ECONOMICS P1 ASSIGNMENT

Name:

1. The statements refer to the proposal to build another runway at London’s Heathrow airport. Which statement Is normative?

• Heathrow is London’s busiest airport and has more flights than any other European airport.
• The airport is highly competitive but there is spare capacity
• The potential ne benefit of expansion is around €5 billion over 70 years
• We should concentrate on improving the use of existing capacity not build another runway.

2. India is failing to reach its full economic potential because of poor rail, road and electricity infrastructure. Its problem is not lack of government spending but a lack of skilled civil engineers. Which factors of production need to be increased?

• A. Capital and land
• B. Enterprise and labor
• C. Labor and capital
• D. Land and enterprise

3. The PPC shows the ability of 4 economies to produce trucks and cars. In which economy is the opportunity cost of producing cars the lowest?

• A
• B
• C
• D

4. A farmer is able to grow 3 crops, X, Y and Z, on his land. The farmer decides to grow at most two crops in any year. The table shows six possible combinations of units of output of the 3 crops.What is the opportunity cost of 1 unit of X?

• A. 1.33 units of Y
• B. 1.5 units of Y
• C. 0.5 units of Z
• D. 2.0 units of Z

5. In the diagram, D is the demand curve of an agricultural commodity and S is the initial supply curve. The government promises to maintain farmers’ incomes at least at this initial level. The harvests in four subsequent years are shown by supply curves S1–S4. How much in total will the government pay to support farmers over the four subsequent years?

• A. $0
• B. $3000
• C. $6000
• D. $10 000

6. A change in the price of a good causes an increase in the quantity of the good demanded.What would be the nature of the good and the direction of price change for this to be certain to happen?

• A
• B
• C
• D

7. Four students are given the following list of assets.● a three-bedroom house● banknotes and coins in a purse● money in a bank savings account● shares in a public limited company. The students are asked to order the assets from the most liquid to the least liquid and the table shows their choices. Which student is correct?

• A
• B
• C
• D

8. The diagram shows the relationship between total expenditure and price for three products, 1, 2 and 3.

• 
• A
• B
• C
• D

9. A firm has a perfectly elastic supply curve at the market price of $10.Which statement about the firm is correct?

• A. At any price above $10 quantity supplied is zero.
• B. At any price below $10 quantity supplied is infinite.
• C. At price $10 the firm will supply any quantity.
• D. At price $10 the firm will break even.