2023 Paper 3b QP

Paper 3 - Multiple choice questions 2
1. What is opportunity cost?

a) The cost of buying something
b) The cost of producing something
c) The cost of the best alternative foregone
d) The cost of advertising something
2. Which of the following statements is a normative statement in economics?

A) An increase in the price of smartphones will result in a decrease in demand for them.
B) The government should decrease the corporate tax rate to help economic growth.
C) An increase in the price of bread will result in an increase in demand for pasta.
D) The supply of oil will decrease if oil companies are taxed more heavily.
3. What happens to the PPF when there is an increase in the availability of resources?
A) The PPF shifts inward
B) The PPF shifts outward
C) The PPF remains the same
D) The PPF becomes a straight line
4. What would cause the demand curve to shift to the right?

a) An increase in the price of the product
b) A decrease in the price of a complementary product
c) A decrease in the consumer population
d) An increase in the cost of production
5. Which of the following factors would cause the supply curve to shift to the right in a
market diagram?
A) An increase in the price of the product.
B) A decrease in the cost of production.
C) An increase in the demand for the product.
D) An increase in the price of a complementary good.
6. Which of the following goods is likely to have a more elastic price elasticity of demand?
A) Salt
B) Luxury cars
C) Insulin
D) Gasoline
7. Which of the following products is likely to have a very income elastic elasticity of
demand?
A) Cigarettes
B) Milk
C) Designer handbags
D) Toilet paper
8. Which of the following products is likely to have an inelastic price elasticity of supply?
A) Dried fruit
B) Clothes
C) Mobile Apps
D) Gold
9. Which of the following would increase consumer surplus for a good?
A) An increase in the price of the good.
B) A decrease in the price of a substitute good.
C) A decrease in the income of consumers.
D) A decrease in the availability of the good.
10. How can government policies help to solve market failure?

A) By increasing taxes on goods with negative externalities.
B) By limiting sales of goods with positive externalities.
C) By providing subsidies to firms with high profits.
D) By deregulating markets and allowing for more competition.
11. What is government failure?

A) When government intervention leads to a situation that is worse than the market outcome.
B) When the government intervenes in the market and improves efficiency.
C) When the government provides public goods.
D) When the market fails to allocate resources efficiently.
12. What happens to normal profit when average cost increases?

A) Normal profit decreases.
B) Normal profit increases.
C) Normal profit stays the same.
D) Normal profit becomes negative.
13. What happens to a firm's profit when marginal cost is greater than marginal revenue?
A) Profit increases.
B) Profit decreases.
C) Profit stays the same.
D) Profit becomes negative.
14. What happens to total revenue when marginal revenue is zero?

A) Total revenue is maximized.
B) Total revenue is minimized.
C) Total revenue is increasing at an increasing rate.
D) Total revenue is decreasing.
15. What is the relationship between marginal revenue and total revenue when marginal
revenue is positive?
A) Total revenue is zero.
B) Total revenue is decreasing.
C) Total revenue is constant.
D) Total revenue is increasing
16. What is the main cause of diseconomies of scale?

A) Inefficient production.
B) Inability to take advantage of economies of scale.
C) Increased costs due to larger scale of production.
D) Decline in demand for the firm's products.
17. What is the long-run outcome for a firm in a perfectly competitive market?
A) The firm will earn supernormal profits in the long run
B) The firm will earn normal profits in the long run
C) The firm will incur losses in the long run
D) The firm's profits will gradually decline to zero in the long run
18. In a monopoly market, what is the relationship between the price and the marginal cost
of production?
A) Price is higher than marginal cost
B) Price is equal to marginal cost
C) Price is lower than marginal cost
D) Price can be higher or lower than marginal cost, depending on market conditions
19. What is a defining feature of monopolistic competition in a market?

A) Only a few firms dominate the market
B) Firms have no control over the price of their product
C) Firms produce differentiated products
D) A single firm dominates the market and has significant control over the price of their product
20. How does the level of competition in an oligopoly market compare to that of a perfectly
competitive market?
A) Competition is greater in an oligopoly market
B) Competition is lower in an oligopoly market
C) Competition is the same in both market types
D) Oligopoly markets are not competitive
21. What is the condition for allocative efficiency in a market with perfect competition?
a) Price is equal to average total cost
b) Price is equal to marginal cost
c) Price is higher than average total cost
d) Price is lower than marginal cost
22. Which of the following is a withdrawal from the circular flow of income?
a) Government spending on public goods.
b) Household savings.
c) Business investment in capital equipment.
d) Firms purchasing raw materials from other firms.
23. If the government increases its spending by £100 billion and the marginal propensity to
consume (MPC) is 0.5, what will be the increase in national income?
a) £50 billion
b) £100 billion
c) £150 billion
d) £200 billion
24. What is Aggregate Demand?
A) The total supply of goods and services in an economy.

