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Item 14 refers to the table below which shows the price of a product, the quantity demanded (Qd) and
quantity supplied (Qs).
Price Qd Qs
(s) (Units) (Units)
10 8 20
8 12 16
6 14 14
4 16 12
2 29 8
13. At which of the following prices are there shortages in the market?
(A) $2 and $4
(B) $4 and $6
(C) $6 and $8
(D) $8 and $10
14. A shift in the demand curve for a commodity could result from a change in:
(A) Price
(B) Supply
(C) Conditions of supply
(D) Conditions of demand
15. The Demand curve shows that:
(A) As price decreases, demand increases
(B) Price changes are always in the same direction as demand changes
(C) As price increases, quantity demanded increases
(D) As price decreases, quantity demanded increases
16. Which of the following will not shift an individual consumer’s demand curve for butter?
(A) The price of butter
(B) The price of margarine
(C) The consumer’s income
(D) The consumer’s tastes
17. According to economic theory, a change in demand of any good is not caused by:
(A) Changes in consumer’s preference for that good
(B) Changes in the general income levels of the consumers who buy that good
(C) An increase or decrease in the population
(D) Changes in the price of that good
18. A rise in consumers’ income will cause:
(A) A movement along the demand curve
(B) An increase in quantity demanded
(C) The demand curve to the shift to the right
(D) The demand curve to shift to the left
19. A demand curve is normally drawn with:
(A) Price on the vertical axis and population on the horizontal axis
(B) Price on the vertical axis and quantity demanded on the horizontal axis
(C) Quantity demanded on the vertical axis and income on the horizontal axis
(D) Quantity demanded on the vertical axis and price on the horizontal axis
20. All of the following are conditions of demand except:
(A) Productivity
(B) Population
(C) Income
(D) Tastes and fashion
21. The supply curve shows:
(A) The amount that sellers are willing and able to offer
(B) The amount that sellers are willing and able to offer for sale at all possible prices
(C) A list of price and quantity supplied combinations
(D) The amount consumers will buy from what is supplied
25. All of the following features are characteristics of perfect competition EXCEPT
(A) Many buyers and one seller
(B) Freedom of entry and exit
(C) Selling of homogeneous products
(D) Perfect knowledge of market conditions
26. A market structure in which there are many buyers and sellers and where the products are identified by
their brandname is known as
(A) A monopoly
(B) A perfect competition
(C) A monopolistic competition
(D) An oligopoly
27. In a monopoly:
(A) There are many firms
(B) The product has no close substitutes
(C) There are low barriers to entry
(D) The firm follows the price in the market
28. In perfect competition there is/are:
(A) Product differentiation
(B) A few firms
(C) Freedom of entry and exit
(D) Lack of perfect knowledge
29. An oligopoly:
(A) Is an industry in which there is price rigidity
(B) Produces only homogeneous outputs
(C) Is an industry into which entry is relatively easy
(D) Is a situation in which there is collusion
35. Which of the following will NOT have to change for a planned economy to become a market
economy?
(A) The type of government in the country
(B) The method of allocating resources
(C) The price of goods in the private sector
(D) The ownership of resources by the state sector
36. In a mixed economy, resources are allocated by
(A) The government alone
(B) The firms alone
(C) Consumers alone
(D) The government, firms & consumers
37. What type of economic system do MOST CARICOM countries have?
(A) Capitalist
(B) Mixed
(C) Socialist
(D) Centrally Planned
38. When a country changes from a planned economy to a market economy, there will necessarily be an
increase in
(A) Rationing of basic foodstuff
(B) Government subsidies for industry
(C) Price control of luxury items
(D) Choice for consumers
46. To obtain gross domestic product at factor cost from gross domestic product at market prices,
economists must:
(A) Add the cost of imported raw materials
(B) Add subsidies and subtract taxes
(C) Add exports and subtract imports
(D) Subtract capital consumption
55. Rob and Steele joined an underground group who were printing money
END
Paper Two
Answer ALL questions in this section
Question 1
(c) With the aid of a diagram, explain how a production possibility frontier shows increasing
opportunity cost.
(d) An individual’s disposable income has increased. The choice for the individual arises from the
(e) Question 2
(a) Distinguish between the terms ‘economics of scale’ and ‘diseconomies of scale’.
(d) Explain how the THREE resource allocation decisions are made in a free market economy.
Question 3
(c) Using THREE characteristics, explain the type of market structure that would be associated with the
Question 4
(a) Define the term ‘Price Elasticity of Supply’
(b) Name and explain TWO factors affecting the price elasticity of supply of a good.
10 5
6 4
Using the information in the table, calculate the price elasticity of supply for Product X when the price
END
11. All of the following features are characteristics of perfect competition EXCEPT
(A) Many buyers and one seller
(B) Freedom of entry and exit
(C) Selling of homogeneous products
(D) Perfect knowledge of market conditions
12. A market structure in which there are many buyers and sellers and where the products are identified by
their brandname is known as
(A) A monopoly
(B) A perfect competition
(C) A monopolistic competition
(D) An oligopoly
13. In a monopoly:
(A) There are many firms
(B) The product has no close substitutes
(C) There are low barriers to entry
(D) The firm follows the price in the market
15. An oligopoly:
(A) Is an industry in which there is price rigidity
(B) Produces only homogeneous outputs
(C) Is an industry into which entry is relatively easy
(D) Is a situation in which there is collusion