Economics 0455/12 October/November 2024: question paper and mark scheme

Question

Which economic question is least likely to arise as a result of scarcity? A For whom will we produce? B How will we produce? C What will we produce? D When will we produce?

Question

What is opportunity cost? A the allocation of resources in an economy B the cost to the individual when they consume a good C the lack of goods and services available to satisfy unlimited wants D the next best alternative forgone when making an economic decision

Question

The diagram shows a production possibility curve (PPC) for an economy that produces two goods, X and Y. Which point shows the greatest opportunity cost of producing one more unit of good X? A good Y B D C O good X

Question

A period of bad weather leads to a failure of the rice crop. What is the effect on the market for rice? A a shortage of rice and a fall in its price B a shortage of rice and a rise in its price C a surplus of rice and a fall in its price D a surplus of rice and a rise in its price

Question

The diagram shows a change in demand for coffee. price of coffee D1 D2 O quantity of coffee demanded per month What would cause the demand for coffee to change from D1 to D2? A a good coffee harvest B a rise in the price of substitute drinks C a rise in the wages of coffee workers D a successful advertising campaign for tea

Question

The table shows the supply for a product at different prices. price supply ($) (units) 10 120 12 160 14 200 16 240 18 280 If the price changes from $12 to $14, what will be the change in supply? A Supply will contract by 40 units and there will be a movement down along the supply curve. B Supply will contract by 200 units and there will be an inward shift of the supply curve. C Supply will extend by 40 units and there will be a movement up along the supply curve. D Supply will extend by 200 units and there will be an outward shift of the supply curve.

Question

Which changes would move the equilibrium in the diagram from point X to point Z? S Z price X D O quantity A a decrease in demand with a decrease in supply B a decrease in demand with an increase in supply C an increase in demand with a decrease in supply D an increase in demand with an increase in supply

Question

When the price of shirts rises from $8 to $10, the demand for shirts falls from 1000 to 500. What is the value of the price elasticity of demand for shirts? A greater than 1 B unitary C less than 1 D zero

Question

A government intends to build a new international airport in an area of outstanding natural beauty. What would be an external cost of this decision? A the cost of importing construction materials B the enjoyment lost by those unable to use the countryside C the increase in profits for local businesses D the wages paid to the construction workers

Question

What is an important role of a central bank? A attempts to achieve price stability B issues credit cards C provides loans to producers D provides savings accounts for consumers

Question

How would a change in the demand for labour affect the labour market in an occupation? change in demand change in the change in quantity for labour equilibrium wage of labour supplied A decrease decrease extend B decrease increase contract C increase decrease contract D increase increase extend

Question

A fast-food multinational bought a food-ordering website, in order to allow the multinational’s customers to download menus and make advance payments. Which term best describes this merger? A backward vertical B conglomerate C forward vertical D horizontal

Question

The diagram shows the average total cost (ATC) for a firm, in the long run. costs ATC1 ATC2 O output What would cause the shift from ATC1 to ATC2? A difficulties in controlling the firm B external economies of scale C managerial economies of scale D technical economies of scale

Question

What is most likely to encourage capital-intensive production methods in a low-income economy? A expensive capital equipment costs B grants from foreign aid programmes C supplies of local low-cost labour D a shortage of highly trained supervisors

Question

A firm’s average revenue is $20. It sells 1000 units. What are the firm’s total revenue and the price of the product? total revenue price ($) ($) A 20 20 B 1 000 50 C 20 000 20 D 20 000 50

Question

A competitive industry becomes a monopoly. What is the most likely advantage for consumers? A consumer choice may increase B economies of scale may reduce prices C more goods may be produced D prices may be set by market forces

Question

What will cause real GDP to rise in a country? A nominal GDP rising at a faster rate than employment B nominal GDP rising faster than inflation C nominal GDP rising faster than the population D nominal GDP rising

Question

What is the money supply? A the total quantity of foreign currency available within the economy B the total quantity of money available within the economy C the total quantity of money issued by the central bank D the total quantity of money within commercial banks

Question

Which macroeconomic policy is most likely to achieve economic growth and price stability at the same time? A fiscal policy B import barriers C monetary policy D supply-side policy

Question

What is the definition of economic growth? A It is an increase in the general level of prices over time. B It is an increase in the level of a nation's output over time. C It is an increase in the level of total demand over time. D It is an increase in wages, interest, profits and rent over time.

Question

What causes cyclical unemployment in a recession? A a permanent decrease in the demand for labour B a permanent decrease in the supply of labour C a temporary decrease in the demand for labour D a temporary decrease in the supply of labour

Question

The table shows government expenditure and revenue in selected years. government tax year expenditure revenue $bn $bn 1 500 500 2 600 400 3 700 300 What might explain the changes in the government’s budget over the period? A a fall in the dependency ratio B a fall in the exchange rate C an increase in cyclical unemployment D an increase in real GDP

Question

The table shows changes in economic policies for four countries, A, B, C and D. Which country is most likely to be following a policy of preventing deflation? government money supply taxation spending A decreasing decreasing decreasing B decreasing decreasing increasing C increasing increasing decreasing D increasing increasing increasing

Question

Workers in Switzerland earn more on average than workers in Mexico. What is a likely cause of this? A A greater percentage of workers in Switzerland work part-time than in Mexico. B The average worker in Switzerland is more productive than the average worker in Mexico. C The average worker in Switzerland pays more income tax than the average worker in Mexico. D The unemployment rate is higher in Switzerland than in Mexico.

Question

The table contains details on birth rate, death rate and net migration for several countries in a year. net birth rate death rate migration Australia 13 7 850 000 Brazil 14 6 30 000 Nigeria 39 12 –300 000 US 12 8 4 500 000 What can be concluded from the table? A Only one country, Nigeria, had a decreasing population. B The country with the lowest birth rate had the lowest death rate. C The country with the lowest death rate had the highest birth rate. D The country with the lowest natural rate of increase in population was the US.

Question

Which combination best describes the characteristics of a high-income economy? Human percentage of the GDP per head Development labour force in the (US$) Index value tertiary sector A high high high B high high low C low low high D low low low

Question

What might encourage international specialisation between countries? A free trade B inefficiencies in production C labour immobility D tariffs

Question

A government wishes to stop the dumping of a specific imported good at a very low price. Which method of protection would be most effective? A apply an embargo to this good B devalue the currency C increase interest rates D provide subsidies to home producers of this good

Question

The price of the US dollar in terms of other currencies is set by the forces of demand and supply. To what does this statement refer? A an alternative method of trade protection B the determination of the exchange rate in a fixed exchange rate system C the determination of the exchange rate in a floating exchange rate system D the increasing globalisation of international trade

Question

The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5