Cambridge International (CAIE) A-level Paper 3, June 2023

1. Athe existence of asymmetric information
2. Bthe existence of dynamic efficiency
3. Cthe existence of positive externalities
4. Dthe existence of social benefits

TopicEfficiency and market failure7.4 Private costs and benefits, externalities and social costs and benefits

1. AThe individual can afford more apples than pears.
2. BThe individual has not changed their total utility.
3. CThe individual prefers apples to pears.
4. DThe individual has gained more utility by moving from point X to point Y.

TopicIndifference curves and budget lines7.1 Utility

1. Aability to separate markets
2. Bdifferent price elasticities of demand in each market
3. Cmonopoly power
4. Dprice leadership

TopicDifferent market structures

TopicTypes of cost, revenue and profit, short-run and long-run production

1. Aaverage revenue: decrease; long-run average cost: decrease
2. Baverage revenue: decrease; long-run average cost: increase
3. Caverage revenue: increase; long-run average cost: decrease
4. Daverage revenue: increase; long-run average cost: increase

TopicTypes of cost, revenue and profit, short-run and long-run production

1. AExternal benefit minus private benefit equals social benefit.
2. BPrivate benefit minus external benefit equals social benefit.
3. CSocial benefit minus external benefit equals private benefit.
4. DSocial benefit plus private benefit equals external benefit.

TopicPrivate costs and benefits, externalities and social costs and benefits

1. Acharging the same insurance premium to all people in the same age group
2. Bdesigning insurance contracts so that the insurance company and client share any loss
3. Cgiving unconditional financial support to banks to protect jobs
4. Dguaranteeing jobs for bank managers to provide a sense of security

TopicEfficiency and market failure

1. AA child is vaccinated against measles.
2. BA consumer donates products to a local food bank.
3. CA firm rebuilds a local road when constructing its new factory.
4. DA government pays a subsidy to firms producing cars.

TopicPrivate costs and benefits, externalities and social costs and benefits

1. Aproductive efficiency: no; allocative efficiency: no; dynamic efficiency: no
2. Bproductive efficiency: no; allocative efficiency: no; dynamic efficiency: yes
3. Cproductive efficiency: no; allocative efficiency: yes; dynamic efficiency: yes
4. Dproductive efficiency: yes; allocative efficiency: no; dynamic efficiency: yes

TopicEfficiency and market failure

1. Acost barriers
2. Blegal barriers
3. Cmarket barriers
4. Dphysical barriers

TopicDifferent market structures

1. Aaverage costs: decrease; marginal costs: decrease
2. Baverage costs: decrease; marginal costs: increase
3. Caverage costs: increase; marginal costs: decrease
4. Daverage costs: increase; marginal costs: increase

TopicTypes of cost, revenue and profit, short-run and long-run production

1. AThe materials needed to build the stadium will need to be imported.
2. BThe external costs of clearing land for building will outweigh the private costs.
3. CThe stadium will not be used much for athletics after the World Games.
4. DThe valuation of national pride will be complex to assess.

TopicPrivate costs and benefits, externalities and social costs and benefits

1. Aa decrease in the marginal productivity of labour
2. Ba decrease in the wage rate
3. Can increase in the marginal productivity of labour
4. Dan increase in the wage rate

TopicLabour market forces and government intervention

1. A6.0 units
2. B6.5 units
3. C7.0 units
4. D8.0 units

TopicTypes of cost, revenue and profit, short-run and long-run production

1. Aa reduction in the top rate of taxation
2. Ban increase in government spending on education and training
3. Can increase in unemployment
4. Dprivatisation of the education sector

TopicEquity and policies towards income and wealth redistribution9.3 Employment and unemployment8.1 Government policies to achieve efficient resource allocation and correct market failure

1. ACanada intended to maintain the same level of skilled immigrants under both systems.
2. BCanada wanted a smaller number of highly educated skilled immigrants.
3. CCertainty of employment for skilled immigrants was made the main criterion.
4. DSkilled immigrants needed to have fewer years of work experience than previously.

