9708_w10_qp_12
A paper of Economics, 9708
Questions:
30
Year:
2010
Paper:
1
Variant:
2
Login to start this paper & get access to powerful tools
6
The diagram shows a consumer’s short-run and long-run demand curves for coconuts. Initially, the consumer purchases quantity Q0 at price P0. price quantity O V X Y W Z P0 Q0 If the price of coconuts increases from P0, the consumer’s short-run response is greater than his long-run response. If the price decreases from P0 his short-run response is smaller than his long- run response. What is the consumer’s short-run demand curve?
4. The Macroeconomy (AS Level)  →  4.3. Aggregate Demand and Aggregate Supply analysis
2. The price system and the microeconomy (AS Level)  →  2.1. Demand and supply curves
Open
10
Domino Pizza, the largest US pizza chain, said that its profits had been reduced by price inflation on ingredients and by a reduction in consumers’ disposable income. How would these changes affect the demand and supply curve for its products?
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
4. The Macroeconomy (AS Level)  →  4.3. Aggregate Demand and Aggregate Supply analysis
Open
13
In the diagram OS1 and OS2 are two straight-line supply curves. price O quantity S1 S2 As price increases, the elasticity of supply A decreases along both OS1 and OS2. B increases less rapidly along OS1 than along OS2. C increases more rapidly along OS1 than along OS2. D is constant along both OS1 and OS2.
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
In the diagram, S1S1 and DD represent the original supply and demand curves for an agricultural product. price quantity O S1 S2 P1 D Q1 Q2 Q3 S2 S1 D Bad weather then reduces supply to S2S2. The government does not allow the price to rise above OP1. How much of the product will the government have to supply from stocks if the price is to be maintained at OP1?
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
24
The table shows the percentage price changes in some items in the UK Consumer Price Index (CPin the year to 1 June 2006. item % change in price rents, electricity and gas 9.0 education 4.7 transport 4.0 restaurants and hotels 3.2 health services 2.9 The increase in the overall CPI over the same period was 2.5 %. What can be concluded from the data above?
4. The Macroeconomy (AS Level)  →  4.6. Price stability
2. The price system and the microeconomy (AS Level)  →  2.3. Price elasticity of supply
2. The price system and the microeconomy (AS Level)  →  2.2. Price elasticity, income elasticity and cross elasticity of demand
Open
25
In Year 1 the price of a barrel of oil increased from $60 to $110. In Year 2 there was a further increase to $115 a barrel. Assume that oil price changes have an immediate impact on the general level of prices. What will be the effect of the changes in the oil price on a country’s Consumer Price Index and on its inflation rate in Year 2 compared with Year 1?
5. Government macroeconomic intervention (AS Level)  →  5.3. Monetary policy
4. The Macroeconomy (AS Level)  →  4.6. Price stability
6. International economic issues (AS Level)  →  6.4. Exchange rates
Open
28
In a country the Marshall-Lerner condition for an improvement in the trade balance is satisfied in the long run, but quantities of imports and exports are slow to respond to price changes. The government devalues its currency to reduce its trade deficit. Which curve indicates the probable behaviour of the trade balance?
11. International economic issues (A Level)  →  11.2. Exchange rates
11. International economic issues (A Level)  →  11.1. Policies to correct disequilibrium in the balance of payments
6. International economic issues (AS Level)  →  6.1. The reasons for international trade
Open
29
Assume the Chinese monetary authorities are committed to maintaining the exchange rate of China’s currency the Yuan against the US$ between P1 and P2 on the diagram. price of Yuan (in US $) quantity of Yuan D1 D2 S P2 P1 O What might they do if demand changed from D1 to D2?
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
30
Copyright Acknowledgements: Question 27 © The Economist Newspaper Limited, London (2004) 30 In 2008 the Chinese government was under pressure from other countries to reduce its current account surplus on its balance of payments. Which combination of Chinese measures would help to reduce China’s current account surplus?
6. International economic issues (AS Level)  →  6.5. Policies to correct imbalances in the current account of the balance of payments
6. International economic issues (AS Level)  →  6.3. Current account of the balance of payments
Open