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Fundamentals of Business Economics Questions and Answers

Question 33

If the price elasticity of supply for a good over a certain price range is 0.8, the increase in the quantity supplied of that good, following a 10% increase in its price, will be

Options:

0.8%

8.0%

18%

80%

Question 34

All of the following would tend to lead to an industry being dominated by a small number of firms except one. Which ONE is the exception?

Options:

Significant economies of scale in production

The existence of entry barriers to the industry

High initial capital costs in production

Extensive consumer knowledge of products and prices

Question 35

A market is in equilibrium. If the government imposes a minimum price above the equilibrium price, there will be:

Options:

an extension in demand, a contraction in supply and a market shortage

a decrease in demand, an extension in supply and a market surplus

a contraction in demand, an increase in supply and a market surplus

a contraction in demand, an extension in supply and market surplus

Question 36

In a market economy the market mechanism can achieve all the following except one. Which is the exception?

Options:

Signaling changes in consumer tastes

Causing supply to respond to changes in demand

Eliminating excess supply and demand

Ensuring a socially fair distribution of goods and services

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Fundamentals of Business Economics Questions and Answers

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