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Item 1 refers to the graph below which represents the production possibility frontier for a country that produces cookies and milk

3.

The use of land to build hospitals reduces the amount available for factory construction. This BEST illustrates the concept of (A) (B) (C) (D) choice scarcity rationing shortage is NOT a positive

only.
Milk I

4.

Which of the following economic statement? (A) (B)

Cookies

1.

Which of the following is MDST likely to account for the change from Curve I to II? (A) (B) (C) Death of cows due to disease An increase in the population of cows A successful anti-cookies campaign A rise in input prices for cookie production

(C)

(D)

The government should increase the minimum wage rate. A reduction in income tax will result in an increase in .consumer spending. An increase in the price of gasoline will affect bus operators. A reduction in interest rate will affect investment in a country.

CD)

Items 5 - 6 refer to the following diagram which shows the price and quantity of a good. Price

Item 2 refers to the graph below which represents the market for ferry services.
Ticket price

s
5.
D

f
I II III IV

Me

AC

o~------~~------------~
Quantity Which ofthe following indicates the point of optimum production? (A) (B) (C) CD)

OL.._---------..:;...
Number of trips

2.

OF is the equilibrium ticket price for a return trip. If government imposes a price ceiling to allow the lower income groups to utilise more of the ferry services, it should be placed (A) (B) (C) (D) either above or below OF at the equilibrium price, OF above the equilibrium price, OF below the equilibrium price, OF

6.

Assuming that a firm is earning normal profits, at which point would Marginal Revenue (tv1R) =: Marginal CostCMC)? (A) (8) I

n
III IV

(C)

(D)

-j ~

Items '/ - ilrefer to the production possibility

frontier below.
Good Y M

Which of the following positive slope?

graphs

depicts

(A)

o
("Q

.:

\
7.

(B) \
I

i_,p

I
Good X

Which of the following statements about the points is TRUE? (A) (B) (C) (D) M is inefficient. R is technically inefficient. N is allocatively inefficient. Q is productively inefficient
(C)

8.

Which of the following will account change from Point Q to Point O? (A) (B) (C) (D)

for a
(D)

An uncbanging state ofteclmology Making full use of available resources Rise in the prices of the factors of production Adverse weather conditions causing damage to resources

-4Items 10 - II refer to the scenario below. Due to technical problems being experienced at the CMC bauxite plant, Mr Brown, an engineer, suffered a "pay-cut." It was noticed, shortly afterwards, that he purchased tess fish fillets and more chicken parts. 10. What type of good is fish fillet? (A) Giffen Public Normal Inferior

14.

One of the MAJOR advantages of using graphs to present data is that they show (A) (B) (C) induced parts of functions discreet changes in variables autonomous parts of functions continuous changes in variables

(D)
15.

(B)
(C)

Which of the following graphs of production possibility frontiers illustrates' decreasing opportunity?
R Capital goods (A)

(D)
11.

What type represent? (A)

of good

do chicken

parts

(8) (C)

(D)

Giffen Normal Inferior Ostentatious Capital

(B)

R Consumer goods

.R·

12.

A production possibility outwards indicates (A) (B) (C)

frontier that bows

goods

(D)

increasing opportunity cost as more of one good is produced decreasing opportunity cost as more of one good is produced constant opportunity cost as more of either good is produced a change in the resources available to the producer

R Consumer goods

(C)

13.

Which of the following BEST explains the term, 'indifference curve'?

(A)

(8)

(C)

CD)

Goods which give the consumer maximum satisfaction The combination of two goods which gives the consumer the same level of satisfaction Goods for which consumption is indifferent Goods for which the budget line is the same

R Consumer goods

(D)

R Consumer goods

1.9. Firms 1 iVil!r-ket Share 50 25 10 (%)

Which of the following statements c~ij_diijeS an important characteristic of a private good? (A) (B) (C) It is provided by the private sector. It is consumed by everyone in equal quantity and quality. Its consumption has external effects on the consumption or production of others. Its consumption by one person . diminishes the quantity available to ~ others.

2
3 4 5
Q
r:

'-

10
3 2 20.

(D)

16.

What is the percentage Concentration Ratio? (A) (B)

(C) (D)

of the Four-Finn

Whenever people can enjoy the benefits of public goods without paying for them, the situation is known as the (A) non-rival problem free-rider problem non-excludable problem drop-in-the- bucket prob lem

5% 25% 75% 95%

(8)
(C)

(D)

17.

Which of the following market failure? (A) (B)

is NOT a cause of

Item 21 refers to the graph below which shows a situation in which the monopolistically competitive fum is i11 the longrun equilibrium

(C)
(D)

Taxation Monopoly Externalities Imperfect knowledge

AC

18.

Miss Bent feels unwell and visits her local doctor who, after an examination, discovers an incurable illness. The doctor does not tell Miss Bent what he found but instead prescribes to her costly medicine. What economic concept statement describe? (A) does the above 21.
0

I~I I I I

MR
I

I I

D Qu antity

Q1

Q!

