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1

What is not a factor of production?

1. Basic economic ideas and resource allocation (AS Level)  →  1.3. Factors of production

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2

Two workers, George and Zaheer, can produce the following amounts in one working day if they concentrate on producing only one of the products. units of food units of clothing pairs of shoes George or or Zaheer or or First they decide to produce for themselves the 6 units of food they need to survive. Then they specialise in the product at which they are relatively efficient. What will be the total output of clothing and shoes, in addition to the 12 units of food, that is produced in one working day?

1. Basic economic ideas and resource allocation (AS Level)  →  1.3. Factors of production

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

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3

A centrally planned economy introduces a significant role for free market forces in determining how its economic resources are allocated. What is most likely to occur in the short run?

5. Government macroeconomic intervention (AS Level)  →  5.4. Supply-side policy

5. Government macroeconomic intervention (AS Level)  →  5.2. Fiscal policy

5. Government macroeconomic intervention (AS Level)  →  5.3. Monetary policy

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4

In recent years there was an extremely rapid inflation rate in Zimbabwe. Which two functions of money might the Zimbabwe dollar have still performed during this hyperinflation?

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

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

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5

The diagram shows the demand for telephone calls in four countries in 2004 and 2009. France Germany Spain Japan fixed line mobile telephone calls minutes per month Which statement about the demand for telephone calls is correct?

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

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6

There are three firms (X, Y and Z) supplying a market. The table shows their supply at four different prices. price ($) firm X’s supply firm Y’s supply firm Z’s supply Which price change is required for market supply to double?

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

Open

7

The price elasticity of demand for a product is constant and equal to unity. Which curve in the diagram shows the relationship between total expenditure on the product and its price?

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

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8

The price of good X rises by 20 %. As a result, the demand for a substitute good Y rises by 10 %. What is the cross-elasticity of demand for good Y with respect to good X?

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

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9

A car rental firm rents out the cars in its fleet on weekdays to business users and at weekends to tourists. What is likely to result from an increase in the demand by tourists for car rentals?

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

7. The price system and the microeconomy (A Level)  →  7.8. Differing objectives and policies of firms

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10

The table shows the demand and supply schedules for a good before and after the imposition of a tax. price ($) quantity demanded quantity supplied before tax quantity supplied after tax What was the amount of the tax revenue raised for the government?

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

11

Oranges and apples are substitutes. The diagram shows the equilibrium position in the market for oranges at X. Weather conditions reduce the number of oranges grown but increase the number of apples grown. Which point is likely to indicate the new equilibrium for oranges?

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

12

A consumer saved $700 and preferred to spend the money on a new television rather than a new washing machine. When she went to the shop she discovered that the television cost $500 and the washing machine cost $400. She bought the television. What was the consumer surplus and the opportunity cost?

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

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13

What is generally considered to be one of the advantages of using the price mechanism as a rationing device?

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

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

7. The price system and the microeconomy (A Level)  →  7.8. Differing objectives and policies of firms

Open

14

A government is planning to intervene in a free market to fix output at the currently economically desirable level. MSB MPB MSC = MPC R W Y X S T costs/ benefits O output To achieve its objective, what should the government introduce?

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

15

What does a government compare when carrying out a cost-benefit analysis of a project?

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 the defining characteristic of a private good?

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

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

Open

17

Which pair of government actions are intended to directly benefit suppliers?

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

Open

18

The diagram shows the imposition of a maximum price (OM) on a product. price S R M O X Y T U V W S D quantity An organisation buys up the total supply at the maximum price and then resells it illegally to gain maximum revenue. What is the organisation’s revenue?

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

7. The price system and the microeconomy (A Level)  →  7.8. Differing objectives and policies of firms

Open

19

Which two groups within a country are likely to benefit from the introduction of tariffs?

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

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

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

Open

20

What will cause a deterioration in a country’s terms of trade?

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

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

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

Open

21

The graphs show the production possibilities for commodities X and Y in two countries M and N. Y X country M Y X country N What will be the effect of an agreement between M and N to exchange the commodities at a rate of 1Y for 3X?

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

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

Open

22

What is not an item in a country’s current account of its balance of payments?

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

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23

In the diagram, AD1 is an economy’s initial aggregate demand curve. O general price level real output AD1 AD2 What could cause the curve to shift to AD2?

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

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24

A country has a population of 100 million. 5 million people are unemployed and the country has an unemployment rate of 10%. What is the size of the labour force?

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

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25

The graph shows the annual percentage change in the prices of services and in the prices of goods between 2007 and 2012. –2 –4 % annual price change services goods What can be deduced from the graph?

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

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

Open

26

What combination is most likely to cause a surplus in a country’s trade in goods and services?

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

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

Open

27

With an exchange rate of 30 Thai baht to $US1 an American export sells in Thailand for 150 baht. What change in the exchange rate of the baht would cause the export to sell for 165 baht?

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

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

Open

28

The diagram shows demand and supply curves of the £ sterling against the US dollar. S S D1 D2 price of £ sterling in US dollars O quantity of £s What is likely to cause a shift in the demand curve from D1 to D2?

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

29

According to the Purchasing Power Parity theory, what determines the rate of exchange between two countries?

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

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

Open

30

What is most likely to immediately reduce the deficit on the current account of a country’s balance of payments?

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

6. International economic issues (AS Level)  →  6.5. Policies to correct imbalances in the current account of the balance of payments

Open