Economics May/June 2023 (04/10/22)

The diagram shows a production possibility curve for an economy that is producing at point P. Which quantity of X is given up to produce the quantity of Y shown?

• 40.0
• 50.0
• 100.0
• 110.0

The Indian government operates a pension scheme. Which statement about this scheme would be classed as normative?

• To be eligible, individuals must be above the age of 60 and live below the poverty line.
• In January 2020, eligible individuals aged over 70 received 500 rupees per month.
• In 2018, the Supreme Court said the government must review pension payments because they are unrealistic.
• In January 2020, the Indian government announced that it might increase the payment to 1000 rupees per month.

Economics students have to fill in the gaps in the following passage. ‘The three basic questions arising from the economic problem of scarcity are ......1...... to produce, ......2...... to produce, and ......3...... to produce.’ Which combination is correct?

• A
• B
• C
• D

What is not a function of money?

• It is a medium of exchange.
• It is a store of value.
• It is a unit of account
• It is a measure of satisfaction.

The producer of a good with a price-elastic demand observes that a rise in its price is accompanied by a rise in total revenue. What might explain this?

• The good is an inferior good.
• The rise in price was due to an increase in demand for the good.
• The supply of the good was inadequate to meet the demand.
• The supply of the good was price-inelastic.

What will increase the producer surplus of farmers that grow carrots?

• a decrease in the demand for carrots
• a decrease in the price of carrot seed
• a decrease in the price of cabbage
• a decrease in the subsidy on carrots

A popular band is due to perform at a music concert in a venue that has a 5000-seat capacity. Recent appearances and the release of a new album have made the band even more popular. D1 and S represent the original demand and supply curves for concert tickets and D2 the new demand curve. Which diagram best represents the likely outcome on the market for concert tickets?

• A
• B
• C
• D

Why does an individual’s demand curve generally slope downwards to the right?

• The additional satisfaction an individual gets from consuming most goods decreases as consumption increases.
• The additional satisfaction an individual gets from consumption decreases as income rises.
• The individual has finite income which is used to attempt to satisfy many wants.
• For most goods the price charged by producers falls as the quantity purchased increases.

The demand for a product is inversely related to its price, ceteris paribus. What does ceteris paribus mean in this context?

• Factors affecting demand other than price are held constant.
• Factors affecting price other than demand are held constant
• Price changes result from changes in demand.
• Price falls result in increased quantity demanded.

What is likely to be introduced in the market for bus travel if an economy moves from a mixed economy to a market economy?

• allowing companies to bid for bus routes
• free bus travel for school children
• maximum prices for bus travel
• subsidies to bus operators