(B)
(C) (D)

Inefficiency Moral hazard Adverse selection Asymmetric information

Using the marginalist approach to determine equilibrium price and quantity, what is the area between Q I and Q2 called? (A) (B)

Excess capacity
Shut-down point Equilibrium point Minimum efficiency scale

(C)
(D)

-6 ..
Items 22-24 refer to the graph below which shows the demand for and supply ofheaith care in a particular market.
Price

S=MSC
b d

Pi a

I I

I I I
I
[

I I c

I I I

D=MSB Quantity

12.

If there is no health care insurance, what wouldbe the equilibrium price and quantity of health care? (A) (B) (C)
(D)

24.

What effect will the intervention of the insurance company in the market have on efficiency and social welfare? (A) Allocative efficiency will occur because consumers derive more health care services at Q I' Allocative inefficiency will occur because at Q) MSB is greater than MSC. Allocative inefficiency will OCcur because at Q] MSC is greater thanMSB. Allocati ve efficiency wi II occur because at Q2 MSB is equal to MSC.

r, and

Q1 P2 and Q2

P2 and Q) PJ and QJ

(8)

23.

If a health insurance company offers to pay half the cost of health care, what would be the price and quantity demanded by the consumer? (A) (B) (C) (D) P. and Q1 P2 and Q2 P2 and Q] p) and Q)

(C)

CD)

-IItems )_::.~:;:6 refer tothe graph below which shows an industry which previously was perfectly competitive but is now a monopoly. Cost and revenue curves are assumed to be Item 21 refers to the graph below which shows the Social Marginal Costs (SMC), the Private Marginal Costs (PMC) and the Social Marginal Benefits (S:MB).

the same.
Price

SMC Me ('= Sunder HI

s
-,
\.

perfect competition)

Price

FMC

I
AR=D ,IV

SMffi

25.

Which areas on the graph represent consumer surplus in the perfectly competitive industry? (A) (B) I+2+3+4+5 1+ 2 + 3 +4 + 7

OL-------~--~-=----~ Q1 Q 2 Quantity
27.

Which of the following is TRUE? (A) (B) Output Q2 is efficient because

SMC
PMC 5MB

>PMC

(C) CD)

3+4 +5+7+ 8 6 + 7 + 8 + 9 + 10

Output Q2 is efficient because

ee)
(D)

=SMB

Output Q, is efficient because

>PMC
Output Qi is efficient because =SMC

26.

The deadweight welfare loss under monopoly

is represented (A) (B) 1+2 by the areas

SIvlB

(C)
CD)

4+5 5+8 7+8

28.

Which of the following market structures is characterized by several firms which are too small to influence the market?

CA)
(B)

Perfect competition Duopolistic competition

(C) CD)

Oligopolistic competition
Monopolistic competition

o. o

If the , potential

female labour force

15

·~OO000 ,

the Dumber of females actually employed is 200000, and the number of females seeking employment is 50 000, then the participation rate of the female labour force

Item 4.-Q- refer~, to the graph below iii "<,;:lhic~-:" the Marginal Revenue Product Curve (1VlRP) has shifted from MRF I to J\/fRP 2'

is .

(A)
(B)

12.5 %
37.5 %

(C)
(D)

50.5 % 62.5 %

Item 38 refers to the graph below which shows the demand for and supply of a factor of production.

GL_------------------~----~
Quantity of labour

MRP1

~MRP

40.

Which of the following factors are MOST likely to have caused this movement? I. II. III.
IV. (A)

Price D

s
A rise A fall A rise A rise

in worker productivity
in the price of the final good in the price of the fmal good in the size of the labour force

I and II only

(B) (C) (D)

I and III only

II and III only II and IV only graph which

38.

A shift of the demand D 1 will result in

curve from DO to

Item 41 refers to the following depicts a labour market. Wage

(A) (B) (C)

(D)
39.

a decrease an increase a decrease an increase

in economic Tent in economic rent in transfer earnings in transfer earnings

In the factor market, land is similar to labour in that (A) the owners of both may be represented by a trade union the determinants of supply of both of them are similar both are demanded for their contribution to production both are fixed in supply and indestructable Quantity 41. Labour

(B)
(C) (D)

Which of the following economic concepts does the shaded area in the triangle above represent? (A) (B) (C) (D) Poverty Economic rent Consumer surplus Transfer earnings

- 10 42. Which of the following term 'derived demand'? (A) BEST defines the

(B).
\

(C) (D)

The demand for a factor of production depends on the demand for the good that uses it. The demand for a good depends on the demand for a factor of production which produces it. The amount of a factor of production demanded at a given price., The amount of the goods produced at a given price.

Items 43 - 45 refer information below.

to the following

Jack's Inc. paid wages in the amount of 20 000, rent $ 2 000 and interest of$ 1 500. The business realized a profit of S 5 000.

43.

For the factor of production, much did Jack's Inc. pay? (A) (8) (C) (D) $ 1 500 $ 2000 $ 5 000

labour, how

$20000

44.

For the factor of production, much did Jack's Inc. pay? (A) (B) (C) $ 1 500 $ 2 000 $ 5000 s 20000

capital, how

CD)

45.

For the factor of production, entrepreneurship, how much did Jack's Inc. pay? (A) ~)
$

(}
(D)

1500 $ 20QO $ 5 000 20 000

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