Economics 9708/31 October/November 2024: question paper and mark scheme

Question

The diagram shows a total utility curve for a consumer. At which point does marginal utility equal zero? total C utility B A D O quantity

Question

What is a characteristic of an indifference curve? A It will remain concave to the origin of the diagram. B It will remain convex to the origin of the diagram. C It can intersect other indifference curves at any point. D The lower the indifference curve, the greater the satisfaction attainable.

Question

A Belgian traffic study concluded that there would be significant benefits if 10% of car drivers switched to using motorcycles during peak traffic times. Which result would be considered a cost of this change? A reduced travel times B reduced car emissions C reduced safety standards D reduced traffic queues

Question

The diagram shows a firm’s long-run average cost curve (LRAC). LRAC cost X Y O output What could explain the shape of the curve from X to Y? A a decrease in total fixed cost B increasing returns to scale C internal diseconomies of scale D more than one factor of production is variable

Question

The diagram shows the average revenue (AR) and average cost (AC) curves for a firm X that manufactures electronic goods. Firm X then completes a takeover of firm Y that supplies its component parts making them cheaper. The original average revenue and average cost curves of firm X are AR1 and AC1. price AC3 AC1 AC2 AR2 AR1 AR3 O quantity What is the position of the average cost curve and the average revenue curve after the takeover? average average cost revenue A AC1 AR3 B AC2 AR1 C AC2 AR3 D AC3 AR2

Question

LMN Ltd operates as a relatively small, family-owned producer in an industry dominated by a few large firms. Its product is unique so the owners are confident they will be able to sell enough to provide them with sufficient revenue to allow a minimum acceptable level of performance for the firm. Other than survival, what is the most likely objective of LMN Ltd? A profit maximising B profit satisficing C revenue maximising D sales maximising

Question

The diagram shows the short-run average cost, SRAC, and long-run average cost, LRAC, curves for a firm producing computers. It usually produces 2000 computers per week. An increase in demand requires the firm to produce 3000 computers per week. cost $ SRAC1 LRAC 100 80 SRAC2 SRAC3 40 30 0 2000 3000 4000 output How much will the average costs change in the long run if the firm makes a permanent decision to produce 3000 computers per week? A $20 B $40 C $50 D $60

Question

What is a characteristic of monopolistic competition? A no barriers to entry B identical products C price takers D small number of buyers and sellers

Question

What is likely to have its cause in the separation of ownership and control in a firm? A contestable markets B diseconomies of scale C principal-agent problem D prisoner’s dilemma

Question

Firms X and Y merge in a horizontal integration. What must be true about the industry and the stage of production in which X and Y operate? stage of industry production A different different B different same C same different D same same

Question

Which government policy would not be classified as regulation? A a ban on cocaine consumption B compulsory wearing of seatbelts in cars C licences for the extraction of water from rivers D taxation of cigarettes

Question

A government removes a subsidy on a rural school bus service. What is the effect of this on the market for this bus service? A Deadweight loss decreases. B Private marginal costs increase. C Private marginal benefit decreases. D Social marginal costs decrease.

Question

The graph shows the percentage growth in average earnings for an economy. 4 average wage 2 growth % 0 –2 –4 Jan April 2024 2024 What is the most likely cause of the pattern shown in the graph? A a decrease in the supply of labour B a decrease in the interest rate C an increase in productivity D an increase in the size of the labour force

Question

The table shows the output of chairs at a factory when different numbers of workers are employed. number of workers 0 1 2 3 4 5 number of chairs produced 0 7 17 26 34 40 When will diminishing marginal returns to labour set in? A when the second worker is employed B when the third worker is employed C when the fourth worker is employed D when the fifth worker is employed

Question

In the diagram, D represents the long-run demand curve for labour in a firm operating in an imperfect market. When there is a fall in the amount of capital invested per worker, the marginal revenue productivity of labour (MRP) curve shifts from MRP1 to MRP2. wages W1 W2 MRP1 MRP2 D O L1 L2 L3 labour employed How does this shift affect the amount of labour employed in the long run, when wages fall? A It falls from L3 to L2. B It increases from L1 to L2. C It increases from L2 to L3. D It remains the same at L1.

