Economics A Level Paper 1 Quiz May/June 2021

In 2015, the Chinese economy grew at 6.9%, the Indian economy at 7.6% and the US economy at 2.4%. Which comment contains two positive statements?

• Chinese economic growth exceeded US economic growth by 4.5% in 2015 but was 0.7% less than that in India.

• Chinese economic growth was more than double that in the US in 2015 but was disappointing compared to that in India.

• Economic growth in India was better than that of the US.

• Economic growth in the US was too low in 2015 and economic growth in India was too high.

What is the payment received for the use of capital?

• interest

• profit

• rent

• wage

Which type of good would be over-consumed because of information failure?

• demerit

• inferior

• merit

• public

What does the phrase ‘ceteris paribus’ mean?

• All the resources used are of equal quality.

• Everything else remains unchanged.

• The price mechanism rations scarce goods.

• The variable under consideration is held constant.

What could explain a shift of an upward-sloping supply curve to the right?

• an increase in firms’ unit labour costs

• an increase in the number of firms in the industry

• an increase in the price of the good

• an indirect tax imposed on the good

When will it not be possible to use price as a rationing mechanism?

• when a good has a number of close substitutes

• when a good is an inferior good

• when the demand for a good is perfectly inelastic

• when the quantity of a good is in fixed supply

What is necessary for demand for a good to be effective?

• The consumer must have the ability to buy the product.

• The consumer must receive consumer surplus.

• The good must be sold in the private sector of the economy.

• There must be a successful advertising campaign.

Why is the price elasticity of demand for a particular brand of coffee likely to be higher than the price elasticity of demand for coffee in general?

• Coffee in general takes up a higher proportion of consumers’ income.

• Consumers may be very loyal to a particular brand of coffee.

• There are more substitutes for a particular brand of coffee than for coffee in general.

• Total demand for coffee is higher than for any one brand.

A government wishes to encourage young adults to buy their first home, by providing a subsidy to the builder. Which area on the diagram represents the size of the consumer surplus to those who buy a house with such a subsidy?

• V + W + X

• V + W + Z

• W + X + Y

• X + Y + Z

A government introduces a subsidy for product X and the market price of X falls by 5%. The cross elasticity demand for product Y, with respect to the price of product X, is +0.4. What will happen to the demand for product Y?

• It will decrease by 2%.

• It will decrease by 12.5%.

• It will increase by 2%.

• It will increase by 12.5%.