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1

Each of the factors of production earns an income. What are the incomes for land and capital?

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

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2

A firm decides to stop manufacturing ovens and to produce washing machines instead. What is the opportunity cost to the firm?

1. The basic economic problem  →  1.3. Opportunity cost

3. Microeconomic decision makers  →  3.6. Firms and production

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3

The table shows how employment in selected industries changed in a country between 2000 and 2010. year 2000 (thousands employed) year 2010 (thousands employed) extraction of minerals manufacturing banking and finance distribution and catering Which statement about these industries during this period is correct?

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

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.3. Workers

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4

What is an advantage of the market economic system?

2. The allocation of resources  →  2.9. Market economic system

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

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5

What is meant by the 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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6

The table shows the changes in two influences on the demand for and supply of televisions. If these two changes occurred at the same time, in which case is it impossible for the price of televisions to rise?

2. The allocation of resources  →  2.6. Price changes

3. Microeconomic decision makers  →  3.6. Firms and production

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7

In a country where the demand for petrol is price-inelastic, the incidence of any increase in petrol tax will be mainly on A the company that refines the oil. B the motorist who buys the petrol. C the petrol station that sells the petrol. D the wholesale company that stores the petrol.

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

4. Government and the macroeconomy  →  4.3. Fiscal policy

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8

What is an example of market failure?

2. The allocation of resources  →  2.10. Market failure

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9

Which action by the operators of an airport directly reduces external costs?

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

3. Microeconomic decision makers  →  3.6. Firms and production

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10

Due to changes in the costs of production, an industry’s supply curve shifted at various times from S1 to either S2 or S3. S2 D1 S1 S3 D2 w x y O price quantity If a shift in supply was due to a seasonal increase in the cost of raw materials, what would have been the effect on demand?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.4. Supply

2. The allocation of resources  →  2.3. Demand

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11

Which pair of economic institutions can be found in a market economy?

3. Microeconomic decision makers  →  3.1. Money and banking

3. Microeconomic decision makers  →  3.5. Firms

2. The allocation of resources  →  2.9. Market economic system

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12

A person wishes to buy shares in order to make a long-term profit, but wants as little risk of short-term loss as possible. Which type of share is most likely to meet these wishes?

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

3. Microeconomic decision makers  →  3.5. Firms

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13

Which statement about a country’s banks is correct?

3. Microeconomic decision makers  →  3.1. Money and banking

4. Government and the macroeconomy  →  4.4. Monetary policy

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14

Why might factory workers have higher wage rates than agricultural workers?

3. Microeconomic decision makers  →  3.3. Workers

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15

What is the main purpose of a trade union?

3. Microeconomic decision makers  →  3.4. Trade unions

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

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16

A musician has a choice of playing for an orchestra in either England or Germany. Which combination of incomes and cost of living is most likely to cause her to choose the German orchestra?

5. Economic development  →  5.1. Living standards

3. Microeconomic decision makers  →  3.3. Workers

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17

What may cause an individual to save a higher proportion of their income?

3. Microeconomic decision makers  →  3.2. Households

2. The allocation of resources  →  2.3. Demand

2. The allocation of resources  →  2.10. Market failure

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18

A firm raised the price of its product from $10 to $15 and as a result its sales fell from 200 units to 150 units. What happened to its average revenue and total 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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19

Which change must occur when a firm starts to experience diseconomies of scale?

3. Microeconomic decision makers  →  3.5. Firms

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

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20

If a firm increases its output in the short run, what will happen to its average fixed cost (AFC)?

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

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21

Cathay Pacific, Hong Kong’s largest airline, flies to a number of countries. Shares in the firm are owned by both individuals and other firms in a number of countries. The shares are traded on the Hong Kong Stock Exchange. Which type of business organisation is Cathay Pacific?

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.8. Market structure

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22

A major computer company announced that its profits had fallen below the level predicted. What might have caused this?

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

2. The allocation of resources  →  2.6. Price changes

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23

What is an advantage of small-scale production?

3. Microeconomic decision makers  →  3.5. Firms

3. Microeconomic decision makers  →  3.6. Firms and production

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24

When is a direct tax described as progressive?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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25

In 2008, the government of Argentina imposed a tax on exports of wheat and soya beans. What was the most likely aim of this tax?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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26

A government gives farmers a subsidy of $5 per kilo to supply food on the open market where X is the equilibrium position. The effect is illustrated in the diagram below. S3 S1 D1 S2 quantity supplied (’000 kilos) price ($ per kilo) X What will be the new equilibrium price and quantity supplied as a result of the subsidy?

2. The allocation of resources  →  2.6. Price changes

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

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27

During 2009 some governments adopted policies to try to end the recession in their country and increase economic growth. Which combination of policies is most likely to achieve this?

4. Government and the macroeconomy  →  4.3. Fiscal policy

4. Government and the macroeconomy  →  4.6. Economic growth

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28

The central bank of Mexico set its rate of interest to try to keep the rise in the price level to only 3 %. Which government aim was it directly trying to achieve?

4. Government and the macroeconomy  →  4.2. The macroeconomic aims of government

4. Government and the macroeconomy  →  4.4. Monetary policy

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29

Which statement is most likely to be correct?

4. Government and the macroeconomy  →  4.3. Fiscal policy

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30

Which type of unemployment is generally regarded by economists as the least serious for the economy?

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

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31

Which people are most likely to gain at a time of inflation?

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

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32

Why may GDP not be a good measure to compare the standard of living of two countries?

5. Economic development  →  5.1. Living standards

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33

The table shows the percentage change in employment over a period for a country with three economic sectors. economic sector percentage (%) change in employment agriculture –6 manufacturing +2 services +4 Which statement must be correct?

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

3. Microeconomic decision makers  →  3.5. Firms

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34

Many developed countries are faced with an ageing population. What is the likely result of this?

5. Economic development  →  5.3. Population

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35

The table shows statistics for four countries in southern Africa. From the information given, which country has the lowest standard of living?

5. Economic development  →  5.1. Living standards

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36

Net migration is the difference in a particular year between A the birth rate and the death rate. B the number of people entering and leaving a country looking for temporary work. C the number of people entering and leaving a country on a permanent basis. D the number of tourists coming to and going from a country.

5. Economic development  →  5.3. Population

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

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37

What is likely to happen as a developing country becomes more developed?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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38

A government may use customs barriers to restrict free trade. What is an economic reason for doing this?

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

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39

Which item would appear as a credit item in Pakistan’s current account of the balance of payments?

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

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40

The diagrams show the composition of exports and imports of a country. goods 50 % services 50 % total exports $120 million goods 60 % services 40 % total imports $100 million Exports Imports What is true for this country?

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

2. The allocation of resources  →  2.10. Market failure

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