Economics Supply Concepts Quiz

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Questions and Answers

What is the primary reason firms supply more at higher prices?

To decrease overall production costs

To gain extra revenue from sales (correct)

To comply with government regulations

To increase market demand

Which of the following factors may lead to an increase in supply?

Decrease in production costs (correct)

Fewer producers in the market

Increase in taxes on goods

Higher wages for workers

Which scenario illustrates a movement along the supply curve?

An increase in price from £40 to £50 (correct)

A government subsidy on production costs

A decrease in the number of producers

A change in consumer preferences

What occurs during a shortage in the market?

Consumers demand more than is available at the equilibrium price Signup and view all the answers

What is the effect of consumer demand increasing on the supply side?

Firms are likely to increase prices and supply more Signup and view all the answers

Which of the following best describes the concept of 'joint supply'?

Two goods are supplied from the same source Signup and view all the answers

What happens at market equilibrium?

Supply equals demand Signup and view all the answers

Which of the following would NOT result in a shift in the supply curve?

An increase in consumer population Signup and view all the answers

What does opportunity cost primarily involve when making decisions?

The best use of time, money, and resources Signup and view all the answers

What does point D represent on the production possibility frontier (PPF)?

Inefficient production below potential Signup and view all the answers

What is the opportunity cost of moving from point A (22 goods, 21 services) to point B (18 goods, 27 services)?

6 units of services and 4 units of goods Signup and view all the answers

Which factor contributes to long-run economic growth by shifting the PPF to the right?

Discovery of new raw materials Signup and view all the answers

Which of the following is NOT a cause of a rightward shift in the PPF?

Population decline Signup and view all the answers

What happens to productivity when alcohol is consumed excessively?

It decreases, leading to lower economic growth. Signup and view all the answers

When is an economy said to be productively efficient?

When it cannot increase the production of one good without reducing another Signup and view all the answers

Which of the following describes the PPF when the economy is at point C?

It represents maximum production capacity Signup and view all the answers

What is true regarding the social marginal benefit (SMB) in a market with a negative consumption externality?

SMB is less than the private marginal benefit. Signup and view all the answers

If the PPF shifts inwards, what does this indicate about the economy?

Negative economic growth Signup and view all the answers

At what point is social efficiency achieved in the free market regarding positive externalities?

At Q2, where Social Marginal Benefit equals Social Marginal Cost. Signup and view all the answers

What characterizes a public good?

Non-rivalrous and non-excludable. Signup and view all the answers

What is the free-rider problem associated with public goods?

Some consume the good without paying for it. Signup and view all the answers

What is the main characteristic of a private good?

Consumption by one prevents others from consuming it. Signup and view all the answers

Which of the following represents a situation of under-consumption?

Cycling to work instead of driving. Signup and view all the answers

What is an example of a quasi-public good?

Roads with tolls for certain users. Signup and view all the answers

What is the main purpose of implementing a specific tax on demerit goods?

To reduce the quantity consumed and internalize external costs Signup and view all the answers

How does an ad valorem tax differ from a specific tax?

It varies based on the price of the good Signup and view all the answers

What is considered the ideal tax for correcting market failure?

A tax equal to the external marginal cost Signup and view all the answers

What disadvantage can arise from high taxes on inelastic goods?

Minimal effect on reducing demand Signup and view all the answers

Why might high taxes encourage black market activities?

Desire for lower prices without tax Signup and view all the answers

What is a potential negative impact of implementing a tax on rubbish?

Encouragement of fly-tipping Signup and view all the answers

What role does a subsidy play in the market?

It promotes the production of certain goods by decreasing costs Signup and view all the answers

Which of the following is a challenge in implementing taxes to address external costs?

Difficulty in measuring external costs accurately Signup and view all the answers

What impact does a higher price generally have on consumer purchasing behavior?

It acts as a disincentive to buy. Signup and view all the answers

What does a rise in prices signal to producers?

There is an increase in demand for their products. Signup and view all the answers

What is derived demand?

Demand for a good that depends on the demand for another product. Signup and view all the answers

What is composite demand?

Demand for a good that can be used for multiple purposes. Signup and view all the answers

What is the effect of increased demand for a biofuel on the price of wheat?

It will cause the price of wheat to rise. Signup and view all the answers

Which scenario exemplifies joint demand?

The purchase of a camera necessitates buying memory cards. Signup and view all the answers

What does the concept of rational behavior assume about firms and consumers?

They aim to maximize their economic welfare. Signup and view all the answers

How do firms typically react to a long-term increase in prices?

They increase supply due to higher profit potential. Signup and view all the answers

What is a significant issue faced by former mining communities in south Wales?

High unemployment rates Signup and view all the answers

What does government failure refer to?

Government actions that lead to net welfare loss Signup and view all the answers

Which factor can contribute to government failure?

Incentives failing to align with public service goals Signup and view all the answers

What unintended consequence can arise from setting guaranteed minimum prices in agriculture?

Over-production by farmers Signup and view all the answers

How do rural areas in north Wales primarily struggle economically?

Low-paid work and reliance on in-work benefits Signup and view all the answers

What is one of the proposed government policies to alleviate poverty in Wales?

Attracting new investments through grants Signup and view all the answers

Which of the following is NOT a cause of government failure?

Effective performance targets for employees Signup and view all the answers

What can be a consequence of imposing maximum price controls on rental properties?

Decline in available rental housing Signup and view all the answers

Study Notes

AS Economics Revision Guide

This is a revision guide for WJEC AS Economics.
Copyright information is included, along with a note that this guide may be distributed within an educational establishment
Content is organised into units (e.g., Unit 1 - AS Microeconomics)
The guide covers topics like scarcity, choice, and opportunity cost, production possibility frontiers (PPFs), specialization, markets, demand, supply, market equilibrium, consumer surplus, producer surplus, elasticity, tax, wage determination, national minimum wage, migration, market failure (externalities, efficiency, information gaps), government intervention, tradeable pollution permits, the UK economy, circular flow of income, aggregate demand (AD), aggregate supply (AS), fiscal policy, monetary policy, and trade.
Page numbers are included for specific topics within the outline.

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Test your understanding of key concepts related to supply in economics with this quiz. You'll explore reasons for changes in supply, market equilibrium, and various factors influencing supply curves. Perfect for students studying microeconomics.