1. The wages of carpenters will tend to rise if the supply of carpenters falls. 2. The best explanation for the rise in demand for labour is an increase in productivity of labour. 3. Disposable income is personal income after taxes on income are deducted.

1. Quiz for the Unit Test III

2. 1. The wages of carpenters will tend to rise if
a. The supply of carpenters falls
b. Their productivity rises
c. The price of wooden products falls
d. Demand for plastic products rises

3. 2. The best explanation for the rise
in demand for labour from Dn to
DN1 is:
1. A fall in wages
2. A fall in the price of the product
Wage rate
they produce
3. An increase in unemployment
4. Increasing productivity of labour
DN1
DN
Quantity of labnour employed

4. 3. Disposbale in come is
a. Gross income before tax
b. Personal income
c. Taxable income
d. Personal income after taxes on income
are deducted.

5. 4. Which of the following is most
likely to lead to a fall in the savings
ratio?
a. An increase in taxes
b. A cut in interest rate
c. A cut in borrowing
d. A fall in people’s propensity to consume

6. 5. The supply curve on the left shows
 that
Wage Rate
a. Wages fall as the amount of labour
Sn increases
b. A rise in wages reduces the size of
the working population
c. After a certain level of wages
labour chooses more leisure than
work
d. Supply rises as wages fall
Quantity of labour employed per period

7. 6. The supply of labour to an
occupation will tend to rise when:
a. Promotion prospects improve
b. There are fewer perks
c. Holiday entitlement is cut
d. Unemployment benefit rises

8. 7. Which one of the following is the least likely
explanation for the observed increase in
consumer spending on leisure goods and services
over time in many countries?
1. Increasing real disposable income per
head.
2. Consumers want healthier lifestyles
3. Increasing levels of personal debt
4. Increased Wealth

9. 8. Which one of the following types of household is most
likely to spend the highest proportion of its disposable
income?
a. High income, middle aged with no
children
b. Low income, young single parent with
young children.
c. Middle income, young children person,
no children.
d. High income, middle-aged couple with
two grown-up children.

10. 9. Which of the following is a non-economic reason why
women may earn less than male employees?
A. They may be discriminated against.
B. They undertake more part-time work
C. Married women may be less mobile than
men
D. They take more career breaks to raise
children

11. 10. What has happened in the diagram to the
equilibrium wage and employment?
Wage Rate
a. Wages and employment have
Sn1
Dn risen
Sn
b. Wages and employment have
fallen
c. Wages have risen; employment
has fallen
d. Wages have fallen; employment
has risen.
Quantity of labour per period

12. 11. Personal borrowing has increased in many countries.
Which on of the following factors is the most likely
explanation?
A. Higher real interest rates.
B. Reduced personal wealth.
C. Increased availability of credit
D. Increased public sector borrowing

13. 12. The savings ratio in an economy
measures;
A. Deposits in banks as proportion of total
savings.
B. Total savings as proportion of gross
household income
C. Long-term savings relative to total savings.
D. Total savings as proportion of total
disposable income

14. 13. Disposable income will tend to rise if:
a. Indirect taxes are reduced
b. Interest rates are cut
c. Price inflation falls
d. Direct taxes are reduced

15. 14. Which of the following changes is most likely
to attract an increase in the supply of labour to
engineering professions?
a. An increase in training requirements
b. An increase in holiday entitlements
c. An increase in contracted hours of work
d. A cut in income taxes

16. 15. Which one of the following can be defined as a
secondary industry?
A. Insurance services
B. Coal mining
C. Paper making
D. Banking

17. 16. Which one fo the following reasons will not help
explain why small firms exist and survive?
a. Lack of finance
b. Consumers lime personalized service
c. Government financial help
d. Low start-up costs

18. 17. Which of the following is unlikely to raise
productivity in a firm?
a. Training workers in new skills
b. Performance related pay
c. Investing in new equipment
d. Reducing overtime working

19. 18. A firm employs 25 full-time employees. They produce 500
tee-shirts each week. What is their average labour productivity?
a. 25
b. 500
c. 20
d. 12500

20. 19. Which of the following reasons can explain why a firm
may substitute capital for labour in production?
a. Wage fall
b. The cost of borrowing rises
c. Consumer demand rises
d. The productivity of labour falls

21. 20. Which of the following mergers between two firms is
an example of vertical integration?
a. A bank and an insurance company
b. A car rental firm and a car maker
c. A tin mine and a coal mine
d. A restaurant and a hot food take-away

22. Output per Total cost Total
week ($) Revenue ($)
A 1000 10000 13000
B 2000 16000 30000
C 3000 18000 42000
D 4000 28000 56000
21.At what level of output is average cost at a minimum?
22.At what level of output is average at a maximum?
23. At what level of output is profit maximized

23. 24. Which of the following is a variable cost of production?
A. Purchase of component parts.
B. Insurance premiums
C. Loan repayments
D. Computer repair costs

24. 25. A firm A firm expands its scale of production
by investing in additional factory space and
machinery. What is the most likely impact of this
decision on costs?
 A. Variable costs will fall
 Fixed costs will rise
 Total costs will be unchanged
 Average costs will rise.

25. 26. On the graph, what level of output represents
the beak-even point of production? Total
Revenue
Total
Revenue
Costs ($)
Variable Cost
Fixed Cost
A B C D Output Per Period

26. 27. Average cost of producing 200 compact discs is:
Total output of Total Costs
compact discs
0 $ 100
100 $ 800
200 $ 1500
300 $ 2200
400 $ 2900
500 $ 3600
600 $ 4300
A. $7
B. $70
C. $7.5
D. $1500

27. 28. The fixed cost of productin are
Total output of Total Costs
compact discs
0 $ 100
100 $ 800
200 $ 1500
300 $ 2200
400 $ 2900
500 $ 3600
600 $ 4300
A. $1 B. $10 C. $100 D. $800

28. 29. The variable cost of producing a
compact disc is;
Total output of Total Costs
compact discs
0 $ 100
100 $ 800
200 $ 1500
300 $ 2200
400 $ 2900
500 $ 3600
600 $ 4300
A. $ 7 B. $8 C. $ 7.5 D. $ 7.20

29. 30. If the company produces 500 compact discs and wanted to
make a $ 1400 profit from their sale, the price of each disc must
be;
Total output of Total Costs
compact discs
0 $ 100
100 $ 800
200 $ 1500
300 $ 2200
400 $ 2900
500 $ 3600
600 $ 4300
A. $5 B. $10 C. $2.8 D. $7.20