economics

1 the diagram shows the total utility of consumers y and z when each consumes bars of
chocolate.
70 4------- 22 -2n eee consumer y
gb sates reesese sags
total ae
utility a
457 ey ee |
40 ee ee a
! : “consumer z
wp ff i
0 ' i i '
0 1 2 3 4
number of bars
what is the difference in the marginal utility of consumers y and z when each consumes four
bars of chocolate?
a 0 b 5 cc 10 d 30

2 when choosing to buy two products, the satisfaction gained by the consumption of different
combinations of these two products can be represented by an indifference curve.

which statement about such an indifference curve diagram is correct?

a_ the range of indifference curves shows the combination of products a consumer can
purchase with a given income.

b_ if an indifference curve is a downward-sloping straight line, the principle of diminishing
marginal utility must be operating.

c indifference curves never cross, because this means that a consumer would be indifferent
between combinations of two goods, even when one combination provides more of each
good.

d_ the gap between indifference curves is always constant.

3 negative externalities, such as air pollution due to car emissions, can cause damage to people’s
health in cities.
which response is most likely to occur from this situation?
acar manufacturers will automatically bear any external costs
b- market failure will be resolved when private costs equal external costs
c_ most people will decide to use buses rather than cars
d some form of government intervention to improve economic efficiency

4 the merger of two large firms in the singapore market supplying taxis and private hire vehicles
resulted in a single firm with 80% of the market. the remaining 20% of the market consisted of
thousands of independent taxi drivers.

which statement best describes what has effectively occurred in the market structure?
a the market has become monopolistically competitive.

b_ the market has changed from an oligopoly to a monopoly.

c_ the market has changed from perfect competition to an oligopoly.

d the market remains an oligopoly.

5 the diagram shows the cost and revenue curves of a profit-maximising, monopolistically
competitive firm in long-run equilibrium.
costs, ac
revenue mc
p essence
ar
mr
[e) q
output
which statement correctly describes the performance of this firm?
a _ltis allocatively efficient.
b it is making abnormal losses.
c_itis making abnormal profits.
d_itis making normal profits.

6 a firm changes its aim and chooses to produce where marginal revenue (mr) is zero instead of
where mr is equal to marginal cost (mc).
which explanation for this is not correct?
a_ the firm wishes to increase sales.
b_ the firm wishes to increase its output.
c_ the firm wishes to reduce prices.
d_ the firm wishes to gain more profits.

7 a firm operating in the airline industry uses third degree price discrimination.
which condition is most likely to allow this to happen?
a consumers are able to buy cheaply and then sell the product at a higher price.
b_ price elasticity of demand is the same for all consumers in the market.
c_ the firm faces a perfectly elastic demand curve.
d_ the firm is able to keep the different market segments separate.

8 what is not an example of a moral hazard?
a_ people with a higher risk of unemployment are more likely to undertake training.
b_ people with free dental care are less likely to take care of their teeth with good oral hygiene.
c_ people with insurance against car theft are more likely to park their car in high crime areas.
d_ people with unemployment benefits are less likely to undertake retraining if they become
unemployed.

9 in recent years, the fuel cost of operating a jet aircraft has declined. over the same period,
improved design has led to much quieter aircraft.
how would this affect the marginal private cost (mpc) and the marginal external cost (mec) of air
travel?
a adownward shift of both the mpc and the mec curves
b  adownward shift of the mpc curve and a movement left along the mec curve
c amovement left along both the mpc and the mec curves
d amovement left along the mpc curve and a downward shift of the mec curve

10 firm k operates in a competitive market. firm l is a monopsony employer. both firms are
operating at an equilibrium level of output.
trade unions are introduced with the result that wages in each firm are increased.
what is the likely effect on each firm if trade unions enter the labour market?
a employment will decrease employment will decrease
b employment will decrease employment will increase
cc employment will increase employment will decrease
d employment will increase employment will increase

11 a backward-sloping supply curve of labour is one where, beyond a certain point, the supply of
labour
a decreases as the demand for labour rises.
b_ increases as the demand for labour rises.
c_ decreases as wages rise.
d_ increases as wages rise.

