A Level Economics Example Questions - Multiple Choice

How to use this page:

1. Print out the Questions. 
2. Select the answer you think is correct, and then justify your answer with a short explanation. You should take no more than 35 minutes.
3. Check your answers against the Edexcel answers

Example Multiple-Choice Questions

1. Which of the following is a normative statement?
   1. Planned economies allocate resources via government departments
   2. Most transitional economies have experienced problems of falling output and rising prices over the past decade.
   3. There is a greater degree of consumer sovereignty in market economies than planned economies
   4. Reducing inequality should be a major priority for mixed economies

    

2. A small sweet manufacturer would be willing to sell 100 organic chocolate bars for £3 each.  The sweets are popular and so the actual market price is £5 per bar.  This means:
   1. The opportunity cost of each bar is less than the consumer surplus
   2. The total consumer surplus is £200
   3. The total producer surplus is £300
   4. The total producer surplus is £200

    

3. A possible advantage of a planned economy is that:
   1. Resources are allocated via the price mechanism
   2. There is greater consumer choice of products
   3. Identification with the state may be a better work incentive than the profit motive
   4. The free rider problem will be solved 

    

4. Two people are working together to paint some railings.  Jay can strip the old paint from 30 metres of railing per hour or paint 15 metres of railing per hour.  Alex can strip 40 metres or paint 10 metres per hour.  Which of the following is true?
   1. Alex has an absolute advantage in both activities
   2. Jay has a comparative advantage in paint stripping
   3. For Alex the opportunity cost of stripping the paint from 1 metre of railings is painting 4 metres of railings
   4. For Jay the opportunity cost of painting 1 metre of railings is stripping 2 metres of railings 

    

5. Which of the following is not an internal economy of scale?
   1. A computer firm locating  in a science park to take advantage of specialised support services from other computer firms.
   2. An expanding firm which directly employs specialist accountants, lawyers and retail managers
   3. A motor vehicle manufacturer spreading its research and design costs over a large output 
   4. A major supermarket gaining bulk discounts on the purchase of food.

    

6. David and Ruth each buy a ticket to go on the London Eye (Millennium Wheel).  David is prepared to pay £30 and Ruth £25 for a ticket.  The actual ticket price is £20.  This means:
   1. The total opportunity cost of the tickets is £55
   2. The total consumer surplus is £15
   3. The total producer surplus is £55
   4. The combined producer and consumer surplus is £95

    

7. The diagram below shows the imposition of an indirect tax on a good.

   

   Which of the following statements is correct?
   1. The tax per unit is BF
   2. Consumer surplus is falls to AED as a result of the tax
   3. The tax revenue to the government will be BCHG
   4. The sales revenue kept by the firm will be BCOI

    

8. The diagram shows a decrease in demand for sterling on the foreign exchange market.

   

   A possible explanation of such a change is:
   1. Pessimism about the future value of the dollar because of rising unemployment in the United States
   2. An improvement in the quality of UK exported goods as a result of several years of high exchange rates
   3. A fall in the popularity of the UK as a tourist destination because of the bad weather
   4. A decision by multinational companies to open new factories in the UK due to the stable state of the economy

    

9. The Bank of England raises interest rates and the retail banks immediately follow by raising mortgage interest rates.  This will lead to:
   1. A rise in the demand for housing
   2. A rise in the supply of housing
   3. A fall in the demand for rented accommodation
   4. A fall in the demand for owner-occupied housing 

    

10. The following table shows the demand and supply schedules for wholesale potatoes during a market day's trading.

     

    Price per Tonne	Quantity demanded	Quantity supplied
    £8	3,000	600
    £10	2,800	1,200
    £12	2,600	1,800
    £14	2,400	2,400
    £16	2,200	3,000

     

    If the government imposes a maximum price per tonne of £16, the result will be:
    1. Excess demand 0f 800 tonnes
    2. Excess supply of 800 tonnes
    3. No change in the equilibrium price
    4. A rise in the equilibrium price not exceeding £16 per tonne

End of Examples - now check your answers against the Edexcel answers

The information on this page has been reproduced with the permission of the author,  Mark Gavin. To purchase the book, please refer to the Economics Homepage