9708/13/M/J/23

People plant flowers in a local park. Which statement is correct?

• Flowers in parks are a public good because people can enjoy them at no charge.

• Flowers in parks are a public good because they are owned by local people and are not for profit.

• Flowers in parks are not a public good if local people can limit the number of visitors to the parks.

• Flowers in parks are not a public good if they are individual, not identical, in nature.

A government decides that all non-essential businesses must close for three months due to a disease pandemic. What is an opportunity cost of this policy?

• Increased leisure time for employees

• Lives that are saved due to reduced disease levels

• The production of goods by essential businesses

• The loss of goods from the closed businesses

The diagram shows an economy’s production possibility curve. The economy produces

combinations of goods and services using all available resources.

What does the production possibility curve indicate for goods and services?

• Constant returns to scale in the production of both goods and services

• Diminishing returns to scale in the production of both goods and services

• Increasing returns to scale in the production of both goods and services

• Infinite returns to scale in the production of both goods and services

Which economic conditions are likely to encourage an increase in enterprise?

• high interest rates, high profit tax, high consumer confidence, high unemployment

• high interest rates, low profit tax, low consumer confidence, high unemployment

• low interest rates, low profit tax, high consumer confidence, low unemployment

• low interest rates, low profit tax, low consumer confidence, low unemployment

When is the price elasticity of demand for a product most likely to be price elastic?

• A large percentage of income is spent on the product.

• It is measured in the short run.

• It is a necessity product.

• There are few substitutes available.

What is most likely to cause a shift in the supply curve for rice?

• A change in the price of the rice

• A change in the price of meat

• A change in the size of the rice industry

• A change in tastes and preferences for rice

A free market is in disequilibrium with a shortage of a product. As the market moves towards equilibrium, what will happen to the price, the quantity demanded and the quantity supplied?

• decrease in price, decrease in quantity demanded, increase in quantity supplied

• decrease in price, increase in quantity demanded, decrease in quantity supplied

• increase in price, decrease in quantity demanded, increase in quantity supplied

• increase in price, increase in quantity demanded, decrease in quantity supplied

What would not cause a shift in the demand curve for a good?

• A. a change in the price of a complement

• B. a change in the price of a substitute

• C. a change in the price of the good itself

• D. a change in consumers’ incomes

What does joint supply mean?

• A. A firm can choose between producing a range of different goods.

• B. A good has multiple uses.

• C. A good is a by-product of the production process of another good.

• D. Consumers consider two goods as complements.

When the price of a firm’s product falls by 5%, its total revenue also falls by 5%. What describes the product’s price elasticity of demand?

• A. elastic

• B. infinite

• C. unitary

• D. zero