---

---

1

Why are there no markets for free goods?

1. Basic economic ideas and resource allocation (AS Level)  →  1.6. Classification of goods and services

3. Government microeconomic intervention (AS Level)  →  3.1. Reasons for government intervention in markets

Open

2

What is present in a mixed economy but not in a planned economy?

1. Basic economic ideas and resource allocation (AS Level)  →  1.4. Resource allocation in different economic systems

4. The Macroeconomy (AS Level)  →  4.2. Introduction to the circular flow of income

2. The price system and the microeconomy (AS Level)  →  2.5. Consumer and producer surplus

Open

3

In economics a statement is positive if A it assumes current economic conditions remain unchanged. B it concerns the factual outcomes of an economic action. C it examines the desirability of government economic policy. D it is based upon the opinion of an economic adviser.

4. The Macroeconomy (AS Level)  →  4.4. Economic growth

1. Basic economic ideas and resource allocation (AS Level)  →  1.2. Economic methodology

Open

4

Which characteristic of money is essential, if it is to be used as a medium of exchange?

9. The macroeconomy (A Level)  →  9.4. Money and banking

Open

5

The market demand for a product is made up of the demand from three firms, X, Y and Z. The table shows the demand from each firm and the market supply. price $ demand from X demand from Y demand from Z market supply 10 000 What is the equilibrium price in the market?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

Open

6

The diagram shows the demand curve for good X. quantity price M D N O What could cause a movement along the curve from M to N?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

Open

7

From the table below, in which price range is demand for product X inelastic?

2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply

Open

8

Product R is an inferior good with no close substitutes. It is also a complement to product S. Which describes product R?

2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

Open

9

A firm publishes and sells books. The diagram shows a shift in the firm’s supply curve from S1 to S2. price of books quantity of books S1 S2 O What would have caused this shift in the firm’s supply curve?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

4. The Macroeconomy (AS Level)  →  4.3. Aggregate Demand and Aggregate Supply analysis

Open

10

A product has a low price elasticity of supply. What might explain this?

2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply

Open

11

In the diagram, S1 and D1 are the initial supply and demand curves for tea and X is the original equilibrium. There is then a failure in the coffee harvest of a major coffee producer. Which point would represent the equilibrium position in the tea market as a result of this failure?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

Open

12

The diagram shows a market subject to a maximum price. S P D maximum price Q1 Q Q2 O quantity price What will happen if the maximum price is removed?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

3. Government microeconomic intervention (AS Level)  →  3.2. Methods and effects of government intervention in markets

Open

13

What is not correct when price acts as a means to allocate resources?

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

1. Basic economic ideas and resource allocation (AS Level)  →  1.1. Scarcity, choice and opportunity cost

2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply

Open

14

What is an external cost of building new houses in a city centre?

7. The price system and the microeconomy (A Level)  →  7.4. Private costs and benefits, externalities and social costs and benefits

1. Basic economic ideas and resource allocation (AS Level)  →  1.1. Scarcity, choice and opportunity cost

Open

15

What is an advantage of using cost-benefit analysis in decision-making rather than using only private costs and private benefits?

7. The price system and the microeconomy (A Level)  →  7.4. Private costs and benefits, externalities and social costs and benefits

Open

16

What is an essential characteristic of a private good?

3. Government microeconomic intervention (AS Level)  →  3.1. Reasons for government intervention in markets

7. The price system and the microeconomy (A Level)  →  7.4. Private costs and benefits, externalities and social costs and benefits

1. Basic economic ideas and resource allocation (AS Level)  →  1.6. Classification of goods and services

Open

17

The diagram shows the market demand and supply curves for an agricultural product. The government allows the price paid by consumers to be determined by the market, but guarantees producers a price of OP2. O quantity price supply P2 P1 demand x y z w Which area in the diagram represents the total subsidy payments made by the government to producers?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

Open

18

A government intends to introduce a minimum price for rice, a maximum price for heating oil and a tax on chewing gum. Who, in each market, is meant to benefit from these policies?

