Practicse Question 2024/2025 ACADEMIC SESSION

1. Why does scarcity exist? A Each year workers tend to produce less than previously B Machines wear out with time C
There are not sufficient resources to produce all the products people want D There is a limit to people’s wants.
2. Why will scarcity continue to be a problem in the future? A Prices will rise B The quantity of resources will decline C
Wants will continue to increase D World population will fall
3. Which of the following is a free good? A. Inoculation provided without charge by the state B Products given away by a
supermarket to attract customers C Recycled paper D Wind coming in from the sea.
4. Which factor of production’s function is to make decisions and take risks? A Capital B Enterprise C Labour D Land.
5. Which type of factor of production is a road? A Capital B Enterprise C Labour D Land.
6. A country produces 3000 new capital goods in a week. 500 of these replace worn out capital goods. What is the net
investment made? A 500 B 2500 C 3000 D 3500.
7. Which factor of production is the most mobile? A Capital B Enterprise C Labour D Land
8. What is meant by ‘opportunity cost’? A The best alternative forgone B The cost of the item selected C The cost of
exploring business opportunities D The labour used in producing the product.
9. A person decides to go to the university for three years, to study economics. If he had not gone, he could have taken up a
job which would have paid him $15 000 a year. After he graduates, he expects to find a job paying him $40 000 a year.
What is the opportunity cost of going to the university for him? A $15 000 B $40 000 C $45 000 D $120 000
10. What are the characteristics of a free good?

A Has an opportunity cost Takes resources to produce

B Has an opportunity cost Takes no resources to produce it
C Has no opportunity cost Takes no resources to produce it
D Has no opportunity cost Takes resources to produce it

11.
12. A country experiences a fall in unemployment. How would this be shown on a PPC diagram? A A movement
of the production point away from the curve B A movement of the production point towards the curve C A
shift of the PPC to the left D A shift of the PPC to the right.

13.

14.

15. What gives rise to the problem of scarcity? A a lack of money B an uneven distribution of income C capital
equipment being greater than labour D wants exceeding resources.

16. As an economy becomes richer, what happens to resources and wants? Resources Wants A decrease
decrease B decrease increase C increase decrease D increase increase

17. Which of the following is an example of the factor of production ‘capital’? A the money a farmer has
borrowed to buy livestock B the money a farmer has saved in the bank C a farm worker D a tractor.
18. Which type of factor of production can be described as a ‘natural resource’? A capital B entrepreneur C
labour D land.

19. A woman owns a TV which she bought for $300. She is considering buying a better model for $450. Her
neighbour offers her $200 for her TV. What is the opportunity cost of her rejecting this offer? A $100 B $200
C $300 D $450

20. A man presently works as a builder. His previous jobs included working as a farm labourer and a street
trader. His next best-paid job is that of a carpenter, but he would rather choose to work as a gardener, if he
was not a builder. What will be the opportunity cost of him working as a builder? Working as: A a carpenter
B a farm labourer C a gardener D a street trader.

21. What does a production possibility curve show? A The amount of capital and labour in a country B the
output of two products that can be produced with given resources C the popularity of the two products D
the price of the two products that are produced with given resources.

