ECS1500 — Introduction to Economics | Assignment 5 Sample Semester 1, 2026
ECS1500 INTRODUCTION TO ECONOMICS COMPLETE
SOLUTION LATEST UPDATED 2026
ASSIGNMENT 5 —
Semester 1, 2026
Module ECS1500 — Introduction to
Economics
Assignment Assignment 5
Semester Semester 1, 2026
Total Marks 100 Marks
Sections A: Multiple Choice | B: Short
Answer | C: Calculations | D: Essay
SECTION A: Multiple Choice Questions
(20 Marks — 4 marks each)
Question 1
If the price of a good increases by 10% and the quantity demanded falls
by 20%, what is the price elasticity of demand (PED)?
a) 0.5 | b) 1.0 | c) 2.0 | d) 4.0
Answer c) 2.0 — Elastic Demand
Solution: PED = % Change in Quantity Demanded ÷ % Change in Price
= 20% ÷ 10% = 2.0
Page
, ECS1500 — Introduction to Economics | Assignment 5 Sample Semester 1, 2026
Since PED > 1, demand is elastic. A 1% price increase leads to a more
than 1% fall in quantity demanded.
Question 2
Which of the following best describes a perfectly competitive market?
a) Firms are price setters b) Products are differentiated
c) Many buyers and sellers d) High barriers to entry
Answer c) Many buyers and sellers
In perfect competition: many buyers and sellers exist; products are
homogeneous; firms are price takers; there is free entry and exit.
Question 3
When a firm's marginal revenue (MR) equals marginal cost (MC), the
firm is:
a) Making a loss b) At the break-even point
c) Maximising profit d) Minimising total cost
Answer c) Maximising profit
The profit-maximising rule for all market structures is MR = MC. At this
point, producing one more unit adds equally to revenue and cost — so
profit cannot be increased further.
Question 4
A negative externality occurs when:
a) Social cost exceeds private cost b) Private benefit exceeds social
benefit
c) The government imposes a tax d) Supply decreases
Answer a) Social cost exceeds private cost
Page
ECS1500 INTRODUCTION TO ECONOMICS COMPLETE
SOLUTION LATEST UPDATED 2026
ASSIGNMENT 5 —
Semester 1, 2026
Module ECS1500 — Introduction to
Economics
Assignment Assignment 5
Semester Semester 1, 2026
Total Marks 100 Marks
Sections A: Multiple Choice | B: Short
Answer | C: Calculations | D: Essay
SECTION A: Multiple Choice Questions
(20 Marks — 4 marks each)
Question 1
If the price of a good increases by 10% and the quantity demanded falls
by 20%, what is the price elasticity of demand (PED)?
a) 0.5 | b) 1.0 | c) 2.0 | d) 4.0
Answer c) 2.0 — Elastic Demand
Solution: PED = % Change in Quantity Demanded ÷ % Change in Price
= 20% ÷ 10% = 2.0
Page
, ECS1500 — Introduction to Economics | Assignment 5 Sample Semester 1, 2026
Since PED > 1, demand is elastic. A 1% price increase leads to a more
than 1% fall in quantity demanded.
Question 2
Which of the following best describes a perfectly competitive market?
a) Firms are price setters b) Products are differentiated
c) Many buyers and sellers d) High barriers to entry
Answer c) Many buyers and sellers
In perfect competition: many buyers and sellers exist; products are
homogeneous; firms are price takers; there is free entry and exit.
Question 3
When a firm's marginal revenue (MR) equals marginal cost (MC), the
firm is:
a) Making a loss b) At the break-even point
c) Maximising profit d) Minimising total cost
Answer c) Maximising profit
The profit-maximising rule for all market structures is MR = MC. At this
point, producing one more unit adds equally to revenue and cost — so
profit cannot be increased further.
Question 4
A negative externality occurs when:
a) Social cost exceeds private cost b) Private benefit exceeds social
benefit
c) The government imposes a tax d) Supply decreases
Answer a) Social cost exceeds private cost
Page
