2015 ON2

In a rural community of Southern Africa, women were responsible for planting and weeding crops by hand, while men used to control production and receive profits. Which combination of factors of production was in operation?

• men: capital; women: land

• men: enterprise; women: labour

• men: labour; women: capital

• men: land; women: enterprise

The government of a prosperous country announced that it would offer free food to its citizens for a year. What would be the effect of this measure?

• Agricultural resources would become unlimited.

• Human wants would become finite.

• More resources would be devoted to food production.

• The basic economic problem would be solved.

The diagram shows a production possibility curve for an economy that can produce rice or electronic equipment. The economy is at point Q. A recession causes unemployment in the electronics industries. At which point will the economy be in the diagram?

• A

• B

• C

• D

A person works at home making table cloths. He works for 6 hours each day and makes 15 table cloths an hour. He sells them for $10 each. He then decides to work only 4 hours each day. What can be concluded from the above information?

• The lost profit would be $300.

• The lost revenue would be $60

• The daily opportunity cost would be 30 table cloths.

• The daily opportunity cost would be $50

What is meant by an equilibrium price?

• a government price that ensures fairness for all

• a price that has no pressure to rise or fall

• a price that maximises the profits of the producers

• a price that maximises the satisfaction of the consumers

In August 2013, a lengthy strike in north-east India, where the finest and most expensive Darjeeling tea is grown, shut down the tea industry at harvest time. What is the likely outcome of such a situation on a demand and supply diagram for Darjeeling tea?

• The price will rise because demand will switch to other teas.

• The price will rise because the strike will cause a movement down the supply curve.

• The price will rise because the supply curve will move to the left.

• The price will rise because there will be a fall in demand for the remaining Darjeeling tea.

Air travel and rail travel are substitute forms of transport. The diagram shows the effect of new technology on the market for air travel. What would be the most likely effect on the market for rail transport?

• a decrease in demand for rail transport

• an increase in the price of rail tickets

• an increase in supply of rail transport

• an increase in the total income of rail companies

A developer built some large houses in a rural area which poorer people could not afford. The houses destroyed an area of natural beauty. What type of market failure resulted from the development?

• ignoring external cost

• inequality of income

• lack of information

• price discrimination

How do high direct taxes affect spending and how do high interest rates affect saving by wage-earners?

• spending: decrease; saving: decrease

• spending: decrease; saving: increase

• spending: increase; saving: decrease

• spending: increase; saving: increase

A national trade union wishes to increase the wages of its members without reducing the numbers employed. Which factor would help the union to do this?

• The demand for the industry’s product is high.

• The industry consists of a small number of well-organised employers.

• The union workers have low-level skills.

• The workers’ wages are the largest cost of the industry.