ECONOMICS PAPER 1 AS AND A LEVEL MULTIPLE
CHOICE EXAM PAPER WITH CORRECT ANSWERS
ECONOMICS
Paper 1 AS Level Multiple Choice
1 Why does a production possibility curve exist for every economy?
A Resources are unlimited.
B Resources have alternative uses.
C Some resources can be imported.
D Some resources may be unemployed.
2 Which statement is a normative statement?
A Aggregate demand will increase following a decrease in interest rates.
B A rise in unemployment will decrease inflationary pressures.
C The incentive to work will rise if benefit payments are reduced.
D Unsustainable economic growth is more harmful to the economy than hyperinflation.
3 Which combination best describes the basic economic problem?
resources wants
A limited limited
B limited unlimited
C unlimited limited
D unlimited unlimited
, 2
4 What is the main reason an economy is unlikely to rely completely on market forces to allocate
resources?
A Demerit goods will be over supplied.
B Merit goods will be under supplied.
C Private goods will not be supplied.
D Public goods will not be supplied.
5 What is the opportunity cost to a person of spending $20 on a new pair of sports shoes?
A all the other things the person could have bought
B the cost of getting to the sports shop
C the current value of the person’s old pair of shoes
D the next best thing that could have been bought with the $20
6 What is the definition of effective demand?
A demand that is speculative
B demand that is supported by the ability to pay
C the relationship between price and quantity demanded
D the total amount demanded by consumers
7 The price elasticity of demand for good X is –2.4, its income elasticity of demand is –0.4 and the
cross elasticity of demand for good X with respect to good Y is +0.8.
What is the correct description of good X?
A inferior good, price-elastic demand and substitute for good Y
B inferior good, price-inelastic demand and complement to good Y
C normal good, price-elastic demand and complement to good Y
D normal good, price-inelastic demand and substitute for good Y
8 The diagram shows two straight line demand curves, X and Y.
CHOICE EXAM PAPER WITH CORRECT ANSWERS
ECONOMICS
Paper 1 AS Level Multiple Choice
1 Why does a production possibility curve exist for every economy?
A Resources are unlimited.
B Resources have alternative uses.
C Some resources can be imported.
D Some resources may be unemployed.
2 Which statement is a normative statement?
A Aggregate demand will increase following a decrease in interest rates.
B A rise in unemployment will decrease inflationary pressures.
C The incentive to work will rise if benefit payments are reduced.
D Unsustainable economic growth is more harmful to the economy than hyperinflation.
3 Which combination best describes the basic economic problem?
resources wants
A limited limited
B limited unlimited
C unlimited limited
D unlimited unlimited
, 2
4 What is the main reason an economy is unlikely to rely completely on market forces to allocate
resources?
A Demerit goods will be over supplied.
B Merit goods will be under supplied.
C Private goods will not be supplied.
D Public goods will not be supplied.
5 What is the opportunity cost to a person of spending $20 on a new pair of sports shoes?
A all the other things the person could have bought
B the cost of getting to the sports shop
C the current value of the person’s old pair of shoes
D the next best thing that could have been bought with the $20
6 What is the definition of effective demand?
A demand that is speculative
B demand that is supported by the ability to pay
C the relationship between price and quantity demanded
D the total amount demanded by consumers
7 The price elasticity of demand for good X is –2.4, its income elasticity of demand is –0.4 and the
cross elasticity of demand for good X with respect to good Y is +0.8.
What is the correct description of good X?
A inferior good, price-elastic demand and substitute for good Y
B inferior good, price-inelastic demand and complement to good Y
C normal good, price-elastic demand and complement to good Y
D normal good, price-inelastic demand and substitute for good Y
8 The diagram shows two straight line demand curves, X and Y.
