IFoA CB2 Practice Questions - IFoA Subject CB2 Business Economics Exam - IFoA CB2 Practice Questions

Question 1

A market is initially in equilibrium. If consumer incomes rise and the good is a normal good, what happens to the equilibrium price and quantity, all else equal?

Both price and quantity rise Price rises but quantity falls Both price and quantity fall Price falls but quantity rises

Correct Answer:

Both price and quantity rise

Question 2

The price elasticity of demand for a product is measured as -0.4. A firm raises the price by 10%. What is the approximate effect on quantity demanded and total revenue?

Quantity rises 4%; total revenue rises Quantity falls 4%; total revenue rises Quantity falls 4%; total revenue falls Quantity falls 25%; total revenue falls

Correct Answer:

Quantity falls 4%; total revenue rises

Question 3

Cross-price elasticity of demand between Good X and Good Y is calculated as +1.8. What does this indicate about the relationship between the two goods?

They are unrelated They are complements They are substitutes Good X is an inferior good

Correct Answer:

They are substitutes

Question 4

According to the law of diminishing marginal utility, as a consumer increases consumption of a good, holding other consumption constant, the marginal utility from each additional unit:

Becomes negative immediately Increases at an increasing rate Remains constant Eventually falls

Correct Answer:

Eventually falls

Question 5

A consumer maximises utility subject to a budget constraint. At the optimum interior solution, the ratio of marginal utilities of two goods equals:

The ratio of the goods' prices Unity for all goods The income elasticity ratio The ratio of total utilities

Correct Answer:

The ratio of the goods' prices

Question 1

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Prepare with the IFoA CB2 Practice Questions - IFoA Subject CB2 Business Economics Exam practice quiz. This question bank includes 100 questions covering firm, good, market, price, and marginal. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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IFoA CB2 Practice Questions - IFoA Subject CB2 Business Economics Exam

This practice set contains 100 questions from the matching question bank and focuses on firm, good, market, price, and marginal. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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IFoA CB2 Practice Questions - IFoA Subject CB2 Business Economics Exam

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