22.
23. What are the three questions faced by all economies? A What to produce, when to produce it and who
receives it B What to produce, how to produce it and who receives it C Where to produce, how to produce
and when to produce D Where to produce, when to produce and why to produce
24. What encourages firms to produce what consumers demand? A The chance to earn a high profit B The
chance to experience high unit costs of production C The desire to attract new firms into the industry D The
desire to keep revenue as low as possible,
25. How are resources allocated in a market economy? A By directives B By the price mechanism C By directives
or the price mechanism D By directives and the price mechanism 4 What is meant by market forces? A The
interaction of demand and supply B The interaction of firms and the government C The power of producers
D The power of the state.
26. What is measured on the vertical axis of a demand diagram? A Cost B Price C Quantity demanded D Wants 2
What happens to people’s willingness and ability to buy a product when its price falls? Willingness Ability A
increases increases B increases decreases C decreases decreases D decreases increases
27. An increase in demand is represented by: A A movement down the demand curve B A movement up the
demand curve C A shift to the left of the demand curve D A shift to the right of the demand curve
28. The price of a product rises. What will happen to the demand for its complement? A It will contract B It will
extend C It will decrease D It will increase
29. What is the relationship between demand and price and the relationship between supply and price?
Demand and price Supply and price A directly related directly related B directly related inversely related C
inversely related directly related D inversely related inversely related
30. What does a market supply curve show? A The proportion of total output produced by different firms in the
industry B Proportion of total output sold C The relationship between the total quantity supplied and
demand for the product D The relationship between the total quantity supplied and the price of the product
31. How would an increase in supply be illustrated? A A movement up the supply curve B A movement down
the supply curve C A shift to the left of the supply curve D A shift to the right of the supply curve
32. What would cause an increase in the supply of milk? A An increase in the price of cattle feed B An increase
in wages paid to farm workers C The introduction of a subsidy to cattle farmers D The outbreak of a disease
affecting cows.
33. Equilibrium price is the price at which: A Everything that is produced is sold B The amount consumers
demand is equal to the amount sellers supply C The number of buyers equals the number of sellers D Supply
exceeds demand
34. A market is experiencing a shortage. What will happen to price and sales as the market moves back to
equilibrium? Price Sales A Decrease Fall B Decrease Rise C Increase Fall D Increase Rise.
35. If there is excess demand in a market, what is the relationship between price and equilibrium price, and
sales and equilibrium sales? Price Sales A above equilibrium above equilibrium B above equilibrium below
equilibrium C below equilibrium below equilibrium D below equilibrium above equilibrium
36. A market is operating with a disequilibrium price. What must this mean? A Demand and supply are not
equal B Shortages do not exist C The price mechanism is not working D There is no opportunity cost
involved.
37. The diagram shows a change in the market for coffee. What could explain this change? A A rise in the price
of coffee B A rise in the price of tea C A successful advertising campaign for tea D A health report indicating
that drinking coffee can cause headaches

38. The diagram shows the demand for and supply of a product. The initial equilibrium is at point x. The cost of
raw materials used to produce the product falls. Which point represents the new equilibrium?
39. What effect would a decrease in supply of a product have on its price and demand? Price Demand A
decreases contracts B decreases extend C increases contracts D increases extends
40. What is price elasticity of demand? A A measure of the extent to which price changes when the quantity
demanded changes B A measure of the extent to which the quantity demanded changes when price changes
C A measure of the extent to which total revenue changes when price changes D A measure of the extent to
which price changes when total revenue changes
41. Demand for a product is inelastic. What effect will a fall in price have? A Demand will not change B Demand
will change by a greater percentage C Total revenue will fall D Total revenue will rise
42. What characteristic is likely to make the demand for a product elastic? A It is a necessity B It is habit-forming
C It is relatively cheap D It has close substitutes
43. The price of a product rises from $60 to $90. This causes demand to contract from 800 to 600. What type of
price elasticity of demand does this product have over this price range? A Perfectly inelastic B Inelastic C
Unity D Elastic
44.

45. What does a PES of 0.8 indicate? A Supply is elastic B Supply is perfectly elastic C Supply is perfectly inelastic
D Supply is inelastic
46. In what circumstance would supply of a product be elastic? A It is costly to produce B It takes time to
produce C It can be stored D It uses resources which are in short supply
47. what can cause the supply curve for a product to shift to the right? (a)an increase in demand for the
product(b)an increase in
government subsidy for the producer(c)an increase in direct taxes on the product(d)an increase in the cost
of production.

48. What is an advantage of a market economy? A An absence of poverty B Consumer sovereignty C

Firms having considerable market power D Full employment.
49. What encourages firms to produce what consumers demand? A The chance to earn a high profit B
The chance to experience high unit costs of production C The desire to attract new firms into the
industry D The desire to keep revenue as low as possible.
 50.
51. The diagram shows a production possibility curve (PPC).

