indicates.
J. Consumer demand at different prices.
K. Profit levels at different prices.
L. The responsiveness of the quantity demanded to a change in prices.
M. The responsiveness of the demand for a product to advertising.

Page 2 of 7

The University of Adelaide.

Economics for Management.
First Assignment Multiple Choice.

Question 10:
In a market economy:
J. A surplus of goods in the market will cause the price to rise.
K. The question of for whom to produce is determined by consumer demand.
L The private sector provides insufficient quantities of collective goods and services.
M. The question of how to produce is determined by government.
Question 11:

If a nation has a comparative advantage in the production of a good:

J.
It can produce the good at a lower opportunity cost than its trading partners.
K.
It can produce the good using fewer resources than its trading partner.
L.
It can benefit by restricting imports of that good.
M. It must be the only country with the ability to produce that good.
Question 12:

When the Government sets the price of a good such that it is above the equilibrium price, the result will be:
J.
A surplus of the good.
K.
A shortage of the good.
L.
An increase in the demand for the good.
M. A decrease in the supply of the good.
Question 13:

In the Graph, as a result of the tariff, deadweight loss would be:

J.
E.
K.
B.
Page 3 of 7

The University of Adelaide.

Economics for Management.
First Assignment Multiple Choice.
L.
D + F.
M.
B + D + E + F.
Question 14:

If an unusually cold growing season in Brazil (the worlds largest coffee producer) reduces coffee
production by 50% it would likely raise the price of coffee on world markets. The effect of this would be to:
J.
Reduce the demand for coffee and increasing the demand for tea.
K.
Reduce the quantity demanded for coffee and increase the demand for tea.
L. Reduce the demand for both coffee and tea.
M. Reduce the quantity demanded for both coffee and tea.
Question 15:

The law of supply states that, other things being equal, as price decreases:
J.
Supply increases.
K.
Supply decreases.
L.
The quantity supplied increases.
M. The quantity supplied decreases.
Question 16:

A decrease in supply and an increase in demand will:

J.
Increase price and increase quantity.
K.
Decrease price and increase quantity.
L.
Affect price in an indeterminate way.
M. Affect price in an indeterminate way and increase quantity.
Question 17:

The deadweight loss of a tax is equal to:

J.
Total tax paid.
K.
Loss of producer and consumer surplus due to the tax
L.
Total taxes paid plus the loss of producer and consumer surplus due to the tax.
M. Loss of producer and consumer surplus minus total taxes paid.
Question 18:
If Janes income increases and her demand for a particular good increases, it can be concluded that the good is:
J.
Normal.
K.
Inferior.
L.
A substitute.
M.
A complement.
Question 19:

If Australia buys cars from Japan, then in Australia:

J.
Car producers lose and consumers gain.
K. Car producers gain and consumers lose
Page 4 of 7

The University of Adelaide.

Economics for Management.
First Assignment Multiple Choice.
L. Both producers and consumers lose
M. Both car producers and consumers gain.
Question 20:

If the Indonesian Government subsidises its textile industry, making it impossible for Australian producers to
compete, then:
J.
A high tariff on textiles would improve economic wellbeing in Australia.
K.
Our most appropriate response would be to retaliate with an identical subsidy.
L.
The ideal response would be to threaten retaliation without actually following through with the
threat.
M. We would maximise our economic wellbeing by purchasing the subsidised textiles from
Indonesia.

Page 5 of 7

The University of Adelaide.

Economics for Management.
First Assignment Multiple Choice.
Answer Sheet:

Name

1.

2.

3.

4.

5.

6.

7.

9.

10.

11.
Page 6 of 7

The University of Adelaide.

Economics for Management.
First Assignment Multiple Choice.

12.

13.

14.

15.

16.

17.

19.

20.

18

Page 7 of 7