TopicLabour market forces and government intervention

1. AIt will encourage electricity suppliers to invest in additional capacity.
2. BIt will increase the incentive for consumers to conserve energy.
3. CIt will prevent the monopolistic exploitation of consumers.
4. DIt will prevent the rationing of electricity through power cuts.

TopicGovernment policies to achieve efficient resource allocation and correct market failure

1. AIt is spending on capital goods by firms because the rate of growth in demand for final goods and services increases.
2. BIt is spending on capital goods by firms because the cost of borrowing has fallen.
3. CIt is spending on capital goods by firms because they want to access new technology to improve the output per worker.
4. DIt is spending on new capital goods by firms replacing old and obsolete capital goods.

TopicThe circular flow of income

1. Aassisting low-income countries to overcome foreign exchange shortages by writing off debts
2. Benabling low-income countries to undertake capital projects for supplies of clean water through financial aid
3. Chiring mainly labour from low-income countries to build infrastructure in the Middle East
4. Dreducing exports of fuels to low-income countries to lower pollution of the environment

TopicRelationship between countries at different levels of development9.2 Economic growth and sustainability

1. AQE
2. BRT
3. CSR
4. DST

TopicThe circular flow of income

1. Ahigh average and marginal tax rates
2. Bhigh marginal propensity to save
3. Clow level of autonomous consumption
4. Dlow marginal propensity to import

TopicThe circular flow of income

1. Acyclical
2. Bfrictional
3. Cstructural
4. Dtechnological

TopicEmployment and unemployment

1. Aan automatic stabiliser
2. Bcrowding out
3. Cthe accelerator
4. Dthe substitution effect

TopicEffectiveness of policy options to meet all macroeconomic objectives9.1 The circular flow of income

1. Aa decrease in the average standard of living
2. Ba decrease in the currency’s foreign exchange rate
3. Can increase in the level of frictional unemployment
4. Dan increase in the rate of inflation

TopicGovernment macroeconomic policy objectives9.3 Employment and unemployment11.3 Economic development

1. Ato reduce the budget deficit
2. Bto reduce the inequality of income distribution
3. Cto reduce the level of unemployment
4. Dto reduce the rate of inflation

TopicGovernment macroeconomic policy objectives

1. Aprice of imported goods in the domestic currency: fall; price of exported goods in the domestic currency: fall
2. Bprice of imported goods in the domestic currency: fall; price of exported goods in the domestic currency: rise
3. Cprice of imported goods in the domestic currency: rise; price of exported goods in the domestic currency: fall
4. Dprice of imported goods in the domestic currency: rise; price of exported goods in the domestic currency: rise

TopicExchange rates

1. AIndia had a fall in life expectancy at birth.
2. BIndia had a fall in real national income per head.
3. CIndia had a rise in environmental pollution and crime rates.
4. DIndia had a rise in the mean years of schooling of the adult population.

TopicEconomic development

1. Aa time lag before recognising that prices have changed
2. Ban improvement in the quality of goods produced
3. Cthe demand for imports and exports is elastic in the short run
4. Dthe supply of goods is price elastic

TopicPolicies to correct disequilibrium in the balance of payments11.2 Exchange rates

1. AGini coefficient: high; death rate: high; relative size of tertiary sector: high
2. BGini coefficient: low; death rate: low; relative size of tertiary sector: low
3. CGini coefficient: low; death rate: low; relative size of tertiary sector: high
4. DGini coefficient: low; death rate: high; relative size of tertiary sector: low

TopicCharacteristics of countries at different levels of development8.2 Equity and policies towards income and wealth redistribution

1. Aan expansion of the range of economic choices available to individuals
2. Ban increase in Gross Domestic Product
3. Cthe eradication of absolute poverty
4. Dthe satisfaction of basic needs amongst the whole population

TopicEconomic development