economics

1. which outcome depends upon the division of labour?
a adecrease in boredom at work
b  adecrease in comparative advantage
c  adecrease in efficiency
d  adecrease in opportunity cost

2  ‘anincrease in consumption by one person leaves the benefits available to others undiminished’.
which good does this statement define?
a ademerit good
b  amerit good
c_ aprivate good
d a public good

3 the diagram shows a production possibility curve for a farmer. the original position is x.
if the farmer switches some of his land from producing pears to producing apples, which point
represents his new position?
pears
ss an
oo apples

4 a student buys a flute for $80 but then is unable to learn to play it. it has a resale value of $50,
while the shop retail price of the same type of flute has risen to $95.
what is the present opportunity cost to the student of keeping the flute?
a $30 b $50 c $80 d $95

5 the diagram shows a supply curve for beef.
$
/ ts)
oo quantity
what explains why the supply curve for beef slopes upwards?
a anincrease in the demand for beef will bring about an increase in supply.
b_ farmers’ productivity rises as the price rises.
c_ increased production leads to a reduction in costs.
d_ the cost of additional beef production rises as output increases.
o_o — evooot

6 a theatre increases the price of its tickets trom 910 to glo. as a resull, its total receipts aecrease
from $10000 to $6000.
within what range does the price elasticity of demand for theatre tickets lie?
a 0.2 to 0.5
b_ 0.6 to 1.0
c 1.1 to 1.4
d 1.5 to 2.0

7 a taxi firm raises fares at its busiest times by as much as five times the normal fare. taxi drivers
and customers are notified of the changes by mobile (cell) phone.
what will result from this policy?
a it will be less likely that there is a market equilibrium.
b_ potential customers will have less perfect information.
c_ the market surplus will become a shortage.
d_ the supply of taxi rides will become more price elastic.

8 the table shows shanaz’s and sunil’s price elasticity of demand for restaurant meals and theatre
tickets.
j shane [seni
theatre tickets -1.3 -0.7
there is a rise in the price of restaurant meals and a fall in the price of theatre tickets.
what can be concluded after these price changes?
a_ restaurant owners will receive more income.
b_ shanaz will spend more money on both theatre tickets and restaurant meals.
c sunil will spend more money on both theatre tickets and restaurant meals.
d_ theatre owners will receive less income.

9 the diagram shows the demand curve for a normal product.
price w
xx
demand
y
z,
o quantity
which two points indicates a move from a price inelastic point to a less inelastic point?
a wtoxx b xtow c ytoz d ztoy

10 inthe diagram, the supply of a product increases while the demand curve does not shift.
s,
price s,
d,
el
p, |------------2p0"----- 73
s, d,
s,
oo quantity
which row correctly identifies the resulting impact on consumer and producer surplus?
a has fallen has fallen
b has fallen has risen
cc has risen has fallen
d has risen has risen

11 the diagram shows the market demand and supply for a good. which statement is not valid?
: d, s
price 1
ww,
pg pants cree rg orice
d,
s;
quantity
a at price op,, uv represents the market surplus.
b_ at price op3, p3x represents the quantity that consumers would like to buy.
c if price were to fall from op, to op3, the extra quantity demanded would be equal to the extra
quantity supplied.
d_ price op: is the market equilibrium price.

12 for which supply curve is the value of price elasticity of supply not the same at all points on the

curve?

; si so

rice

p s;
ss
oo quantity

a si b s2 c ss d si

13 producer surplus is the difference between

a_ the consumer surplus from the good and the producers’ total cost of supplying the good.

b_ the highest price that the consumer would be willing to pay for the good and the price the
producer actually sold it for.

c_ the lowest price that the producer would accept for the good and the price the producer
actually sold it for.

d_ the quantity that the producers manufacture in a week and the amount sold to consumers in
that week.

14 a government wishes to raise the incomes of farmers without raising the price of food to
consumers.
which policy should it use?
a amaximum price below the market price for food
b  aminimum price below the market price for food
c apayment of a subsidy to farmers to produce food
d_ arelease of government food stocks onto the market

15 the diagram shows the demand and supply of rice. supply increases from s; to so.
50 s; s2
price of
rice per
kg (cents)
35 ay,
32 1
30
27
d,
0
0 18 20 100
kgs rice
what is the change in sales revenue received by the rice farmer?
a 24cents
b60 cents
c_ 600 cents
d 700 cents

16 money is paid by the government to an unemployed worker in the form of a benefit.
why is this called a transfer payment?
a_ the payment is from taxes paid by employed workers.
b the payment is made from government savings not current income.
c_ the payment is made without the production of goods and services taking place.
d_ the payment must be spent as directed by the government.