B) The total demand for goods and services in an economy.
C) The total amount of money in an economy.
D) The total number of people in an economy.
25. How does increased productivity affect employment in the country?
a) It increases unemployment
b) It has no impact on employment
c) It creates more jobs
d) It reduces salaries
26. How does an increase in government spending affect Aggregate Demand?

A) It shifts the AD curve to the left.
B) It shifts the AD curve to the right.
C) It does not affect the AD curve.
D) It decreases the price level.
27. What is a floating exchange rate?

A) An exchange rate determined by the forces of supply and demand in the foreign exchange
market.
B) An exchange rate fixed by the government at a certain level.
C) An exchange rate that changes only in response to changes in inflation.
D) An exchange rate that is set by the International Monetary Fund.
28. What happens to the Short Run Aggregate Supply curve if there is an increase in the
minimum wage?
A) It remains unchanged
B) It shifts to the right, increasing output and decreasing prices.
C) It shifts to the left, decreasing output and increasing prices.
D) It can shift either to the right or to the left depending on other factors.
29. What happens to the Long Run Aggregate Supply curve if there is an increase in
government spending on improving transportation?
A) It remains unchanged.
B) It shifts to the left, decreasing output and increasing prices.
C) It shifts to the right, increasing output and decreasing prices.
D) It can shift either to the right or to the left depending on other factors.
30. What is likely to cause a decrease in the National Income Equilibrium in an economy?
a) An increase in exports
b) A decrease in taxes
c) An increase in foreign investment
d) An increase in imports
31. What can cause demand pull inflation in an economy?
A) Decrease in interest rates

B) Decrease in international trade
C) Increase in production costs
D) Increase in consumer savings
32. Which of the following is an example of structural unemployment?
A) Machines used in manufacturing leading to job losses

B) A recession causing a decline in economic activity
C) An increase in the minimum wage
D) A reduction in government spending on public services
33. Which of the following is a factor that can affect the trade in goods and services of the
current account of the balance of payments?
A) The level of government borrowing
B) The exchange rate of the currency
C) The level of foreign direct investment
D) The level of domestic income
34. Which of the following is an expansionary monetary policy measure?
A) Increasing interest rates

B) Decreasing interest rates
C) Decreasing taxes
D) Decreasing the money supply
35. What is the aim of fiscal policy?
A) To control the money supply

B) To control interest rates
C) To control government spending
D) To control the exchange rate
36. Which of the following is an example of a supply-side policy measure aimed at

increasing the productivity of the workforce?
A) Reducing Corporation tax
B) Increasing prices for medicine
C) Increasing unemployment benefits
D) Providing free education
37. Which of the following best describes a macroeconomic policy conflict?
A) When interest rates rise and reduce inflation

B) When interest rates rise and reduce output
C) When taxes increase and reduce inflation
D) When taxes increase and reduce inequality
38. What does a trade deficit represent?

A) A country importing more than it exports
B) A country exporting more than it imports
C) A country experiencing balanced trade
D) A country not engaging in international trade
39. Which of the following is an advantage of international trade?

A) Increased competition leading to better quality goods
B) Fewer goods and services
C) Decreased economic growth due to increased imports
D) Increased unemployment
40. How does an appreciation of a country's currency impact its international trade?
A) It reduces the country's trade deficit
B) It makes the country's imports more expensive and more competitive
C) It has no impact on the country's international trade
D) It makes the country's exports more expensive and less competitive

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Paper 3 - Multiple choice questions 2

1. What is opportunity cost?

2. Which of the following statements is a normative statement in economics?

4. What would cause the demand curve to shift to the right?

10. How can government policies help to solve market failure?

11. What is government failure?

12. What happens to normal profit when average cost increases?

14. What happens to total revenue when marginal revenue is zero?

16. What is the main cause of diseconomies of scale?

19. What is a defining feature of monopolistic competition in a market?

24. What is Aggregate Demand?

A) The total supply of goods and services in an economy.

26. How does an increase in government spending affect Aggregate Demand?

27. What is a floating exchange rate?

31. What can cause demand pull inflation in an economy?

A) Decrease in interest rates

32. Which of the following is an example of structural unemployment?

A) Machines used in manufacturing leading to job losses

34. Which of the following is an expansionary monetary policy measure?

A) Increasing interest rates

35. What is the aim of fiscal policy?

A) To control the money supply

36. Which of the following is an example of a supply-side policy measure aimed at

A) When interest rates rise and reduce inflation

38. What does a trade deficit represent?

39. Which of the following is an advantage of international trade?

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