Question

Which statement about money is correct? A It consists solely of deposits held by commercial banks. B It functions as a medium of exchange. C Its monetary value equals its production costs. D It operates only when there is a double coincidence of wants.

Question

In country X, unemployment is rising at the same time as the number of job vacancies is increasing. What is the most likely reason for this? A Economic growth is falling. B Economic growth is rising. C Geographical mobility of labour is rising. D Occupational immobility of labour is rising.

Question

An increase in which variable affecting labour markets is most likely to reduce the natural rate of unemployment? A the level of unemployment benefit B the militancy of trade unions C the national minimum wage D the participation on training courses

Question

A consumer has an income of $1000 per week. The consumer spends 80% of this on goods and services. Following an increase in the consumer’s income to $1200 per week, consumption increases to $900 per week. Which statement is correct? A The average propensity to consume does not change. B The initial average propensity to consume is 5. C The marginal propensity to consume is 0.5. D The marginal propensity to consume is 2.

Question

The table shows data about the population of a country. total population 2 000 000 labour force 1 200 000 number of people employed 900 000 number of people unemployed 300 000 What is the rate of unemployment? A 25% B 33% C 60% D 75%

Question

What is not an aim of macroeconomic policy? A economic development B exchange rate stability C Pareto optimality D satisfactory balance of payments

Question

The diagram shows an increase in aggregate demand (AD) from AD1 to AD2. LRAS price SRAS level AD2 AD1 O real output How can the subsequent impact on short-run and long-run macroeconomic equilibrium positions be shown using expectations-augmented Phillips curves? long-run Phillips curve inflation % K J short-run Phillips curve 2 F short-run Phillips curve 1 H G short-run Phillips curve 3 O unemployment rate % A F to G to H B F to G to K C F to J to H D F to J to K

Question

How could high interest rates increase a country’s rate of inflation? A by increasing the current borrowing costs of business B by increasing the current borrowing costs of government C by increasing the foreign exchange rate of the currency D by increasing the opportunity cost of spending

Question

What is most likely to influence subsequent increases in national income as a result of a government policy of reduced interest rates? A marginal cost B marginal efficiency of capital C marginal product D marginal utility

Question

Which policy to reduce a current account deficit on the balance of payments could be described as an expenditure-switching policy? A a decrease in government spending B a decrease in the exchange rate of the country’s currency C an increase in domestic income taxes D an increase in domestic interest rates

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Which components are included in the financial account of the balance of payments? foreign direct interest, profits investment and dividends A key B = included C = not included D

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It is often argued that the UN Human Development Index (HDI) is a better indicator of economic development than income per capita because it adjusts for A average hours worked by the population. B environmental pollution. C inequality in income distribution. D life expectancy at birth.

Question

Some conditions for providing foreign aid to low-income countries can be restrictive. Which kind of aid fits this description? A food aid in the event of natural catastrophes such as severe drought B grants that are tied to purchasing donor country goods C loans that are repaid over a long period at a low rate of interest D technical assistance using highly skilled worker transfers to provide support

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What is most likely to cause the living standards of a country to rise? A an increase in the number of doctors B an increase in the gold reserves C an increase in the number of people per house D an increase in the money supply

Question

Globalisation means that goods and services, capital and labour are traded on a worldwide basis. Which combination illustrates that each trade partner can benefit when a low-income country trades with a high-income country? the low-income country the high-income country A contracts are not always fulfilled agrees to increase investment in due to corrupt practices the infrastructure of low-income countries B experiences liquidity problems transfers short-term government that restrict investment loans repayable at high interest rates C multinational companies receives supplies at high prices repatriate profits from mining from multinationals to meet of rare minerals for export excess demands for rare metals D supplies seasonal labour to repatriates wages to families overcome shortages for of seasonal workers picking fruit crops