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CANDIDATE
NAME
CLASS TOTAL
SCORE
INSTRUCTIONS
● Write your name and class in the boxes at the top of the page.
● There are two sections on this paper. Answer all questions.
● Write your answer to each question in the space provided.
● Do not use correction fluid.
● You may use a calculator.
INFORMATION
● The total mark for this paper is 100.
● The number of marks for each question or part question on section B is shown in brackets [ ].
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2. Every business organisation faces the problem of satisfying wants. What is the reason
why wants are not fully satisfied?
A. An economy can only produce a limited amount of goods and services.
B. Governments cannot print enough money to pay for goods and services.
C. There is an over-production of goods and services by business organisations.
D. Workers are too skilled for the requirements of the jobs available.
4.
2
6.
7. A product has a price elasticity of supply of +2. A change in price causes the quantity
supplied to change from 100 units to 120 units. What is the price change?
A a fall of 10%
B a fall of 40%
C a rise of 10%
D a rise of 40%
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8.
9.
11. In many countries, the price of personal computers has fallen while the quantity sold has
risen. What is the most likely reason for these changes?
A Advertising campaigns for computers increased.
B Computer production technology improved.
C Computer software became cheaper.
D Real incomes rose.
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12.
13.
14.
15.
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16.
17.
18.
19. Which change would make the supply of a product more price elastic?
A an increase in the number of close substitutes for the product
B an increase in the proportion of firms working at full capacity
C a reduction in the time taken to make the product
D a reduction in the time that the product can be stored
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20.
21.
22. When the price of a good doubles, the demand falls by less than half, and the revenue
received by the seller increases. What does this suggest about the good?
A it has substitutes
B it is a necessity
C it is in fixed supply
D it is perfectly elastic in demand
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23.
24. A product has a perfectly inelastic price elasticity of demand. What will happen to total
revenue if the price of the product falls by 25%?
A It will fall by 25%.
B It will fall to zero.
C It will remain unchanged.
D It will rise by 25%.
25. In response to an increase in price from $5 per kilo to $6 per kilo a chicken farmer
increased supply from 400 kilos to 500 kilos per week. What is the price elasticity of
supply?
A 0.8 B 0.9 C 1.2 D 1.25
28.
8
29.
30.
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Question 1
Read the source material carefully before answering Question 1.
Source material: transport and cotton production
There is not much traffic on the motorway(高速公路) between Islamabad(伊斯兰堡) and
Lahore(拉合尔-巴基斯坦城市). This first motorway built in Pakistan was opened in 1997. It
cost $1.2 billion to construct. One reason for the lack of traffic on the motorway is the
existence of a rival road, the Grand Trunk Road, which is shorter and toll-free(免费通行).
Some economists, however, argue that less tax revenue should be spent by the government on
roads and more on education. Higher spending on education can increase labour productivity
which, in turn, can reduce unemployment and increase productive potential.
Answer all parts of Question 1. Refer to the source material in your answers.
(b) Explain a possible opportunity cost of Pakistan government building more roads. [4]
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(c) Analyse the effect of improvements in road infrastructure on the market for cotton. [6]
(d) Analyse, using a production possibility curve diagram, the effect of the change in labor
productivity on the economy. [6]
Question 2
The demand for flat screen televisions has increased enormously in many countries and this has
had an effect on the market.
(a) Define a normal good. [2]
(b) Describe what can influence the demand for flat screen televisions. [4]
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(d) Using a demand and supply diagram, analyse how an increase in income can affect the
equilibrium price and equilibrium quantity of flat screen televisions. [6]
(e) Discuss the potential usefulness of price elasticity of demand to a manufacturer of flat
screen televisions. [6]