May/June 2008 P1

1. What can happen in a planned economy that does not happen in a market economy?

 
 
 
 

2. Which of the following is a factor of production?

 
 
 
 

3. In a mixed economy, resources are used as a result of

 
 
 
 

4. Hong Kong lacks natural resources. Its best asset is its people. What can be concluded about Hong Kong’s factors of production?

Well Supplied Poorly Supplied
A Capital Enterprise
B Enterprise Labour
C Labour Land
D Land Capital
 
 
 
 

5. The table shows the various combinations of food and clothing which a village can produce using

all its resources.

Food Units Clothing Units
0 500
100 400
200 250
300 50
400 0

What is the opportunity cost to the village of increasing the production of food from 200 to 300
units?

 
 
 
 

6. An Italian-owned tour operator needs its staff in Rome to be able to speak a number of languages
so it employs people from different countries. It also uses other firms in different countries to
provide tour guides and coach drivers. It is part of an organisation that has shares issued on the
stock exchange.
Which type of company is this?

 
 
 
 

7. A commercial bank is appointed to act as a country’s central bank.
What new function would it now have?

 
 
 
 

8. What is not a function of a trade union?

 
 
 
 

9. What is always true about multi-national companies?

 
 
 
 

10. Due to good weather, there is a surplus in the market for an agricultural product.
Which change would cause the market to return to equilibrium?

 
 
 
 

11. In July 2006, the UK chocolate producer, Cadbury Schweppes, had to withdraw one million bars
of chocolate from the market because of food contamination at one of its factories. This was
widely reported in UK newspapers.
Which diagram shows the likely effect on the market for chocolate produced by Cadbury
Schweppes?

 
 
 
 

12. What combination of events might cause a rise in the willingness and the ability of consumers to
buy a product?

Price of a substitute product
Tax rates
A
decrease
decrease
B
decrease
increase
C
increase
increase
D
increase
decrease
 
 
 
 

13. What could cause the demand for a product to become more price-elastic?

 
 
 
 

14. When the price of a product rises from $10 to $15, the demand falls from 5000 to 4000 units.
What is the value of the price elasticity of demand for the product?

 
 
 
 

15. What would an individual be doing to be described as a worker in the secondary sector?
̀

 
 
 
 

16. A supermarket wishes to recruit a qualified manager for a senior position to control the stocks of
goods. Some work will be required at night as the supermarket is open 24 hours. A good salary is
being offered.
Which applicant would be most likely to be suitable for the position?

 
 
 
 

17. What is the most likely reason for a firm to offer higher wages to recruit more staff?
̀

 
 
 
 

18. In India, there is a considerable gap between the incomes of the rich and the incomes of the poor.
In 2006, there were 6 million rich households with an annual income above 215 000 rupees and 50 million poor households with an annual income less than 22 000 rupees.
What is most likely to be true about spending?

the group spending most money
on food per household
the group spending the highest
proportion of its income on food
A
the rich
the rich
B
the rich
the poor
C
the poor
the poor
D
the poor
the rich
 
 
 
 

19. Why would people use their savings to buy shares on a stock exchange?

 
 
 
 

20. An Economics student made the following statements about costs of production.
Average costs remain the same at all levels of output.
Fixed costs can exist when there is no output.
Total costs can include both fixed and variable costs.
Total variable costs fall as output increases.

How many of these statements are correct?

 
 
 
 

21. Which statement explains why cars are often repaired by small garages?

 
 
 
 

22. A Japanese company which has spare capacity has agreed to refine 20 000 barrels of oil a day
for a Chinese company.
What is likely to happen in the Japanese firm to fixed cost, to variable cost and to total cost?

fixed cost
variable cost
total cost
A
rise
rise
rise
B
rise
fall
stay the same
C
stay the same
rise
rise
D
stay the same
fall
fall
 
 
 
 

23. A firm sells its products for $10 each. It produces 100 units. Its average variable cost is $5 and its
average fixed cost is $2.
How much profit does the firm make from selling 100 units?

 
 
 
 

24. In 2006, the Indian company, Ratnagin Gas and Power bought another Indian power company,
Dabhol Power.
What type of integration is this?

 
 
 
 

25. What is not a main economic government objective?

 
 
 
 

26. The diagram shows the price per litre paid for petrol in four countries in a year. The amount of tax
included in that price is shown by the shaded area.
If there was no tax on petrol, which country would have the highest petrol price?

 
 
 
 

27. What might a government increase if it wished to raise the growth rate of an economy?

 
 
 
 

28. What is meant by a regressive indirect tax?

 
 
 
 

29. What is likely to be an advantage of economic growth?

 
 
 
 

30. A government decreased the tax on all goods produced in a country.

What is the most likely result of this?

 
 
 
 

31. It was reported that the economic recovery in the first half of 2003 was poor.
What factor might have explained this?

 
 
 
 

32. The table gives information on Gross Domestic Product (GDP) growth rates, inflation and the
unemployment rates for a number of countries in 2006.

Country
GDP growth %
inflation %
unemployment rate %
Brazil
3.5
4.0
10.4
China
11.3
1.5
4.2
France
1.5
1.9
9.0
India
9.3
7.9
7.3
UK
2.6
2.5
3.0

What can be concluded from the table about 2006?

 
 
 
 

33. Which of the following is most likely to be used as a measure of living standards?

 
 
 
 

34. What combination of events is most likely to cause an ageing population?

birth rate
death rate
A
fall
fall
B
fall
rise
C
rise
rise
D
rise
fall
 
 
 
 

35. Zambia is sometimes spoken of as a developing country.
What would be most likely to confirm that a country is developing rather than developed?

 
 
 
 

36. Why might the government of a developing economy welcome large-scale cutting of its limited
hardwood forests for export by a multi-national company?

 
 
 
 

37. What is not likely to be a barrier to international trade?

 
 
 
 

38. What is an advantage if a region specialises in a narrow range of products?

 
 
 
 

39. What is the main reason why the government, rather than the private sector, builds and runs
hospitals?

 
 
 
 

40. A conference representing countries from many parts of the world agreed to ban trade in ivory
products in order to try to stop the killing of elephants. Local people also argued that elephants
are a menace: they threaten lives and destroy crops.
Which policy do the above statements support?

 
 
 
 

Question 1 of 40

 

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