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1

A farmer pays a landowner for the use of a field. What is the income to the landowner called?

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

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2

What makes choice an important element in the basic economic problem?

1. The basic economic problem  →  1.1. The nature of the economic problem

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

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3

What is a factor of production?

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

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4

A government is faced with the choice of spending on either education or healthcare. Of what is this an example?

4. Government and the macroeconomy  →  4.3. Fiscal policy

1. The basic economic problem  →  1.3. Opportunity cost

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5

The diagram shows that when a tax of $2 on a good raises the supply curve from S1 to S2, the price to the consumer rises from $4 to $5. price $ quantity 75 100 D S1 S2 What is the total tax yield to the government?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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6

The diagram shows demand and supply curves for a product at its equilibrium price P. price P Q quantity O D1 D2 S2 S1 S D How would the introduction of a subsidy be shown...

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.5. Price determination

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7

Which statement could explain a decrease in the demand for natural rubber?

3. Microeconomic decision makers  →  3.6. Firms and production

2. The allocation of resources  →  2.3. Demand

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8

The table illustrates the demand and supply for rice in a market in Africa. price per kg ($) quantity demanded quantity supplied 10 When the price rises from $20 to $30 per kg, what is the approximate price elasticity of demand for rice?

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

2. The allocation of resources  →  2.7. Price elasticity of demand (PED)

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9

What might be a direct benefit to the individual worker of a specialised job?

6. International trade and globalisation  →  6.1. International specialisation

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10

A stock exchange is a market in which A a system of barter operates. B the interest rate is fixed. C the value of the exchange rate is determined. D shares are bought and sold.

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

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11

‘Savers suffer as inflation rises to 4.4 %.’ Which function of money is most involved in this statement?

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

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

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12

What is the most likely reason for a worker preferring to be employed by the government rather than by a firm in the private sector?

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

3. Microeconomic decision makers  →  3.3. Workers

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13

‘There are actors who earn extremely high incomes.’ What best explains this?

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14

The table shows a firm’s fixed and variable costs at four levels of output. output fixed costs ($) variable costs ($) At which level of output is average cost at its lowest?

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

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15

A milk processing company takes over a group of dairy farms before merging with a chain of supermarkets. Which types of integration have taken place?

3. Microeconomic decision makers  →  3.5. Firms

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16

What is usually an advantage of a small firm?

3. Microeconomic decision makers  →  3.5. Firms

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

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17

In 2008, XL, the UK’s third largest tour operator went out of business. What would have been the effect of this on the level of competition in the industry, the external economies of scale experienced by the remaining firms and the level of business confidence in the UK?

3. Microeconomic decision makers  →  3.5. Firms

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

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18

In 2008, the world’s largest metal mining company, BHP, increased its profits by 20 %. What could have helped that happen?

4. Government and the macroeconomy  →  4.6. Economic growth

3. Microeconomic decision makers  →  3.5. Firms

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19

In September 2008, the Chinese government increased the sales tax on cars with large engines whilst it reduced the sales tax on cars with small engines. Most cars in China with large engines are imported whilst most cars with small engines are home produced. Which effects would the changes in sales tax be expected to have on China’s trade surplus and the demand for home produced cars?

4. Government and the macroeconomy  →  4.3. Fiscal policy

2. The allocation of resources  →  2.6. Price changes

Open

20

Direct taxes can be used to A place the burden of tax on sellers not buyers. B protect domestic industries from foreign competition. C raise revenue without affecting the number of hours employees work. D redistribute incomes from rich to poor.

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.5. Supply-side policy

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21

Brazil is a highly taxed economy. Some Brazilian economists have suggested that if the government were to cut tax rates, the government would actually receive more tax revenue. Why may cutting taxes increase revenue?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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22

What is most likely to be the responsibility of a central government?

4. Government and the macroeconomy  →  4.1. The role of government

2. The allocation of resources  →  2.11. Mixed economic system

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23

In 2008, the US had a higher GDP per head than Iceland, but a lower Human Development Index ranking than Iceland. What could explain this difference?

5. Economic development  →  5.4. Differences in economic development between countries

5. Economic development  →  5.1. Living standards

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24

In Germany’s 2007 retail price index, transport received a higher weighting than clothing and footwear. What does this difference indicate?

2. The allocation of resources  →  2.6. Price changes

3. Microeconomic decision makers  →  3.3. Workers

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25

How is the pattern of employment likely to change when a country becomes more developed?

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

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26

What is most likely to indicate that an economy is developed rather than developing?

5. Economic development  →  5.4. Differences in economic development between countries

4. Government and the macroeconomy  →  4.6. Economic growth

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27

The table shows four countries in 2007. Which country is most likely to have the lowest standard of living?

5. Economic development  →  5.1. Living standards

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28

What will be the likely effect on the remaining population of a developing country when newly trained, skilled workers migrate to developed countries?

5. Economic development  →  5.3. Population

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29

What might cause the balance on the current account of Mauritius to improve?

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

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30

One argument for protectionism is to prevent dumping. What is meant by dumping?

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

Open