economics

1. the diagram shows the marginal utility (mu) from the consumption of quantities of good x.
10
marginal
utility 8
6
4 mu
2
0
0 1 2 3 4 5
quantity of x
what happens to the total utility as consumption of x rises from 1 to 6 units?
a it falls continuously.
b it falls and then rises.
c_itrises continuously.
d_itrises and then falls.

2 anindifference curve is typically drawn with a convex shape.
which economic concept explains the reason for this convex shape?
a allocative efficiency
b_ diminishing marginal rate of substitution
c_ pareto optimality
d the equi-marginal principle

3 what is most likely to increase the principal—agent problem?
a ensuring the actions of agents are known by the managers
b linking the rewards of managers with the profitability of the firm
c removing from managers the opportunity to hold shares
d preparing contracts that compel agents to work in the interest of the principal

4 the table shows a firm’s total fixed cost and total variable cost.
output cost cost
$ $
1 1000 1000
2 1000 2000
3 1000 3000
4 1000 4000
5 1000 5000
6 1000 6000
what can be concluded from the table?
a average fixed cost falls.
b_ average fixed cost is constant.
c_ average variable cost falls.
d_ average variable cost rises.

5 the diagrams relate to industry x. ps is the original production possibility curve.
average costs market for x production possibility
curves
price atc, price d ss s good ps
§ $ 4 y mw
atc, n
al y
o quantity ie) quantity ) good x
an improvement takes place in manufacturing techniques in industry x.
which changes take place?
average costs market for x new production
possibility frontier
a atc, to atc2 s3 to s4 p,
b atc, to atc2 sa to s3 ps
cc atc2 to atc, s3 to s4 ps
d atc2 to atc, s4 to s3 p,

6 the world’s largest coffee restaurant chain purchased a large coffee bean farm in costa rica.
the farm has research and development facilities to study specific diseases that devastate the
coffee bean crop.

how is this type of takeover classified?
a horizontal integration

b_ organic growth

c vertical backward integration

d vertical forward integration

7 which condition is necessary for a firm to practise third degree price discrimination effectively?
a_ all consumers and producers must be in the same geographical location.
b customers must be divided into separate markets for the same product.
c_ each separate market must have identical price elasticities of demand.
d_ price undercutting is required to enter a monopolistic market.

8 a traffic study concluded that there would be significant benefits if 10% of car drivers switched to
using motorcycles during peak traffic times.
which benefit of this change would be considered a private benefit?
a faster journeys for those who continued to go by car
b faster journeys for those who switched to motorcycles
c_ increased safety for cyclists
d_ reduced levels of air pollution for pedestrians

9 which conditions are most likely to reduce the accuracy of cost-benefit analysis in decision
making?
proportion of external % of total costs and
costs and benefits to total benefits that are in
total costs and benefits the future
a high high
b high low
c low high
d low low

10 what is consistent with a movement towards pareto optimality?
a_ when negative externality lowers the utility of an individual
b~ when consumption of a good is non-rival
c_ when reallocation of resources can make someone better off without making any other
person worse off
d_ when trade takes place to make one nation better off at the expense of its trading partner

11 the diagram shows the short-run supply curve and long-run supply curve of labour.
short run
wage
rate
long run
is
2) quantity of labour

which area turns from economic rent in the short run to transfer earnings in the long run?
a x b x+y cc y d y+z

12 which policies might a government introduce to increase the marginal productivity of labour?
baler tax allowances
: for capital
education
goods
a no no
b no yes
cc yes no
d yes yes

13 what is most likely to increase relative poverty in a country?
a __ increasing means-tested benefit levels
b increasing the power of trade unions
c_ making the tax system more progressive
d_ removing the national minimum wage

14 which policy is not designed to correct a market failure?
a government provision of healthcare
b price controls on large firms
c regulations to limit smoke pollution
d introducing import quotas

15 to control the cost of living, governments have sometimes imposed a maximum price on certain
goods that is below the free market price.
what is often an undesirable side effect of such a policy?
a accelerating general inflation
b_anincrease in profits above normal profits
c_anincrease in the stocks of unsold goods held by firms
d shortages of the good

16 when is an increase in national income most likely to induce an increase in investment
spending?
a when firms have spare production capacity
b_ when firms use labour-intensive production
c_ when the increase in income is regarded as permanent
d_ when the increase in income is regarded as temporary

17. what is a function of money?
a_ lt can be divided into small units.
bit can be easily carried.
c_ itis a standard of deferred payment.
d_itis widely accepted.

