2nd/Final Quarter Examination,

December, 2020

Year: 9 (B)

Total Marks: 100

Date: 23rd December, 2020

Question 1

Mobile phone service providers supply the infrastructure (telephone masts) and
services to customers.

Figure 2a shows the market share of these firms in the UK in 2008.

In November 2008 two firms, T-Mobile and Orange, announced plans to merge
their UK market operations.

(a) (i) With reference to the data, which firm was the largest service provider
before the merger? (2)
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(ii) With reference to the data, explain how the market share of the major firms
would change after the merger. (2)

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(iii) The merger of T-Mobile and Orange is an example of (1)

A a horizontal merger

B a vertical merger

C diversification

D privatization.

(iv) Briefly explain one reason why a merger between two firms producing similar
products may reduce the level of employment in the industry. (2)

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A spokesman for T-Mobile and Orange announced that the merger would benefit
shareholders and consumers.

Fill in the missing words in the sentences below from the following list.

public profits

losses mixed

private primary

(v) T-Mobile and Orange are in the .............................................................. sector. (1)

(vi) Shareholders will usually benefit if the merger increases ..................................................... (1)

(vii) Do mergers between firms producing similar goods and services always benefit
consumers? Give reasons for your answer.

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(b) Cars produce negative externalities.

(i) Identify one negative externality produced by cars. (1)

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(ii) Briefly explain one reason why governments try to reduce negative externalities
produced by cars. (2)

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Study the following paragraph.

In 2009 the Canadian government introduced a state funded discount to buyers of electric
cars. The South Korean government announced it would inject about 400 billion SKwon
(US$341 million) into industries to develop the high-performance batteries needed in
electric cars.

(iii) Briefly explain how the two government policies mentioned in the paragraph above
could promote the production and sales of electric cars. (4)

1. Canadian government’s policy:

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2. South Korean government’s policy:

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(iv) Apart from the two policies mentioned in the paragraph, identify two other policies a
government can use to reduce negative externalities produced by petrol and diesel fuelled
cars. (2)

1. .........................................................................................................................................................................................
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2. .........................................................................................................................................................................................
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(v) With reference to both methods identified in (iv), which is likely to be better at reducing
negative externalities? Justify your answer. (6)

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(Total for Question 1 = 30 marks)

Question:2

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‘ Cards for You’ is a firm based in Finland. It produces personalised birthday and special
occasion cards which can be ordered on the internet. The demand and supply for the cards
is shown in Figure 2a.

Figure 2 a

Study Figure 2a.

(a) (i) What is the equilibrium price of a birthday card?

(1)
 4 euros
 5 euros
 6 euros
 7 euros

(ii) The demand for cards produced by Cards for You is price elastic. Explain this statement
with reference to the total amount spent on cards when the price rises from 5 euros to 6
euros. Show your calculations. (4)

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(iii) Cards for You has experienced an increase in demand for cards over the last 12
months. Briefly describe two factors which may have caused this increase in demand. (4)

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(iv) Define price elasticity of supply. (2)

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(v) Which of the following diagrams A, B C or D shows a supply curve which has price
elasticity = 0? (1)

 A

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  B
 C
 D

(vi) The supply

of birthday
cards is likely
to be more price elastic than the supply of fresh flowers. Do you agree with this statement?
Give reasons for your answer.
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Vii) In 2013 chocolate shops in Belgium experienced a rise in demand for chocolate due to
economic recovery. This suggests that chocolate is (1)

 A a normal good
 B a complementary good
 c an inferior good
 D a substitute good

(viii) An inferior good is one for which a rise in income will cause demand for it to (1)

 A rise by a small amount

 B fall
 C rise by a large amount
 D stay the same

The Nigerian government stated that some of the money it would have spent on subsidies
would now be spent on improving the infrastructure of Nigeria.

(x) Choosing to spend money on infrastructure rather than expenditure on subsidies is an

example of (1)

 taxation
 opportunity cost
 monetary policy

b)

i) Do the advantages of a national minimum wage rate always outweigh the disadvantages
for an economy? Give reasons for your answer.
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ii) The Scandinavian countries of Sweden, Norway, Finland and Denmark do not have a
national minimum wage rate. The majority of workers in these countries belong to trade
unions.

(b) Complete the following sentences using the words listed below. Each word may be
used more than once. (3)

employers workers percentage wages customers countries

Trade unions represent (i) ......................................................................................... The trade unions

negotiate with (ii) ............................................................................................. to determine wages,
hours worked and working conditions. A strong trade union is one where a large

(iii) ............................................................................................. of the workforce are members of the

trade union.

(Total for Question 2 = 30 marks)

Section: B

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 Question: 3

Julia is a hairdresser. She used to work in a hairdressing salon but now she visits her
clients in their own homes.

(a) (i) Julia is an entrepreneur. Define the term entrepreneur.

(2) ...............................................................................................................................................................................
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(ii) Below is a list of some of Julia’s costs. Place each cost in the correct column (3)

Example: Loan repayments

1. Petrol

2. Car insurance

3. Shampoo

Julia has calculated that her fixed costs are $450 each month In July her variable costs were
$150

(iii) Calculate Julia’s total costs for July. Show your workings. (2)
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The following table shows Julia’s revenue and variable costs for August

(iv) Calculate Julia’s profit for August. Show your workings.

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(b) Julia received help from the government to start her business.

(i) Identify and briefly explain two methods a government can use to help individuals to
start their own businesses.
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(ii) How important are government schemes to encourage the setting up of small firms in
an economy?
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(c) (i) What is meant by the term privatisation?

(2) ......................................................................................................................................................................................
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(ii) Briefly explain one reason why privatised firms may need to be regulated.
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(iii) Bakeries typically remain as small businesses. To what extent do you agree with this statement?
Give reasons for your answer.
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Question: 4

a) Onions are an essential ingredient in Indian cookery. In India during December

2010 the price of one kilogram of onions increased from 30 rupees to 90 rupees.
The price rise was due to a fungus which ruined the crop in the main onion growing
region.

Figure 4 (a) The Supply of Onions

(a) (i) Onions are an agricultural product. Study Figure 1a above. Which of the curves, A,
B, or C represents a typical short run supply curve of onions? (1)

Answer = .......................................................................

Explain your answer. (2)

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(ii) The fungus which ruined the onion crop in India caused the supply curve to (1)

 shift to the right

 shift to the left
 stay the same

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iii)When the price of onions increased, chefs in some Indian restaurants began to use
pumpkins instead of onions in recipes. This indicates that pumpkins have the following
relationship with onions: (1)

 pumpkins are substitutes for onions

 pumpkins are complements to onions
 pumpkins are secondary goods
 pumpkins are luxury goods

Bee Lovely is a small manufacturing firm in Brazil which makes beauty soap. It is owned by
Claudia Torres.

(iv) Bee Lovely is in the (1)

 Primary sector
 Secondary sector
 Tertiary sector

Lux soap produced by Unilever, a multinational company, has the largest market share of
the beauty soap market in Brazil.

(b) (i) What is meant by a multinational company? (2)

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(ii) In the production of Lux soap Unilever experiences economies of scale. What is meant
by the term 'economies of scale'? (2)

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(Total for Question 4 = 10 marks)

(Total for Marks = 100 marks)

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