2022/2023 FIRST TERM SS2 ECONOMICS EXAMINATION

1. Which market conditions apply to firms that operate in perfect competition and
which to a monopoly?
PERFERCT COMPETITION MONOPOLY
A demand influenced by demand not influenced by
advertising advertising
B many barriers to entry no barriers to entry
C no influence on price strong influence on price
D sales of branded products sales of unique products

2. Why is the Human Development Index (HDI) often considered to be better than
GDP per head as a measure of living standards?
A. GDP per head excludes economic growth.
B. GDP per head ignores population growth.
C. HDI includes more than the production of goods and services.
D. HDI is calculated by the national government.

3. Developing countries often wish to prevent the population in rural areas moving to
the towns. Investment grants are given to companies if they set up their businesses
in rural areas. What is this policy intended to achieve?
A. decreased transport costs.
B. decreased external cost.
C. increased use of labour.
D. increased economies of scale.

4. Increasing numbers of qualified medical workers from developing economies

migrate to developed economies. What explains this migration?
A. There are better working conditions in hospitals and clinics in developed
economies.
B. There are fewer patients requiring medical treatment in developing countries.
C. There is a lack of training opportunities for medical staff in developed
economies.
D. There is an oversupply of qualified medical workers in developing countries.

5. The citizens of a country which avoids international trade may benefit from
A. an increase in specialisation.
B. better political and cultural ties.
C. competitive pressure to improve the quality of goods.
D. more employment in their industries.
6. Official statistics in 2010 showed South Africa had a very high unemployment rate
at around 25%, although wages were double those in Brazil.
What might be a reason for South Africa’s high wages in a time of high
unemployment compared with Brazil?
A. a skilled workforce in Brazil.
B. high levels of savings in South Africa
C. more labour-intensive production in Brazil.
D. strong trade unions in South Africa

7. What is a common feature of developed countries?

A. a high fertility rate.
B. a low population.
C. high net emigration.
D. low birth rates

8. An incentive given to local manufacturers to enable them compete favorably with

foreign firms is referred to as
A. Embargoes
B. Quotas
C. Tariffs
D. Subsidies.

9. When the coefficient of price elasticity of demand is zero, we say that demand is
A. inelastic
B. elastic
C. perfectly inelastic
D. perfectly elastic

10. What does cross elasticity measure?

A. Measures the responsiveness of the quantity demanded of a commodity with
respect to price
B. It measures the degree of consumer satisfaction
C. It measures profit
D. Measures the responsiveness of the quantity demanded of one good to changes
in price of another good

11. In a capitalist system who has the most important role in influencing the allocation
of resources?
A. consumers
B. entrepreneurs
C. government officials
D. producers
12. The table shows the demand for chocolates at two different prices.
Price ($) Quantity demanded
0.50 400
0.45 480
What is the price elasticity of demand when the price falls from $0.50 to $0.45?
A. less than 0.5
B. between 0.5 and 1
C. between 1 and 1.5
D. greater than 1.5

13. Which method of trade protection has the most predictable effect in controlling
the level of imports?
A. quotas on imports
B. safety and quality regulations for imports
C. subsidies to domestic producers
D. tariffs on imports

14. What would cause a favourable change in the Indian trade in services (invisible)
account?
A. A Japanese company invests in a subsidiary in India.
B. A large Indian company increases its exports of goods.
C. A Malaysian company increases its exports to India.
D. An Indian company wins a contract to transport South African exports

15. In South Africa, the rate of consumer spending is relatively high compared with
other developing countries. However, the unemployment rate is high at 25% and
only 27% of students complete the 12 years of basic education. As a result, what is
also likely to be found in South Africa?
A. a high average standard of living
B. a high current rate of savings.
C. a high level of debt among consumers.
D. a high supply of skilled workers
16. When the coefficient of price elasticity of demand is zero, we say that demand is
A. inelastic
B. elastic
C. perfectly inelastic
D. perfectly elastic

17. A vertical line parallel to the price axis as demand curve shows a/an
A. infinitely elastic demand
B. zero elastic demand
C. elastic demand
 D. inelastic demand
18. A PED coefficient that has a value of 0.5 can be said to be
A. inelastic
B. zero elastic
C. elastic
D. infinitely elastic

19. Increasing the price of a product with a PED value of 1.2 would lead to one of the
following below:
A. increase in revenue for the producer
B. loss to the consumer
C. loss of revenue for the producer
more satisfaction for buyers

20. The table shows the percentage change in employment over a period for a country
with three economic sectors.
Economic sector Change in employment (%)
Agriculture -6
Manufacturing +2
Services +4
What could be concluded from this information?
A. Agricultural output fell.
B. The country became more developed.
C. The working population stayed constant.
D. Total employment remained the same.

21. What combination of goods could give a cross elasticity value of - 2

A. coke and pepsi
B. milo and bonvita
C. Bread and butter
D. Car and petrol
22. This population below pyramid is true for a ...