17 what describes a regressive tax?
a _ low income earners pay a higher proportion of their income in tax than high income earners
b- marginal tax rates exceed average tax rates
c_ the cost of collecting the tax exceeds the revenue raised
d_ the marginal rate of tax is higher for high income earners than for low income earners

18 a government is concerned that foreign-owned companies are responsible for a high proportion
of the economy’s output. therefore it nationalises timber extraction, which is controlled by a
foreign-owned company.

what benefit will the economy gain from the change in ownership?
a forestry workers will become the new owners

b _ profits will no longer be sent abroad to foreign shareholders

c social costs arising from forestry will be eliminated

d_ the market for timber will become more competitive

19 what will definitely lead to an improvement in the terms of trade?
a export prices fall whilst import prices rise.
b_ export prices rise by the same amount as import prices.
c_ export prices rise slower than import prices.
d_ export prices rise whilst import prices stay the same.

20 in the diagram sg is the domestic supply of a product, sy is the world supply and dg is the
domestic demand for the product.
sa
price
($)
20
10 4 . sy.
/ ob | iy
0
0 4 8 13
quantity (m)
after operating a free trade system the country bans all imports.
what will be the effect on the revenue of domestic producers and world producers of the ban?
domestic producers world producers
$m $m
a gain 120 lose 50
b gain 120 lose 90
cc gain 160 lose 50
d gain 160 lose 90

21 the diagram shows the value of the nigerian naira against the us dollar between june 2015 and
june 2016.
naira per 260
dollar
197
june june
2015 2016
which term is used for the change in the value of the naira in june 2016?
a appreciation
b_ depreciation
c_ devaluation
d revaluation

22 countries m and n produce the world supply of machines and textiles. the table shows what
each country produces when it divides its resources equally between the two products.
[___[issines [totes
country m 1000 500
country n 900 300
total 1900 800
what should happen according to the principle of comparative advantage?
a country m should produce both machines and textiles.
b country m should specialise in the production of machines, country n should specialise in
production of textiles.
c country m should specialise in the production of textiles, country n should specialise in
production of machines.
d country n should produce both machines and textiles.

23 the diagram shows an aggregate supply curve, and aggregate demand curves.
as
price
level
ad,
ad,
oo national income
what would cause a decrease in aggregate demand from ad, to ad2?
a anincrease in income tax
b_anincrease in the price of electricity
c_anincrease in the tax on goods
d_anincrease in wage rates

24 two countries trade with one another without any forms of protection. they also impose a
common external tariff on the imports from all other countries.
what have these two countries formed?
a acustoms union
ba free trade area
c amonetary union
d = aneconomic union

25 the terms of trade of a developing country fell from 90 in 2010 to 80 in 2015.
assuming the index of its import prices remained constant at 110 between these two years, what
happened to its index of export prices?
a fell by 10
b fell by 11
c_ increased by 10
d increased by 30

26 which type of import control allows a country to develop a potential comparative advantage in a
particular good?
a a quota that protects jobs in a depressed region
b_ashort-term tariff that protects an infant industry
c a tariff that improves an industry's terms of trade
d  anembargo on goods with negative externalities

27 the diagram shows aggregate demand (ad) and aggregate supply (as) in an economy. the
initial equilibrium is at point e.
as,
as
as
price p, nn ae
level p we ne
xx
p,}----<<---->
ad
ie) national output
what causes shifts in the aggregate supply curve from as to as, and from as to as»?
| | shift from as to as; shift from as to as,
a change in ad from e to w change in ad from e to x
b increase in price level from p to p; decrease in price level from p to pz
cc increase in productivity of capital fall in the returns to capital
d shortages of skilled labour improvements in training of workforce

28 which action might be part of an expansionary economic policy?
a reducing the budget deficit
b_ reducing the level of government spending
c_ reducing the money supply
d_ reducing the rate of interest

29 a government is faced with rising inflation. it wishes to reduce inflationary pressure while avoiding
a fall in output.
which action is most likely to meet its needs?
a anincrease in laws to promote competition
b_anincrease in taxation
c_anincrease in the budget surplus
d_anincrease in the exchange rate

30 why may a government seek to reduce a current account surplus on the balance of payments?
a to lower inflation
b_ to lower unemployment
c_ to raise the economic growth rate
d_toraise the exchange rate

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