An increase in the price of petrol will often result in consumers economising in their use of fuel by

1. reducing the number of journeys they make in their cars. This is because

A petrol and car journeys are in joint supply.

B the cross elasticity of demand between the price of petrol

and number of car journeys is positive.

C of the operation of the rationing function of the price

mechanism.

D the price elasticity of demand for petrol is positive.

[1 mark]

The diagrams below show the impact of an increase in demand for good G and the resulting
2. change in the related market for good H.

These changes imply that goods G and H are in

A composite demand.

B derived demand.

C joint demand.

D joint supply.

[1 mark]

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 Which one of the following would generate a short-run disequilibrium with excess supply in the
3. market for Cornish pasties?

A A minimum price for Cornish pasties is set above the current

market price

B Higher meat prices increase the cost of producing Cornish

pasties

C More advertising increases the demand for Cornish pasties

D The government levies a new indirect tax on Cornish pasties

[1 mark]

Land is in composite demand and can be used to build houses or to provide playing fields. When
4. the demand for playing fields increases, there will be

A a decrease in the price of new houses.

B a decrease in the supply of new houses.

C an increase in demand for new houses.

D an increase in output of new houses.

[1 mark]

The equilibrium market price can be defined as the price at which

5.
A the market for the product clears.

B the price elasticity of demand equals the elasticity of supply.

C producers maximise their profits.

D positive excess demand equals negative supply.

[1 mark]

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