Name Date

Subject Grade
Topic Chapters 1 to 13 Susan Grant Marks

2.

3.

1
4.

5 What is the correct formula to calculate price elasticity of supply?

A the percentage change in price divided by the change in quantity supplied

B the percentage change in price divided by the percentage change in quantity supplied
C the percentage change in quantity supplied divided by the change in price
D the percentage change in quantity supplied divided by the percentage change in price

6. The diagram shows the effect of a decrease in price on the demand for a product.
Price

What does the arrow on the diagram illustrate?

A contraction in demand
B decrease in demand
C extension in demand
D increase in demand
2
7. What would bring about a movement upwards along the supply curve for rice?
A a decrease in the productivity of farmworkers
B a decrease in the profitability of rice production
C an increase in consumers’ incomes
D an increase in farmworkers’ wages

8 A government decides to reduce air pollution in city centres by giving financial assistance to bus
companies, reducing their costs of production and prices for passengers.

Which type of policy measure is this?

A a maximum price
B a minimum price
C a subsidy
D regulation

9 The use of digital technology has led to a major increase in buying goods online. Suppliers with
large warehouses then deliver directly to customers.
How will this affect the capital and labour employed by these suppliers?

3
10

11 The city of Lviv in Ukraine has built a new airport terminal and it now has flights to more than
20 destinations. It is trying to get more flights in and out of the city.
What is a possible macroeconomic impact of more flights?

A The price of air tickets will fall.

B There will be an increase in the demand for tourist services in the city.
C There will be an increase in the level of economic growth.
D There will be an increase in the price elasticity of demand for air tickets.

12 What is found in a mixed economy?

A Economic goods are provided only by the private sector.

B Economic goods are provided only by the public sector.
C Public goods are provided only by the private sector.
D Public goods are provided only by the public sector.

13. What causes the price of a good to increase?

A The cost of labour falls.
B The cost of raw materials falls.
C The incomes of consumers fall.
D The price of a complement falls.
4
14

15

16 A country experiences a long strike by railway workers.

What would be the macroeconomic impact of such a strike?
A National output would fall.
B Railway workers would lose income.
C The demand for taxi services would rise.
D The profits of railway operators would fall.

5
17.

18 What necessarily describes the market system?

A an economy with both a private and public sector
B limited resources but unlimited wants
C resources are allocated through demand and supply
D when all resources are used to produce consumer goods

19

20 What is not held constant when constructing the supply curve of a firm?
A indirect taxes and subsidies on the firm’s products
B the level of technology used by the firm in production
C the price of the factors of production paid for by the firm
D the market price of the good produced by the firm

21 A newspaper reported that ‘The world market for coffee has returned to equilibrium’.
Which situation supports this statement?
A A sequence of poor harvests resulted in shortages.
B Decreased transport costs led to a surplus of supply.
C Farmers matched demand by planting more coffee bushes.

6
 D The price of coffee was fixed between producers.

22. The diagram shows demand and supply curves for a product. Initially the market is in equilibrium
at point X.
What would be the new equilibrium point if the costs of production fell and a rumour circulated
that the product could become unsafe in extreme weather conditions?

23 The diagram shows the market for a product.

Which statement about the points marked on the diagram is correct?

A The distance from W to X shows a shortage of the product.
B The distance from Z to Y shows a surplus of the product.
C The movement from W to Y shows a fall in the quantity demanded of the product.
D The movement from X to Z shows a fall in the quantity supplied of the product.

7
24

25.

8
2 Changes in global weather conditions are increasing the risks of some of
the islands of the Maldives disappearing under the sea. At the same time
market failure due to overfishing is also affecting the country’s fishing
industry. As a result, there are frequent changes in equilibrium price. The
country is considering whether to devote more of its resources to fishing.
The country has recently created a new island, called Hulhumale, from
reclaimed land.

(a) Why do choices have to be made about how resources are used? [2]

(b) Explain the difference between increase in demand and increase in

quantity demanded [4]

(c) Using a production possibility curve diagram, analyze the effect of an [6]
increase in land on an economy.

(d) Discuss whether devoting more of its resources to fishing would benefit an [8]
economy.

9
1. B

2. D

3. B

4. B

5. D 2281 p11 s 2023

6. C

7. C

8. C

9. D 3178/12/summer 2021

10 B same as above

11. C

12. D

13. D

14. D

15. C march 2021

16. A 2020 march

17 B 2021 march

18. C 2020 march

19 A 2020 march

20 D 2020 march

21 C summer 2019 p 11

22 B 2016 summer p 13

23. D 2017 summer p 11

24. B 2019 summer p11

25 A same as above

2 Changes in global weather conditions are increasing the risks of some of the
islands of the Maldives disappearing under the sea. At the same time market
10
 failure due to overfishing is also affecting the country’s fishing industry. As a
result, there are frequent changes in equilibrium price. The country is
considering whether to devote more of its resources to fishing. The country has
recently created a new island, called Hulhumale, from reclaimed land.

(a) Why do choices have to be made about how resources are used ? [2]
• Scarcity/resources are finite/limited (1) not all wants can be met/wants are unlimited (1).
• The use of resources involves an opportunity cost (1) not all wants can be met/wants are
unlimited (1).

(b) Explain two causes of market failure. [4]

1 mark each for each of two causes identified:

failure to take into account all costs and benefits/external costs and benefits
abuse of market failure/exploitation of monopoly power
1 mark each for each of two explanations of the causes:
not considering external costs and benefits will result in under-consumption/under-
production and
over-consumption/over-production.
Abuse of market power may result in higher price, restricted supply and lower quality.
4
Do not expect but reward references to merit goods, demerit goods, public goods and
information failure.

(c) Using a production possibility curve diagram, analyze the effect of an increase in [6]
land on an economy.

Upto 4 marks for diagram

 Axes correctly labelled(1)

 Original curve downward sloping (1)
 New curve to the right of the original (1)
 Shift to thr ight indicated by labelling (1)

Upto 2 marks for written explanation

 Land is a reource – more of which is available (1)
 The amount an economy can produce will increase/there will be an increase in
productive capacity (1)

(d) Discuss whether devoting more of its resources to fishing would benefit an [8]
economy.
Up to 5 marks for why it might:
• may allow an economy to specialize (1) in a product in which it has a cost/comparative
advantage (1); (i.e. increase output, Produce goods and services more efficiently)
11
• The increased output and GDP of the country/GDP (1) as well as the increasing incomes could
help residents enjoy a better of living standards (1); as they will be able to enjoy more goods and
services.
• The firms may allow greater advantage to be taken of economies of scale (1) examples of
economies of scale (up to 2);
• demand for fishing may be increasing (1) will raise revenue (1) reason why demand may
be increasing e.g. greater awareness of health benefits (1);
• may increase exports of fish/reduce imports of fish (1) improve the position on the
current account of the balance of payments (1);
• may build up a reputation for fishing (1).
Up to 5 marks for why it might not:
• risk that demand may fall (1) reasons why demand may fall e.g. rise in price/quality
competitiveness of other economies (1);
• the country may be better at producing other products (1) this would result in a high
opportunity cost of devoting more resources to fishing (1);
• may result in diseconomies of scale (1) examples of diseconomies of scale (up to 2);
• may result in overfishing (1) depleting fish stocks (1).

12