3. Government microeconomic intervention (AS Level)  →  3.1. Reasons for government intervention in markets

3. Government microeconomic intervention (AS Level)  →  3.2. Methods and effects of government intervention in markets

Open

19

The table shows the output per unit of input of two goods, X and Y, in two countries, 1 and 2. output of X per unit of input output of Y per unit of input Country 1 Country 2 Which statement about the data in the table is correct?

6. International economic issues (AS Level)  →  6.1. The reasons for international trade

2. The price system and the microeconomy (AS Level)  →  2.5. Consumer and producer surplus

Open

20

What would reduce an economy’s protection against the import of cars?

6. International economic issues (AS Level)  →  6.4. Exchange rates

11. International economic issues (A Level)  →  11.2. Exchange rates

6. International economic issues (AS Level)  →  6.2. Protectionism

Open

21

A country’s terms of trade index currently stands at 120 (base year 2000). Since 2000, the average price of its imports has increased by 25 %. What has been the change in the average price the country has received for its exports over this period?

6. International economic issues (AS Level)  →  6.1. The reasons for international trade

6. International economic issues (AS Level)  →  6.4. Exchange rates

2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand

Open

22

The diagram shows the UK trade balance with China and Japan in 2003 and 2004. £ billion imports from Japan imports from China exports to Japan exports to China How did the trade balance of the UK change between the start of 2003 and the end of 2004?

6. International economic issues (AS Level)  →  6.3. Current account of the balance of payments

6. International economic issues (AS Level)  →  6.1. The reasons for international trade

Open

23

The data in the table are taken from a country’s labour market statistics. millions adult population number of persons in employment number of persons unemployed What is the unemployment rate and the participation rate?

4. The Macroeconomy (AS Level)  →  4.5. Unemployment

9. The macroeconomy (A Level)  →  9.3. Employment/unemployment

Open

24

The diagram shows rates of inflation as measured by the Consumer Price Index (CPbetween 1997 and 2004. 1997 1998 1999 2000 2001 2002 2003 2004 –1 –2 –3 –4 –5 services and goods CPI inflation % year on year services goods Which conclusion can be drawn from this data?

10. Government macroeconomic intervention (A Level)  →  10.2. Links between macroeconomic problems and their interrelatedness

4. The Macroeconomy (AS Level)  →  4.1. National income statistics

2. The price system and the microeconomy (AS Level)  →  2.5. Consumer and producer surplus

Open

25

The table shows a country’s rate of inflation for four years. year rate of inflation % 4.0 3.0 2.5 2.0 What fell between 2000 and 2003?

4. The Macroeconomy (AS Level)  →  4.6. Price stability

10. Government macroeconomic intervention (A Level)  →  10.2. Links between macroeconomic problems and their interrelatedness

Open

26

What is not a possible cause of cost-push inflation?

4. The Macroeconomy (AS Level)  →  4.6. Price stability

8. Government microeconomic intervention (A Level)  →  8.3. Labour market forces and government intervention

Open

27

The table shows items from the balance of payments for countries A, B, C and D. Official Financing is excluded from the Financial Account. Which country has the greatest disequilibrium on its balance of payments?

11. International economic issues (A Level)  →  11.1. Policies to correct disequilibrium in the balance of payments

6. International economic issues (AS Level)  →  6.3. Current account of the balance of payments

Open

28

Turkey can produce a good but also imports some of the good from Egypt. The Turkish currency depreciates against the Egyptian currency. How might this affect production of this good in Egypt and in Turkey?

6. International economic issues (AS Level)  →  6.4. Exchange rates

11. International economic issues (A Level)  →  11.2. Exchange rates

Open

29

The diagram shows the supply and demand for pounds sterling (£) in the foreign exchange market with the initial US dollar ($) price of the £ being OP1. S D2 D1 Q1 Q2 P2 P1 O $ price of £ quantity of £s What will increase the $ price of the £ to OP2?

2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves

2. The price system and the microeconomy (AS Level)  →  2.4. The interaction of demand and supply

Open

30

In which of the following circumstances will devaluation of the external value of a country’s currency have the greatest beneficial effects on its balance of trade?

6. International economic issues (AS Level)  →  6.4. Exchange rates

11. International economic issues (A Level)  →  11.2. Exchange rates

11. International economic issues (A Level)  →  11.1. Policies to correct disequilibrium in the balance of payments

Open