economics

1 in which situation are there definitely positive externalities?
a private benefits exceed private costs.
b_ private benefits exceed social benefits.
c_ social benefits exceed private benefits.
d_ social benefits exceed private costs.

2  acost-benefit analysis is carried out on the construction of a hydroelectric power station.
which combination of circumstances would be most likely to lead to the scheme being approved?
a _ private benefits are greater than private costs.
b_ social benefits are greater than social costs.
c_ social benefits are greater than total costs.
d_ total costs are greater than total revenue.

3 what does not pose a threat to the achievement of allocative efficiency?
a _ imperfect information on the part of consumers
b_ income inequalities
c_ the existence of externalities
d_ the presence of monopolistic elements

4 the diagram shows budget lines and an indifference curve. the consumer’s initial position is t.
the price of good x then falls.
jood y
a j
p
or
os ss
: se
oo k l
good x

which combination of statements about the movements in this diagram is correct?
a_ t to q represents perfect elasticity; t to p represents a giffen good
bt tor represents an income effect; r to s represents a substitution effect
c_ t to u represents a substitution effect; t to q represents a normal good
dt to urepresents a substitution effect; u to p represents an income effect

¥3 the diagram shows various combinations of apples and rice wnicn are potentially available to a
consumer.
apples
x
e
zz.
e
ww
°
ce
o rice
if standard indifference curves were added to the diagram they would show that the consumer is
indifferent between combination x and combination w.
what can be concluded?
a the consumer is indifferent between combination y and combination z.
b_ the consumer is indifferent between combination z and combination w.
c the consumer prefers combination y to combination x.
d the consumer prefers combination z to combination w.

6 the schedule shows the short-run marginal cost of producing good x.
marginal cost (8)
given that the total fixed cost is $50, which level of output minimises average total cost?
a 2units b 3 units c 4units d  5units

9 technological change reduces the minimum efficient scale of production in an industry.
what is likely to result?
a__ increased number of firms and increased size of firms
b_ increased number of firms and reduced size of firms
c_ reduced number of firms and increased size of firms
d_ reduced number of firms and reduced size of firms

10 the diagram shows the costs and revenue for a firm in imperfect competition.
which level of output would produce only a normal profit?
$ mc
ac
7
pi ar
oo a bcd .
\ quantity
mr

11 what would be a reason why small firms do not survive?
a incertain industries, there are economies of scale.
b_ small firms often supply personal services to consumers.
c_ small firms often supply products, the size of the market for which is limited.
d small owner-managed firms involve less risk.

12 what is the implication of a dominant oligopoly following a limit pricing policy?
a the industry will be restricted to a target number of firms.
b_ the industry will contract as rival oligopolists are eliminated.
c_ the oligopolist will achieve a satisficing level of profit.
d_ the oligopolist will sacrifice short-term profit for long-term profit.

13 transport economists estimate the price elasticity of demand for private car use is very low.
what would be the most effective way of reducing road traffic congestion?
a banning private cars and lorries from town centres
b _ introducing a subsidy to lower the price of using bicycles
c introducing road pricing on all main roads
d _ subsidising public transport such as trains and buses

14 what would help to explain why there was a reduction in wage inequality in a country during the
post-2008 economic recession?
a adecline in the share of wages in national output
badecline in trade union bargaining power
c_ the existence of a minimum wage
d_ the trend towards later retirement

15 how is marginal revenue product calculated?
a_ marginal physical product x marginal revenue
b- marginal physical product + price
c total physical product x marginal cost
d total physical product + marginal cost

16 a firm currently employs 30 workers at a daily wage of $50 each.
the marginal cost of employing one extra worker is $112 per day.
by how much will the firm have to increase the daily wage in order to increase its labour force
from 30 to 31 workers?
a $2 b $4 c $62 d $112