Why is the curve usually draw like this? (a)international free trade(b)opportunity
cost changes (c)resources are unlimited supply(d)some resources will be unemployed.
52. When the price of a product decreases, what is likely to happen along the demand curve(a)s shift to the
left(b)a shift to the right (c)a movement upward(d)no change in position
53. What does movement along the demand curve represent? (a)changes in consumer preference(b)shifts in the
supply curve(c)changes in the quantity demanded due to price changes(d)changes in income levels.
54. how does an improvement in technology typically affect supply? (a)supply increase(b)supply
decreases(c)supply remains unchanged(d)supply becomes inelastic
55. Which situation indicates a mixed economy? (a)Economic activity is controlled entirely by the private
sector(b)individual choices are unaffected by government actions(c)services are provided by both private
and public sectors(d)the government carries out all planning and decision making.
56. Use the following scenario to answer the question that follows.
Two independently owned drug companies arrange to merge their businesses to form a single firm. Before
they can do so, however, the merger must be approved by a government agency to ensure that it does not
violate antitrust laws. This scenario most likely took place in which of the following types of economic
 systems? (a)pure market economic system(b)command economic system(c)traditional economic
system(d)mixed-market economic system.
57. Government purchases of airplanes would initially affect which of the following? (a)Goods and
Services(b)Payment for Goods and Services(c)Rent, Wages, Interest (d)Land, Labor, Capital Which of the
following statements best describes a major social consequence of industrialization in nineteenth-century
Western Europe?
58. Personal budgets can best be used to achieve which of the following goals(a)keeping expenditures in line
with income(b)establishing a good credit rating(c)maximizing purchasing power(d)improving one's standard
of living
59. What is an advantage of the market economic system? (a) It aims for equality of income. (b) It ensures the
provision of defense and law and order. (c) It gives an incentive to produce. (d) It reduces pollution and
congestion.
60. What is meant by the economic problem? (a) how to achieve efficiency with the existence of fixed resources
and limited wants(b) how to allocate resources between public and private sectors(c)how to balance
unlimited wants against finite resources(d)how to decide which methods to use to exploit all resources.
61. In a country where the demand for petrol (gas) is price-inelastic, the incidence of any increase in petrol tax
will be mainly on (a) the company that refines the oil. (b)the motorist who buys the petrol. (c) the petrol
station that sells the petrol. (d)the wholesale company that stores the petrol.
62. What does individual supply refer to(a)The total quantity of a product supplied in the market(b)the quantity
of a product supplied by an individual producer(c)The demand for a product by individual consumer (d)The
price of a product in the market.
63. How does an improvement in technology typically affect supply (a)supply increases(b)supply
decreases(c)supply remains unchanged(d) supply becomes inelastic
64. What term describes a graph that illustrates the relationship between the quantity of a good supplied by an
individual producer and its price (a)demand curve(b)market supply curve(c)supply schedule(d)individual
supply curve.
65. Due to changes in the costs of production, an industry’s supply curve shifted at various times from S1 to
either S2 or S3.

If a shift in supply was due to a seasonal increase in the cost of

raw materials, what would have
 been the effect on demand? (a)The demand curve would move from D1 to D2. (b)The quantity demanded
would move from x to w.(c) The quantity demanded would move from x to y. (d)The quantity demanded
would remain the same at x.

66. For anything to be used as money, it must be (a) a fixed value. (b) in fixed supply. (c)legal tender. (d)readily
acceptable.
67. A mixed economy has: (a)an agricultural and an industrial sector (b) consumer goods and capital goods(c)a
financial sector and an industrial sector(d)a private sector and a public sector.
68. What is a function of a central bank? (a)providing savings facilities(b)making personal loans(c)supervising
the banking system(d)Giving independent financial advice.
69. What is the relationship between demand and price and the relationship between supply

and price?

Demand and price Supply and price

A directly related directly related

B directly related inversely related

C inversely related directly related

D inversely related inversely related

70. What does a market supply curve show?

A The proportion of total output produced by different firms in the industry

B Proportion of total output sold

C The relationship between the total quantity supplied and demand for the product

D The relationship between the total quantity supplied and the price of the product

71. How would an increase in supply be illustrated?

A A movement up the supply curve

B A movement down the supply curve

C A shift to the left of the supply curve

D A shift to the right of the supply curve

72. What would cause an increase in the supply of milk?

A An increase in the price of cattle feed

B An increase in wages paid to farm workers

C The introduction of a subsidy to cattle farmers

D The outbreak of a disease affecting cows

73. Equilibrium price is the price at which:

A Everything that is produced is sold

B The amount consumers demand is equal to the amount sellers supply

C The number of buyers equals the number of sellers

D Supply exceeds demand

74. A market is experiencing a shortage. What will happen to price and sales as the market

moves back to equilibrium?

Price Sales

A Decrease Fall

B Decrease Rise

C Increase Fall

D Increase Rise

75. If there is excess demand in a market, what is the relationship between price and

equilibrium price, and sales and equilibrium sales?

