AS Economics MCQs Help Watch

Annayah Usman
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Hello, everyone! I'm due to sit for my AS Econ P1 in a few days and I need lots of help in MCQs --mainly in understanding the logic behind them (the tricky or difficult ones mostly) and being quick at them.

I'll begin posting them in this thread shortly. I hope I'll get a good response from people out there! If you can help with an MCQ please quote that post with your explanation. Much thanks!
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Annayah Usman
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MCQ #1

Between 2006 and 2007, the price of skimmed milk powder on the world market Rose from $1000 per ton to $2400 per ton.
Assuming that the market is a free market, what will results from the price change?

A. Consumers will buy more complements to the skimmed milk powder.
B. Farmers will increase the size of their dairy herds to supply more milk.
C. Firms processing milk into skimmed milk will switch to producing substitutes.
D. Governments will introduce a system of rationing.
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CoffeeAndPolitics
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TeeEff See above.
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Annayah Usman
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MCQ #2

Which statement indicates that the price mechanism is allocating resources successfully?

A. Belgian chocolate companies increase supplies to China because of higher than expected sales.
B. Train operators in India lower fares because of overcrowding on trains.
C. US super markets throw away large amounts of food because of misjudging demand.
D. World fish stocks decline because of over fishing.
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Annayah Usman
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MCQ #3

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Can someone explain the MPB, MSC and MSB? I know what they stand for; just can't understand them through a graph.
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jpt4749
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(Original post by Annayah Usman)
MCQ #3

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Can someone explain the MPB, MSC and MSB? I know what they stand for; just can't understand them through a graph.
MPB = marginal private benefit
MSB = marginal social benefit
MSC = marginal social cost

The problem arising from this question is positive externality so a subsidy of ST is needed to impose to shift the marginal benefit from private up to the socially optimal level
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Annayah Usman
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(Original post by Nathan9087)
MPB = marginal private benefit
MSB = marginal social benefit
MSC = marginal social cost

The problem arising from this question is positive externality so a subsidy of ST is needed to impose to shift the marginal benefit from private up to the socially optimal level
I understand your explanation but my bad that I didn't mention what the correct answer is. It's actually D. but I understand it as to achieve the social optimum level the MSB = MSC which can be seen only through D.
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Annayah Usman
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The correct answer is D. I don't understand the math.
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Speckle
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(Original post by Annayah Usman)
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The correct answer is D. I don't understand the math.
Participation rate is (5+75)/100
Unemployment rate is 5/(5+75)

Does that help? If you don't know why these numbers are used, you need to look up the definitions of participation rate and unemployment rate. It's actually fairly intuitive once you look at it.
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