12 what is the economic result of a universal basic income (ubi)?
asta |s
incentive to work equality
a no no
b no yes
cc yes no
d yes yes

13. which combination of fiscal policy measures would be most effective in reducing income
inequality?
top rates of — value of state
: indirect taxes :
income tax benefits
a increase increase increase
b increase reduce increase
cc reduce increase reduce
d reduce reduce reduce

14 atpresent, motorists who drive their cars within area 1 on the map pay a daily congestion charge
of $8.
ex
& 7
afeal2
which car journeys would decrease in number if the congestion charge area were extended to
include area 2?
a_ journeys from point x to point z
b_ journeys from point x to point y
c_ journeys from point y to point z
d_ journeys from point z to point y

15 what is most likely to lead to an increase in the size of the national income?
a afallin interest rates on savings accounts
ba fall in the prices of imported goods
c_ adecrease in government spending
d_anincrease in direct taxes

16 which government policy is most likely to improve occupational mobility?
a_ decreased income tax rates
b_ increased government spending on education and training
c_ increased government spending on infrastructure
d_ increased subsidies to firms to employ school leavers

17 the table shows the marginal propensity to consume (mpc), marginal propensity to save (mps),
marginal rate of taxation (mrt) and marginal propensity to import (mpm) for a four-sector
economy.

| vate]
mpc 0.5
mps 0.2
mrt 0.2
mpm 0.1
what is the size of the multiplier?
a 1 b 2 cc 5 d 10

18 what is likely to happen when the productive capacity of a free enterprise economy increases
over a long period of time?
a future generations will be less well-off than present generations.
b_ increasing the production of one good cannot be done without decreasing the production of
another.
c individuals will have more choices due to a wider range of consumer goods.
d_ rising levels of output will cause per capita incomes to equalise.

19 the accelerator principle refers to a relationship between investment and
a the level of gdp.
b_ changes in gdp.
c the level of interest rates.
d_ changes in interest rates.

20 what is likely to be the effect of an increase in the budget deficit?
a_anincrease in effective demand
b_anincrease in unemployment
c_ areduction in inflation
d areduction in the volume of spending

21 ae gives details of the inflation and unemployment rates for different countries in 2008 and
‘om | se ss
country (% per annum) (% of workforce)
canada 2.38 2.89 6.15 7.47
france 3.16 2.29 7.81 9.68
germany 2.10 2.48 7.60 5.98
japan 1.37 —0.28 3.99 4.55
which countries experienced a trade-off between their inflation and unemployment rates?
a canada and germany
b- canada only
c_ france and japan
d_ france only

22 which government policy would boost economic growth but not necessarily promote economic
development?
a creating a more equal distribution of income and wealth
b_ diverting government spending from industry to education
c_ encouraging the extraction of finite natural resources
d introducing tighter controls on air pollution

23 which policy measure to encourage economic growth might be based on the concept of the
laffer curve?
a cuts in direct taxes
b_ exchange rate depreciation
c_ investment subsidies
d_ quantitative easing

24 the exchange rate of an economy appreciates.
assuming that the marshall—lerner condition holds in this economy, what is the likely outcome for
imported inflation and unemployment?
| | imported inflation | unemployment
a falls falls
b falls rises
cc rises falls
d rises rises

25 which characteristics are most commonly found in low-income countries?
[ene arm
a low low
b high low
cc low high
d high high

26 what has not accompanied global economic growth over the last 25 years?
a_ adepletion of non-renewable resources
b_ decreased international trade
c growing urbanisation
d increased atmospheric pollution

27 when assessing income distribution in an economy, which change in the gini coefficient
suggests that a country is distributing its income more equally?
a_ it has moved closer to one.
b_ it has moved closer to zero.
c_ ithas moved from negative to positive.
d_ it has moved from positive to negative.

28 in 2021, a very large cargo ship carrying over 18000 cargo containers blocked the suez canal
for seven days. it delayed over 350 other cargo ships, causing shortages of products in markets
around the world as supplies were disrupted.

which consequence of globalisation is best illustrated by this event?
a cheaper products for consumers

bs greater choice of products for consumers

c increased interdependence between countries

d_ increased migration of labour between countries

29 the table shows data for namibia and spain from 2014 to 2017.
pe sca
real gdp per capita ($) 6113 6013 | 29399 | 32283
(assuming constant price levels)
what can be concluded about whether there has been an increase in economic growth and
economic development in namibia and spain between 2014 and 2017?
[|
growth development
a namibia only namibia only
b spain only namibia and spain
cc spain only neither country
d neither country spain only

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