Price Sales

A above equilibrium above equilibrium

B above equilibrium below equilibrium

C below equilibrium below equilibrium

D below equilibrium above equilibrium

76. A market is operating with a disequilibrium price. What must this mean?

A Demand and supply are not equal

B Shortages do not exist

C The price mechanism is not working

D There is no opportunity cost involved

77. The diagram shows a change in the market for coffee. What could explain this change?

A A rise in the price of coffee

B A rise in the price of tea

C A successful advertising campaign for tea

D A health report indicating that drinking coffee can cause headaches

78. What effect would a decrease in supply of a product have on its price and demand?

Price Demand

A decreases contract

B decreases extends

C increases contracts

D increases extends
 79. What is price elasticity of demand?

A A measure of the extent to which price changes when the quantity demanded changes

B A measure of the extent to which the quantity demanded changes when price changes

C A measure of the extent to which total revenue changes when price changes

D A measure of the extent to which price changes when total revenue changes

80. Demand for a product is inelastic. What effect will a fall in price have?

A Demand will not change

B Demand will change by a greater percentage

C Total revenue will fall

D Total revenue will rise

81. What characteristic is likely to make the demand for a product elastic?

A It is a necessity

B It is habit-forming

C It is relatively cheap

D It has close substitutes

82. The price of a product rises from $60 to $90. This causes demand to contract from 800 to

600. What type of price elasticity of demand does this product have over this price range?

A Perfectly inelastic

B Inelastic

C Unity

D Elastic

82. What is the formula for PES?

83. What does a PES of 0.8 indicate?

A Supply is elastic

B Supply is perfectly elastic

C Supply is perfectly inelastic

D Supply is inelastic

84. In what circumstance would supply of a product be elastic?

A It is costly to produce

B It takes time to produce

C It can be stored

D It uses resources which are in short supply

85. Which diagram illustrates elastic supply?

86. What is an advantage of a market economy?

A An absence of poverty
B Consumer sovereignty
C Firms having considerable market power
D Full employment
87. What encourages firms to produce what consumers demand?
A The chance to earn a high profit
B The chance to experience high unit costs of production
C The desire to attract new firms into the industry
D The desire to keep revenue as low as possible
88. The diagram below shows the current position in a market. How will market forces move

the situation towards allocative efficiency?

 Price Demand Supply

A fall fall rise

B fall rise fall

C rise fall rise

D rise rise fall

89. In a market system, what encourages firms to keep their costs low?

A Competition

B Government regulations

C Subsidies

D Taxation

90. In the diagram below, which movement shows an increase in productive efficiency?

Capital goods.

A A to B

B B to C

C C to D

D A to D

91. Demand for a product is inelastic. What effect will a fall in price have?

A Demand will not change

B Demand will change by a greater percentage

C Total revenue will fall

D Total revenue will rise

A It is a necessity

B It is habit-forming

C It is relatively cheap

D It has close substitutes.

92. What is price elasticity of demand?

A A measure of the extent to which price changes when the quantity demanded changes

B A measure of the extent to which the quantity demanded changes when price changes

C A measure of the extent to which total revenue changes when price changes

D A measure of the extent to which price changes when total revenue changes

93. The diagram shows a change in the market for coffee. What could explain this change?
A A rise in the price of coffee
B A rise in the price of tea
C A successful advertising campaign for tea
D A health report indicating that drinking coffee can cause headaches

94. The price of a product rises from $60 to $90. This causes demand to contract from 800 to
600. What type of price elasticity of demand does this product have over this price range?
A Perfectly inelastic
B Inelastic
C Unity
D Elastic

95. The diagram shows the demand for and supply of a product. The initial equilibrium is at point x. The cost of raw
materials used to produce the product falls. Which point represents the new equilibrium?
2)

(d) Define supply. (2)

(e) Explain why supply and price are positively related. (2)

3. (a) The price of a product falls from $8 to $6, causing demand to extend from 10,000 to 12,500. what is the price
elasticity of demand? (4mrks)

(b) Identify two key resource allocation decisions. (2)

(c) Explain the difference between market equilibrium and market disequilibrium. (2)

(d) Analyze the functions of the price mechanism. (2)

4. In February 2017, China’s central bank raised the rate of interest. It wanted to reduced borrowing and the growth
of the money supply, but it as worried that the rise in the interest rate might reducethe country’s economic growth rate.
The change in interest rate is likely to have increased the workload of skilled commercial bank workers.

(a)identify two functions of money (2mrks)

(b)Analyze why skilled workers are usually paid more than unskilled workers (4mrks)

(c) in 2023 an Earthquake on the Iran/ Pakistan border destroyed many factories and homes. Some officials wanted the
Government to rebuild the factories and homes, even though there would be an opportunity cost. Others suggested that
some people should be encouraged to emigrate.

