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1

Which statement about the factors of production is correct?

1. The basic economic problem  →  1.2. The factors of production

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2

A builder spends one hour travelling to and from work. He works 40 hours per week for $200. He is given a choice to work 50 hours a week for an extra $75. What would be the opportunity cost to the builder of working the extra hours?

1. The basic economic problem  →  1.3. Opportunity cost

3. Microeconomic decision makers  →  3.3. Workers

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3

A country’s infrastructure was damaged by a natural disaster. Before the disaster, the country was producing at point Y on the production possibility curve (PPC). Which point represents the country’s production immediately after the disaster?

1. The basic economic problem  →  1.4. Production possibility curve (PPC) diagrams

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4

What is included in microeconomics?

6. International trade and globalisation  →  6.4. Current account of balance of payments

4. Government and the macroeconomy  →  4.4. Monetary policy

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5

What is an economist’s definition of a market?

2. The allocation of resources  →  2.10. Market failure

2. The allocation of resources  →  2.2. The role of markets in allocating resources

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6

What is an example of an external benefit from an individual cycling, rather than driving, to work?

3. Microeconomic decision makers  →  3.3. Workers

3. Microeconomic decision makers  →  3.5. Firms

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7

A tailor has four customers for her range of suits. The table shows the yearly demand for the suits she makes. demand for suits suit price ($) customer R customer S customer T customer U Which price should be charged to maximise the tailor’s yearly revenue?

3. Microeconomic decision makers  →  3.7. Firms’ costs, revenue and objectives

2. The allocation of resources  →  2.6. Price changes

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8

In response to an increase in price from $5 per kilo to $6 per kilo, a farmer increased supply from 400 kilos to 500 kilos per week. What is the price elasticity of supply?

2. The allocation of resources  →  2.8. Price elasticity of supply (PES)

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9

It is expected that consumers will use less paper money. What is the most likely reason for this?

3. Microeconomic decision makers  →  3.1. Money and banking

4. Government and the macroeconomy  →  4.8. Inflation and deflation

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10

In low-income countries, fewer girls than boys become skilled design engineers. What might explain this situation?

3. Microeconomic decision makers  →  3.3. Workers

5. Economic development  →  5.1. Living standards

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11

The diagram shows the demand for and supply of labour in an industry. The original equilibrium is X. A trade union then negotiates a wage rate of W. wage rate ($) W O quantity of labour D S X R S T What identifies the change in employment?

3. Microeconomic decision makers  →  3.3. Workers

4. Government and the macroeconomy  →  4.7. Employment and unemployment

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12

A company mining cobalt, invests in machinery to replace some workers. Eventually diseconomies of scale occur. What could cause this situation?

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.7. Firms’ costs, revenue and objectives

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13

Why are many hairdressers able to operate as small businesses?

3. Microeconomic decision makers  →  3.5. Firms

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14

Dimitry owns a firm that produces and sells bottles of lemonade. He only sells one size of bottle. How would Dimitry calculate the total revenue of the firm?

3. Microeconomic decision makers  →  3.7. Firms’ costs, revenue and objectives

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15

Which market is likely to be the most competitive?

3. Microeconomic decision makers  →  3.8. Market structure

2. The allocation of resources  →  2.6. Price changes

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16

An economy has a high rate of inflation. In response to this, its government increases income tax. What is the most likely reason for this increase?

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.8. Inflation and deflation

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17

Interest rates are sometimes raised to control inflation. Why might this policy be effective?

4. Government and the macroeconomy  →  4.8. Inflation and deflation

4. Government and the macroeconomy  →  4.4. Monetary policy

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18

A government’s revenue grew 8% to $3.25 trillion. Its expenditure was reduced to $3.69 trillion. What can be concluded from this?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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19

A country’s inflation rate, measured by the Consumer Prices Index (CP, was 3% in year 1. Three years later it was 0.8%. What can be concluded from this information?

4. Government and the macroeconomy  →  4.8. Inflation and deflation

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20

What will deflation most likely lead to?

4. Government and the macroeconomy  →  4.8. Inflation and deflation

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21

Economic growth can be defined as A a reduction in a country’s rate of inflation. B an increase in a country’s exports. C an increase in a country’s population. D an increase in a country’s productive capacity.

4. Government and the macroeconomy  →  4.6. Economic growth

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22

The table compares the distribution of employment in selected industries in two years. industry employment in millions year 1 year 2 agriculture mining manufacturing retailing transport total How did the distribution of employment change between year 1 and year 2?

4. Government and the macroeconomy  →  4.7. Employment and unemployment

3. Microeconomic decision makers  →  3.3. Workers

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23

In a year, two changes occurred in a company. Company directors’ salaries increased by 15%. Office workers’ wages increased by 5%. The rate of inflation was 3.4%. What happened to real income?

4. Government and the macroeconomy  →  4.8. Inflation and deflation

3. Microeconomic decision makers  →  3.3. Workers

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24

The diagrams show birth rate (BR) and death rate (DR) in three countries, X, Y and Z, in two years, 1 and 2. There was no migration. BR and DR year X BR DR year Y BR DR year Z BR DR BR and DR BR and DR Where was there a rise in population in year 1 and a fall in population in year 2?

5. Economic development  →  5.3. Population

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25

The richest 60% of the population of a high-income economy received an increase in income. The income of the rest of the population did not change. What happened to absolute and relative poverty?

5. Economic development  →  5.2. Poverty

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26

Gross Domestic Product (GDP) is a better measure of comparative living standards when it is adjusted for the effects of A exports and inflation. B imports and exports. C population change and exports. D population change and inflation.

5. Economic development  →  5.1. Living standards

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27

What is a disadvantage of increasing international specialisation?

6. International trade and globalisation  →  6.1. International specialisation

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

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28

Which method of protection always reduces the supply of an imported good to zero?

6. International trade and globalisation  →  6.2. Globalisation, free trade and protection

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29

A US car dealer agrees an import price of US$25 000 for a Japanese car at the current rate of exchange. The US dollar then strengthens by 10% against the Japanese yen. What will be the new import price paid for the Japanese car?

6. International trade and globalisation  →  6.3. Foreign exchange rates

2. The allocation of resources  →  2.6. Price changes

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30

A country has a deficit on its current account of its balance of payments. What could increase the size of its deficit?

6. International trade and globalisation  →  6.4. Current account of balance of payments

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