A. Developed country
B. Industrialized country
C. Developing country
D. None of the above

23. All of the following are characteristics of a developing countries EXCEPT...

A. A large rural population
B. A low life expectancy
C. Lack of access to education
D. Advanced technology

24. Which is NOT a reason for the decreasing death rate?

A. Better health care
B. Greater food supply
C. Cleaner water
D. More pollution

25. Before 1800, the infant mortality rate was much higher than it is now. What does
that mean?
A. People didn't have a lot of babies before 1800
B. Children did not grow very tall before 1800
C. Most women were unable to have babies before 1800
D. A lot more babies died during childhood before 1800
26. In general, the predictions of the Malthusian model have shown to be
___________________ during recent history.

A. 100% true
B. relevant to a certain extent, particularly for less economically developed
countries
C. relevant to only more economically developed countries
D. 100% incorrect

27. The change in total product divided by the change in inputs represents the
A. Average product
B. Total product
C. Marginal product
D. None of the above

28. The value of output per unit of input is called _____

A. Average product
B. Total product
C. Marginal product
D. None of the above

29. For perfect market equilibrium, the

A. Total cost = Total Revenue
B. Average Cost = Total Cost
C. Marginal Revenue = Marginal Cost
D. Marginal Revenue = Marginal cost = Unit Price

30. What could be the likely value of the marginal product when the total product
starts decreasing?
A. +2
B. 0
C. – 3
D. +3

31. When the marginal product is zero, the total product is

A. Negative
B. Positive
C. Maximum
D. minimum
32. The level of output associated with an increase in the use of all inputs in the
production process refers to
A. marginal product
B. average product
C. returns to scale
D. total product

33. The population structure of many developed countries is changing. Birth rates are
low, those over 65 are living longer and the working population (16-65 years) is a
smaller proportion of the total population. What is the most likely consequence of
this changing structure?
A. Economic migrants make up shortages in the working population.
B. Overall the standard of living is gradually falling.
C. The population is healthier and needs less medical care.
D. The ratio of those under 16 dependent on the working population is rising.

34. Which of these is not a method of trade protection that can be adopted by a
government?
A. Tariffs
B. Embargoes
C. Negotiation
D. Subsidies

35. What are inferior goods?

A. Quality goods that we consume when we are on higher incomes
B. Lower quality goods that we consume when we are on lower incomes
C. complementary products
D. competitive products bought at the same price

36. If an increase in the price of commodity X leads to an increase in the demand for
commodity Y, X and Y are ____
A. competitive products
B. complementary products
C. consumer products
D. necessities

37. A market where the activities of buyers and sellers cannot influence price is
A. Monopoly
B. perfect market
C. imperfect market
D. capitalism
38. A monopolistic scenario where a government tries to protect the creative works of
some producers is referred to as ___ monopoly
A. patent
B. natural
C. act of parliament
D. None of the above
39. What are complements?
A. Competitive goods
B. Substitute goods
C. Goods we consume together
D. Goods that are rival to each other

40. At a very high income, the price elasticity of demand of a consumer is usually___
A. inelastic
B. zero elastic
C. elastic
D. none of the above
 THEORY
ANSWER QUESTION 1 AND ANY OTHER TWO QUESTIONS
1. Between 2011 and 2012 Russia’s exchange rate was relatively constant. The
country continued to have a surplus on the current account of its balance of
payments. The main change in its international trade position arose from it joining
the World Trade Organization. In order to do this, the government agreed to move
towards free trade.
(a) Describe what is meant by a current account surplus. (4)
(b) Analyze why a country’s exchange rate may rise in value. (6)
(c) Discuss whether engaging in free trade will always benefit an economy. (10)

2. Use the table below to answer the questions that follow suit:
Prices of commodity Quantity demanded of commodity B
A
P1 = 100 Q1 = 200
P2 = 200 Q2 = 100

(a) Calculate the cross elasticity of demand for commodities A and B. (6)
(b) Explain your answer in question 2a above. (2)
(c) State two factors affecting the price elasticity of demand for a product. (2)
(d) Discuss if monopoly would always be beneficial for an economy. (10)

3. It is forecast that India’s working-age population aged between 15 and 64 will rise
by 125 million between 2015 and 2025 and by a further 103 million over the
following decade. Of course, not everyone of working age will be in work or will
be seeking work. Changes in population and the labour force affect a
government’s ability to achieve its economic aims.
(a) Identify two government economic aims. (2)
(b) Explain two reasons why someone may be of working age but not in the labour
force. (4)
(c) Analyse what may cause an increase in a country’s labour force. (6)
(d) Discuss whether an economy will benefit from having a younger workforce. (8)

4. Tuk-tuks, three-wheeled motorised rickshaws, are driven in a number of countries.

India is the largest producer of the vehicle. India’s largest tuk-tuk producing firm
faces competition from firms at home and from imported tuk-tuks. The industry is
becoming more capital-intensive and competitive but is still some way from
perfect competition.
(a) Define ‘capital-intensive’. (2)
(b) Explain two characteristics of perfect competition. (4)
(c) Analyze two internal diseconomies of scale a large firm may experience. (6)
(d) Discuss whether consumers would benefit from an increase in imports. (8)