17 in the diagram, hn is the initial supply of labour curve faced by a firm, and rm is its initial
marginal cost of labour curve.
wage, m n
cost of
labour
www j is x
r
h
oo .
quantity
of labour
what will be the firm’s new labour supply curve if the workers join a trade union and achieve a
union negotiated wage, ow?
a rjx b hkx cc wjm d wkn

18 output per worker in an industry increases more slowly than the industry’s total output.
what could explain this?
a adecrease in labour productivity
b_anincrease in employment
c_anincrease in overtime working
d_anincrease in the hourly wage rate

19 on a diagram showing a production possibility curve, what definitely represents long-run
economic growth?
a achange in the slope of the curve
b  amovement from a point below the frontier to a point on the curve
c amovement from one point to another along a given curve
dan outward shift of the curve

20 when is economic growth most likely to promote economic development?
a. when it achieves maximum rates of extraction of raw materials
b_ when it concentrates on increasing production
c_ when it discovers valuable new resources in remote natural environments
d_ when it provides the funds to finance cleaner production processes
a

21 which items in the table are classified as foreign aid?
. . official portfolio
foreign direct f
: development investment
investment ;
assistance flows
a no no yes
b no yes no
cc yes no yes
d yes yes no

22 country x’s living standards were compared with country y’s living standards using real gnp per
head converted into us dollars. country x was ranked above country y.
which factor might have caused this ranking to be incorrect?
a_ actual market exchange rates were used rather than purchasing power parity rates.
b government spending on transfer payments was higher in country y than in country x.
c inflation was higher in country x than in country y.
d_ the distribution of income was more unequal in country x than in country y.

23 in 2007 turkey had a population of 73m. its labour force was 36m, of which 12m were trained
for the primary sector and 24m were trained for the secondary and tertiary sectors. the
unemployment rate was 10%.

what was the number of people unemployed?
a 1.2m b 2.4m cc 36m d 7.3m

24 aneconomy’s manufacturing share of real gdp fell from 30% in 1970 to 12% in 2016.
what type of unemployment would result from this?
a cyclical
b frictional
c _ structural
d_ voluntary

25 in an open economy, when autonomous investment increases by 100, equilibrium national
income increases by 300.
which conclusion can be drawn?
a_ the accelerator is 3.
b_ the marginal propensity to consume is
c_ the marginal propensity to import is a
d_ the marginal propensity to save plus marginal tax rate is -

26 the diagram outlines the monetary transmission mechanism following an expansionary central
bank intervention (quantitative easing). key actions have been omitted from the process.
central bank ......1...... government assets
+
short-term interest rates ......2......
l
investment demand ......3......
tb
real gdp rises
which words complete gaps 1, 2 and 3?
pfs tf 2 8
a buys fall rises
b buys rise falls
cc sells fall rises
d sells rise falls

27 in keynesian monetary theory, when will an increase in the supply of money not cause a fall in
interest rates?
a _ if bond prices are expected to rise
b _ if investment demand is interest-inelastic
c _ if the liquidity preference schedule is perfectly elastic
d if the velocity of circulation of money increases

28 the diagram shows an economy in equilibrium at point x.
sras
price
level
x
v
ad
“ real gdp
what would be most likely to cause the economy to move from point x to point y?
a_anincrease in government spending on transfer payments
b_anincrease in income tax
c_anincrease in the average wage rate
d_anincrease in the productivity of labour

29 the table identifies pairs of possible government aims.
in which case is achievement of aim 1 likely to be consistent with the achievement of aim 2?
ne
a higher foreign exchange rate lower rate of unemployment
b low rate of inflation balance of payments surplus
cc more even distribution of income higher rate of saving
d rapid economic growth sustainable economic development

30 what is most likely to result from the discovery of oil reserves in a developing economy?
a amore equal distribution of income and wealth
b_anincrease in the competitiveness of commercial agriculture
c_anincrease in the exchange rate
d_ areduction in the volume of imports of manufactured goods

Solve 9708_w18_qp_31