18 a pandemic encourages many workers in developed countries to work from home, leading to a
closure of city centre businesses such as coffee shops and retailers.
if this way of working continues after the pandemic, what is the most likely result?
a_ frictional unemployment will decrease.
b_ the geographical mobility of labour will increase.
c_ structural unemployment will increase.
d_ voluntary unemployment will increase.

19 in its 2020 population census, china reported that the total population was just below 1.4 billion.
the birth rate had continued to decline, the number of those reaching retirement age had
increased and the percentage size of the workforce had decreased.

which change of policy would most quickly sustain china’s economic growth in view of these
population changes?

a allow more immigration of labour.

b encourage women to leave work to have more children.

c increase research in technology to improve labour productivity.

d_ tax the labour force more to pay for the increasing number of pensions.

20 other things remaining equal, what will reduce the level of national income in an economy?
a _afall in planned savings
ba fall in the marginal propensity to import
c_anincrease in the average propensity to consume
d  areduction in the level of defence expenditure

21 what, according to the accelerator principle, will cause the level of investment to fall?
a adecrease in confidence
b= adecrease in the rate of growth of national income
c_anincrease in the price of capital equipment
d_anincrease in the rate of interest

22 what is measured on the vertical axis of the phillips curve?
a the rate of change of real wages
b_ the rate of change of take-home pay
c the rate of inflation
d the rate of interest

23 south africa has attempted to improve the level of economic growth by attracting foreign direct
investment (fdi).
fdi gdp growth
3.50 4
% of 3.00 %of 3
gdp 2.50 gdp 2
2.00 i
1,50 4
1.00 _2
0.50 3
0 4
2008 2010 2012 2014 2016 2018 2008 2010 2012 2014 2016 2018
year year
what can be deduced from this diagram about the relationship between fdi and gdp growth
between 2008 and 2018?
a the relationship between level of fdi and gdp growth is generally weak.
b increases in fdi are in line with improvements in gdp growth.
c lowering fdi is linked to stable gdp growth.
d_ negative gdp growth is linked to a lack of inflows of fdi.

24 which change would be most likely to indicate that a country has experienced economic
development?
a anappreciation in the country’s currency
b animprovement in the average citizen’s quality of life
c  animprovement in the country’s trade balance
d_anincrease in the country’s real gdp

25 the table gives some economic indicators for four countries.
which country is closest to achieving the principal aims of government economic policy?
change in gdp | rate of inflation | unemployment halanowof
(%) (%) (%) payments
(% of gdp)
a 0.47 0.8 3.4 +3.3
b 1.13 0.9 10.5 -0.1
cc 1.18 1.1 6.9 -3.3
d 1.45 0.1 46 +8.5

26 what is a government macroeconomic aim?
a _afall in the general price level of goods and services
b_anincrease in monopoly regulation
c_ lower taxes on consumer goods
d = aminimum wage for low paid agricultural workers

27 which row correctly identifies the characteristics of a low-income economy?
dependency a 3 oy ’
: gini coefficient per capita
on the primary ;
value real income
sector
a high high high
b high high low
cc high low low
d low high low

28 what is the role of the international monetary fund (imf)?
a to advise countries that are experiencing trade disagreements
b_ to help charities providing emergency assistance to countries in need
c to offer short-term assistance to countries with balance of payments problems
d to provide interest-free credit to developing countries for infrastructure purposes

29 the diagram shows the international trading position of a country that had tariffs on imports. the
country removed the tariffs on imports.
price scomestic
$
pe z™~™~
pwet po swortd + tariff
pw * 4 ! : swortd no tariff
décmestic
fe) q, q, q,; q,
quantity
what was the quantity of imports into this country after the removal of the tariffs?
a qq: b q:q, c q:q3 d q;q,

30 under which circumstances will low wages and low-cost land in a low-income country not attract
foreign investment in manufacturing?
a __ if the country creates genuine independence for their central bank
b _ if the country embarks on a programme of privatisation
c _ if the country lacks well-developed infrastructure
d_ if the country permits repatriation of profits

Solve 9708_w23_qp_33