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1

The following are four ways factors of production are used. What is likely to require the greatest use of the factor enterprise?

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

3. Microeconomic decision makers  →  3.6. Firms and production

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2

To help reduce the price of oil, new supplies are needed. However, in 2013, objectors opposed attempts to explore new sites because of the environmental damage the exploration might cause. How does this illustrate 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

With a given level of resources, an economy that can produce food or computers is at point Q on its production possibility curve. Population growth means more resources need to be allocated to food production. At which point in the short term will the economy be in the diagram?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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4

A person makes sandwiches at home for five hours each day. She makes 20 sandwiches per hour, and she sells each sandwich for $2 each. What is the opportunity cost if she takes a holiday on a working day?

1. The basic economic problem  →  1.3. Opportunity cost

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5

What can be found in a mixed economy but not in a market economy?

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

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

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6

Newspapers recently reported there had been a decrease in the demand for beef and that its price per kilogram had increased. From the initial equilibrium point X, which point in the diagram illustrates the new market equilibrium?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.5. Price determination

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7

The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. A new type of fishing boat increases production, which reduces costs. Which point represents the new equilibrium?

2. The allocation of resources  →  2.6. Price changes

2. The allocation of resources  →  2.5. Price determination

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8

A large supermarket applied to build on land which was in an area of natural beauty. The local government allowed the building, even though the natural beauty of the area would be lost, because many jobs would be created and much needed income would be brought to the local community. Which economic ideas cannot be found in the above statement?

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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9

Cigarettes have been used as money in exceptional circumstances. What is the most likely reason that they are not acceptable as money in normal circumstances?

3. Microeconomic decision makers  →  3.1. Money and banking

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10

The table shows a country’s trade union membership in millions between 2008 and 2011. year trade union members in the private sector trade union members in the public sector 8.4 3.6 6.6 4.2 5.1 6.0 3.4 7.1 What can be concluded about the country’s trade union membership in the period 2008 to 2011?

3. Microeconomic decision makers  →  3.4. Trade unions

3. Microeconomic decision makers  →  3.3. Workers

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11

A bus driver works longer hours if the wage rate increases. As his earnings increase there reaches a point when he prefers more leisure to work. Which supply curve, S, represents this situation?

3. Microeconomic decision makers  →  3.3. Workers

2. The allocation of resources  →  2.4. Supply

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12

In 2013, a German company that manufactured medicines bought a UK company that ran a chain of pharmacies that sold medicines. What term best describes this takeover?

3. Microeconomic decision makers  →  3.5. Firms

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13

When is a firm considered more capital-intensive than another firm?

3. Microeconomic decision makers  →  3.6. Firms and production

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

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14

In 2009, Gulf Airlines, which was making a loss, stated it would reduce the number of new aircraft on order. If it did this, which of its costs would be directly affected?

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

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15

The diagram shows the costs of a firm. output cost ($ 000s) What is the firm's total variable cost at an output of 100 units?

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

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

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16

A government lowers the rate of interest. Who is most likely to be disadvantaged by this policy?

3. Microeconomic decision makers  →  3.2. Households

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

4. Government and the macroeconomy  →  4.4. Monetary policy

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17

Which is a supply-side policy that would increase output in the long-run?

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

4. Government and the macroeconomy  →  4.6. Economic growth

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18

Russia exports wheat. In 2010, a bad harvest led the Russian government to prevent the export of wheat, to ensure enough supplies were kept for domestic use. What was the most likely outcome of the government’s action?

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

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

3. Microeconomic decision makers  →  3.6. Firms and production

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19

The government reduces the rate of income tax and increases the rate of tax on producers. From the initial equilibrium point X, which letter indicates the new equilibrium point in the market?

2. The allocation of resources  →  2.6. Price changes

4. Government and the macroeconomy  →  4.3. Fiscal policy

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

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20

What is most likely to cause economic growth?

4. Government and the macroeconomy  →  4.6. Economic growth

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21

A worker earns $250 each week, which leaves a disposable income of $175. What will affect the real value of the worker’s $250 earned income?

3. Microeconomic decision makers  →  3.3. Workers

3. Microeconomic decision makers  →  3.2. Households

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22

The table shows the unemployment rate in three developed economies in June 2013. % United States 7.6 Sweden 8.2 France 10.9 What is the main cause of high rates of unemployment in developed economies in periods of recession?

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

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23

From 2012 to 2013, European economies experienced weak economic growth. Based on the information on GDP, industrial production and unemployment in the table, which economy performed worst?

4. Government and the macroeconomy  →  4.6. Economic growth

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

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24

What is not a reason why the average size of families is likely to be greater in developing countries than in developed countries?

5. Economic development  →  5.3. Population

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

5. Economic development  →  5.1. Living standards

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25

The table shows the proportion of GDP produced by each sector of production in three fictitious countries. Farland (% of GDP) Highland (% of GDP) Lowland (% of GDP) primary sector secondary sector tertiary sector What can be concluded from the table?

3. Microeconomic decision makers  →  3.5. Firms

5. Economic development  →  5.1. Living standards

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

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26

In rural areas in developing countries, farmers grow food for their own consumption. Why might this mean that the GDP is a weak measure of the standard of living in those countries?

5. Economic development  →  5.1. Living standards

4. Government and the macroeconomy  →  4.6. Economic growth

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27

The charts show the population structure of a country in 1960 and 2010. 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 age millions male female 85+ 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 age millions male female During this period, how did birth and death rates change?

5. Economic development  →  5.3. Population

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28

What is an advantage of 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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29

Skin creams preventing sunburn made in the European Union (EU) are more effective than those made in the United States (US). US tourists stock up on the creams when visiting Europe. Such creams are banned from production in the US because of the chemicals in them. In 2013, negotiations began to remove this ban in order to allow production in the US. How is this freer trade likely to affect manufacturers of skin creams in the US and the EU?

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

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30

The table shows the trade in goods balance and the current account balance of the balance of payments for four countries during a year. Which country had the largest surplus on its trade in services, assuming no other transfers or income flows?

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

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