(d)Define opportunity cost (2mrks)

(e) Explain why the Economic problem can never be solved (2mrks)

1. (a) The price of a product falls from $8 to $6, causing demand to extend from 10,000 to 12,500. what
is the price elasticity of demand?
(6mrks)

P 0 2 4 6 8
(b) Calculate the quantity demanded when Qd=800-60p given. (5mrks)
Qd

(c) what does a PED of 0.8 indicate? (1mrk)

2(a). Define what is meant by price elasticity of demand and explain how it is calculated. (3mrks)

(b). Explain three causes of a change in the demand for a food (3mrks).

(i).

(ii).

(iii)
 (c). Explain the difference between equilibrium price and a disequilibrium price (2mrks).

Equilibrium Price Disequilibrium Price

3. in February 2017, China’s central bank raised the rate of interest. It wanted to reduced borrowing and the
growth of the money supply, but it as worried that the rise in the interest rate might reduce the country’s
economic growth rate. The change in interest rate is likely to have increased the workload of skilled
commercial bank workers.

(a)identify two functions of money (2mrks)

(i)

(ii)

(b)Explain two reasons why a central bank may want to reduce borrowing (4mrks)

(i)

(ii)

(c)Analyze why skilled workers are usually paid more than unskilled workers (4mrks)

4. in 2023 an Earthquake on the Iran/ Pakistan border destroyed many factories and homes. Some officials
wanted the Government to rebuild the factories and homes, even though there would be an opportunity
cost. Others suggested that some people should be encouraged to emigrate.

(a)Define opportunity cost (2mrks)

(b) Explain why the Economic problem can never be solved (2mrks)

(c)Define perfectly inelastic (2mrks)

(d)Identify two examples of capital goods (2mrks

a Identify two differences between the private sector and the public sector. (2)

b Explain why consumers are said to be sovereign in a market economic system. (4)

c Analyse the role of profit in a market economic system. (6)

d Discuss whether or not prices will be low in a market economic system. (8)
a Define perfectly inelastic supply. (2)
b Explain how an economist can determine whether the supply of a product is elastic or inelastic. (4)

c Analyse why the supply of agricultural products tends to be more inelastic than the supply of manufactured products.
(6)

d Discuss whether or not producers would want the demand and the supply of their product to be more price elastic. (8)

e the quantity supplied may rise from 100 to 130 as a result of price increasing from $10 to $12. In this
instance, the percentage change in quantity supplied is:

a Define price elasticity of demand. (2)

b Explain the difference between inelastic demand and perfectly inelastic demand. (4)

c Analyse how the price elasticity of demand of a product influences the relationship between changes in
price and total revenue. (6)

d Discuss whether or not demand for laser eye surgery will become more inelastic over time. (8)

e. the quantity demanded may rise from 200 to 240 as a result of price falling from $10 to $9. In this case,
the percentage change in quantity demanded is:

a. Identify two causes, apart from an increase in income, of an increase in demand for a product. (2)
b. b Explain why an increase in wages is likely to increase demand but may reduce supply. (4)
c. c Analyse, using a demand and supply diagram, the granting of a subsidy to the producers of a
product. (6)
d. d Discuss whether or not the price of air travel is likely to rise in the future. (8)

a What may be the opportunity cost of buying apples? (2)

b Explain why the market for apples may be in disequilibrium. (4)

c Analyse, using a demand and supply diagram, why a surplus of apples will be eliminated. (6)

d Discuss whether or not consumers will benefit from a market being in disequilibrium. (8)

a Define supply. (2)

b Explain why supply and price are positively related. (4)

c Analyse, using a supply diagram, the effect of an improvement in the quality of the training car workers
receive on the supply of cars. (6)

d Discuss whether or not changes in demand or changes in supply have a larger influence on the market for
tomatoes. (8)

a Define market demand. (2)

b Explain the relationship between demand and a change in price. (4)

c Analyse the effect of a rise in the price of tea on the demand for milk and the demand for coffee. (6)

d Discuss whether or not the demand for bicycles will rise in the future. (8)

a Identify two key resource allocation decisions. (2)

b Explain the difference between market equilibrium and market disequilibrium. (4)

c Analyse the functions of the price mechanism. (6)

(a) Identify two key resource allocation decisions. (2)