economics

1. the diagram shows a total utility curve for a consumer.
at which point does marginal utility equal zero?
total c
utility
b
d
a quantity

2 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.

3a 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

4 the diagram shows a firm’s long-run average cost curve (lrac).
lrac
cost | x
y¥
ie) output
what could explain the shape of the curve from x to y?
a adecrease in total fixed cost
b increasing returns to scale
c internal diseconomies of scale
d_ more than one factor of production is variable

5 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 ar; and ac,.
price ac,
ac,
ac,
ar, ar, ar;
o quantity
what is the position of the average cost curve and the average revenue curve after the takeover?
average average
cost revenue
a ac, ar3
b ac2 ar
cc acz ar3
d ac3 arz2

6 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

7 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
$ srac,
lrac
oo esses eens omy
80 [see ee ;
| srac, srac,
| a en
o 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

8 whatis a characteristic of monopolistic competition?
a no barriers to entry
b__ identical products
c price takers
d_ small number of buyers and sellers

9 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

10 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?
| it
a different different
b different same
cc same different
d same same

11. which government policy would not be classified as regulation?
a abanon cocaine consumption
b_ compulsory wearing of seatbelts in cars
c licences for the extraction of water from rivers
d taxation of cigarettes

12 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.

13 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 adecrease in the supply of labour
b  adecrease in the interest rate
c_anincrease in productivity
d_anincrease in the size of the labour force

14 the table shows the output of chairs at a factory when different numbers of workers are
employed.
frumberofwoies | o | 1] 2 [sia] s |
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

15 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 mrp, to mrp».
wages
| | \\ \mrp,
| | \smrp2
mek
ie) li le be
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 lz.
bit increases from l; to lo.
cit increases from lz to l3.
d_ it remains the same at l;.

16 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.

17 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.

18 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

19 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.

20 the table shows data about the population of a country.
total population 2000 000
labour force 1200000
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%

21 what is not an aim of macroeconomic policy?
a economic development
b_ exchange rate stability
c_ pareto optimality
d _ satisfactory balance of payments

22 the diagram shows an increase in aggregate demand (ad) from ad, to ad2.
lras
price sras
level
ad2
ad,
ie) 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
%
j k
short-run phillips curve 2
f
short-run phillips curve 1
h g
short-run phillips curve 3
oo 9
unemployment rate %
a ftogtoh
b ftogtok
c ftojtoh
d ftojtok

23 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

24 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

25 which policy to reduce a current account deficit on the balance of payments could be described
as an expenditure-switching policy?
a adecrease in government spending
b adecrease in the exchange rate of the country’s currency
c_anincrease in domestic income taxes
d_anincrease in domestic interest rates

26 which components are included in the financial account of the balance of payments?
[eset | a
investment and dividends
a v x key
b x x jv = included
cc v v x = not included
d x v

27 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.

28 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_sgrants 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

29 what is most likely to cause the living standards of a country to rise?
a_anincrease in the number of doctors
b_anincrease in the gold reserves
c_anincrease in the number of people per house
d_anincrease in the money supply

30 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

cc 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

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