9708/OCT/NOV /13/2023

A factory introduces an automated production line to take advantage of division of labour. What is most likely to increase?

• average cost of production

• job satisfaction of workers

• range of skills of each worker

• worker productivity

Consumers do not use enough of a product to maximise their private benefit because they have imperfect information about the product. How would an economist classify this product?

• demerit good

• free good

• merit good

• public good

The table shows different combinations of rings and bracelets that can be produced by Luke and Zoe in the same time period. Which statement is not correct?

• Luke has a larger opportunity cost than Zoe for making bracelets.

• The opportunity cost of producing rings is constant for both Luke and Zoe.

• Zoe should specialise in making rings.

• Zoe’s opportunity cost for each bracelet is 2 rings.

What is an example of a free good?

• a government sponsoring a free vaccination programme for its citizens

• a hospital providing free treatment to the poor

• a school providing free education to outstanding students

• anything that provides free utility but is not scarce

The diagram shows the market for computers in Pakistan. Which areas represent consumer surplus and consumer expenditure?

• A

• B

• C

• D

The supply curve for a firm is a horizontal straight line. What can be concluded from this statement?

• Quantity supplied is infinite at the given price.

• Quantity supplied is infinite below the given price.

• Quantity supplied remains constant at all prices.

• Quantity supplied is perfectly inelastic.

When the incomes of consumers of good X fall by 5%, under which conditions will the demand curve shift furthest to the right?

• A

• B

• C

• D

Good P and good Q are substitutes. There is a decrease in supply of good P because of a shortage of materials. Which row describes what will happen to demand?

• A

• B

• C

• D

The pressure to reduce the use of fossil fuels has led to oil companies reducing the level of investment in the exploration of new reserves. What will be the long-run effect of such a policy on the market for oil?

• A

• B

• C

• D

The price elasticity of demand for a product is –0.6. The supplier wants to clear all surplus stock of a product and reduces the price of a good by 50%. What is the effect of this price change on the quantity purchased and the expenditure on the good?

• A

• B

• C

• D