9708/11/o/n/22

An economy is changing from a planned economy to a market economy.

Which action would be expected during this change?

• the replacement of fiscal policy by monetary policy

• the replacement of multinational companies by national companies

• the replacement of nationalisation by privatisation

• the replacement of private property rights by common ownership

A local council provides a tap for drinking water in a town.

Would this make drinking water a free good?

• No, because it is possible to exclude some people from using the tap

• No, because it requires the use of scarce resources.

• Yes, because it is available to all passers-by.

• Yes, because it is impossible to charge for it.

Food prices in a country increased by 20% in three months due to an infectious virus.

Which statement about the cause of this rise in food prices is normative?

• Consumers were scared of running out of food.

• Farm workers demanded higher wages to cover extra hours worked

• Supply of foreign food was reduced because of closed borders.

• Transport costs increased by 10%.

A doctor has very long working hours and a high level of stress. She can become a teacher instead of continuing as a doctor.

What is the opportunity cost of choosing to continue as a doctor?

• the risk of mistakes caused by tiredness

• the possible costs of illness caused by high stress levels

• the potential salary as a teacher

• the retraining costs of becoming a teacher

When will the demand curve for motorcycles shift to the left?

• when the price of cars falls

• when the price of motorcycles falls

• when the tax on motorcycles rises

• when the price of public transport rises

The diagram shows the demand curve for housing.

What is not assumed to remain constant when drawing this curve?

• consumer incomes

• expectations about future house prices

• the price of houses

• the rate of interest charged on loans for house purchase

Which statement defines the price elasticity of supply?

• It is a measure of how the price of a good responds to a change in the quantity supplied.

• It is a measure of how the quantity supplied of a good responds to a change in its price.

• It is a measure of how the supply of a good responds to a change in its cost of production.

• It is a measure of how the supply of good X responds to a change in the price of good Y.

Which products are likely to have a positive cross-elasticity of demand with tea?

• biscuits and cakes

• coffee and hot chocolate

• cups and saucers

• sugar and milk

What does not cause a shift in the supply curve of cars?

• a change in the car producers’ costs of production

• a change in the price of fuel used by car owners

• a change in the rate of sales tax on cars

• a change in the wage rate of workers in the car industry

The diagram shows the market for pineapples. X is the original equilibrium point. Pineapple producers benefit from improved technology. At the same time, a new diet book suggests that eating pineapples helps weight loss.

Which point is the new equilibrium?

• A

• B

• C

• D