s23_qp_32 A2 Economics

Studies show that some dentists replace patients’ teeth more often than is necessary. Which factor helps to explain why excessive dental treatment may take place?

• the existence of asymmetric information

• the existence of dynamic efficiency

• the existence of positive externalities

• the existence of social benefits

The diagram shows an individual’s indifference curve, I₁, for apples and pears. What can be concluded from the movement from point X to point Y on this curve?

• The individual can afford more apples than pears.

• The individual has not changed their total utility.

• The individual prefers apples to pears.

• The individual has gained more utility by moving from point X to point Y.

What is not necessary for successful price discrimination?

• ability to separate markets

• different price elasticities of demand in each market

• monopoly power

• price leadership

The diagram shows the cost curves of a firm. What is the level of output below which the firm will shut down in the long run?

• A

• B

• C

• D

Steel producer X takes over its main competitor, steel producer Y. What would X expect to happen to the average revenue for its product and its long-run average cost as a result of this takeover?

• A: decrease, decrease

• B: decrease, increase

• C: increase, decrease

• D: increase, increase

Which statement is correct?

• A: External benefit minus private benefit equals social benefit.

• B: Private benefit minus external benefit equals social benefit.

• C: Social benefit minus external benefit equals private benefit.

• D: Social benefit plus private benefit equals external benefit.

What can be done to help to overcome moral hazard?

• charging the same insurance premium to all people in the same age group

• designing insurance contracts so that the insurance company and client share any loss

• giving unconditional financial support to banks to protect jobs

• guaranteeing jobs for bank managers to provide a sense of security

Which action would produce a positive externality of production?

• A child is vaccinated against measles.

• A consumer donates products to a local food bank.

• A firm rebuilds a local road when constructing its new factory.

• A government pays a subsidy to firms producing cars.

A privately owned sole supplier of gas operates in an unregulated market with high barriers to entry and exit. Which row is most likely to indicate the economic efficiency resulting from the firm’s position in this market?

• no, no, no

• no, no, yes

• no, yes, yes

• yes, no, yes

A government increases the protection that patents offer to inventors of new products and processes. Which barriers to entry into an industry are higher as a result of this increase?

• cost barriers

• legal barriers

• market barriers

• physical barriers