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

1. Aaccess to complete information: no; addictive behaviour: yes; choice is independent of other consumers: yes
2. Baccess to complete information: yes; addictive behaviour: no; choice is independent of other consumers: no
3. Caccess to complete information: yes; addictive behaviour: yes; choice is independent of other consumers: no
4. Daccess to complete information: yes; addictive behaviour: no; choice is independent of other consumers: yes

TopicUtility

1. Agood S: 1; good T: 1
2. Bgood S: 2; good T: 1
3. Cgood S: 3; good T: 4
4. Dgood S: 5; good T: 5

TopicUtility

1. Aprice change: price of X falls; substitution effect: positive; income effect: positive
2. Bprice change: price of X falls; substitution effect: positive; income effect: negative
3. Cprice change: price of Y rises; substitution effect: negative; income effect: positive
4. Dprice change: price of Y rises; substitution effect: negative; income effect: negative

TopicIndifference curves and budget lines

1. AEntry barriers are reduced to increase competition in the market.
2. BFirms are legally bound to produce where price equals marginal cost.
3. CTaxes on profits are raised to encourage firms to produce where price equals average cost.
4. DTaxes on retained profits are reduced to encourage investment in new technology.

TopicEfficiency and market failure7.5 Types of cost, revenue and profit, short-run and long-run production8.1 Government policies to achieve efficient resource allocation and correct market failure

TopicDiffering objectives and policies of firms

1. Aallocative efficiency: no; supernormal profit: no
2. Ballocative efficiency: no; supernormal profit: yes
3. Callocative efficiency: yes; supernormal profit: no
4. Dallocative efficiency: yes; supernormal profit: yes

TopicDifferent market structures7.5 Types of cost, revenue and profit, short-run and long-run production

1. Ademerit good and negative production externality
2. Bimperfect competition and positive consumption externality
3. Cperfect competition and negative consumption externality
4. Dpublic good and negative production externality

TopicPrivate costs and benefits, externalities and social costs and benefits7.3 Efficiency and market failure7.6 Different market structures

1. AThe tenants forget to switch off a tap when filling a bath and water overflows, damaging the floor.
2. BThe tenants have a party and their guests cause damage to the interior of the house.
3. CThe tenants leave the lights and the TV on when they go out for an evening meal.
4. DThe tenants park their car in the garden, damaging the grass and the surrounding hedge.

TopicGrowth and survival of firms

1. AThe project would not be profitable for a private firm.
2. BThe project would cause negative externalities.
3. CThere is limited capital available for government projects.
4. DThere would be more who lost than gained.

TopicPrivate costs and benefits, externalities and social costs and benefits

1. Aproduction of the good: decrease; price of the good: decrease
2. Bproduction of the good: decrease; price of the good: increase
3. Cproduction of the good: increase; price of the good: decrease
4. Dproduction of the good: increase; price of the good: increase

TopicEfficiency and market failure7.5 Types of cost, revenue and profit, short-run and long-run production

1. Aa decrease equal to XY
2. Ba decrease equal to XZ
3. Can increase equal to XY
4. Dan increase equal to YZ

TopicLabour market forces and government intervention

1. AMarket X has a higher marginal revenue product per worker than Y.
2. BMarket X has a higher percentage of its labour belonging to a trade union than Y.
3. CMarket X has higher labour costs as a percentage of total costs than X.
4. DMarket X has more specific skills and training requirements than Y.

TopicLabour market forces and government intervention

1. AThose employed in occupation Y attach greater importance to job security.
2. BThose employed in occupation X attach less importance to leisure activities.
3. CThere will be more competition for places on training courses to enter occupation X than occupation Y.
4. DOccupation Y has more non-pecuniary advantages than occupation X.

TopicLabour market forces and government intervention

1. Adirect taxes: fall; indirect taxes: fall
2. Bdirect taxes: fall; indirect taxes: rise
3. Cdirect taxes: rise; indirect taxes: fall
4. Ddirect taxes: rise; indirect taxes: remain constant

TopicEquity and policies towards income and wealth redistribution11.4 Characteristics of countries at different levels of development

1. Aa decrease in parking charges
2. Blowering tax on petrol (gasoline)
3. Crestricting cycling
4. Dsubsidising public transport

TopicGovernment policies to achieve efficient resource allocation and correct market failure

1. A30%
2. B55%
3. C60%
4. D80%

TopicEquity and policies towards income and wealth redistribution

1. Atotal GDP: decreases; unemployment: rises; government spending: decreases
2. Btotal GDP: decreases; unemployment: rises; government spending: no change
3. Ctotal GDP: increases; unemployment: falls; government spending: increases
4. Dtotal GDP: increases; unemployment: falls; government spending: no change

TopicEffectiveness of policy options to meet all macroeconomic objectives9.3 Employment and unemployment

1. Aissues bank notes; yes; yes
2. Blender of the last resort; yes; yes
3. Cmaximises profit; no; yes
4. Dreceives deposits directly; no; yes

TopicMoney and banking

1. Aa movement of people from rural to urban areas
2. Ban increase in technical training
3. Can increase in the size of the population
4. Drising consumer credit levels

TopicEconomic growth and sustainability11.4 Characteristics of countries at different levels of development

1. Aan increase in retraining facilities
2. Ba significant increase in indirect taxes
3. Cthe imposition of selective import controls
4. Dan increase in the public sector deficit

TopicEmployment and unemployment

1. AConsumption is a function of the rate of change of income.
2. BIncome is a function of the rate of change of investment.
3. CInvestment is a function of the rate of change of income.
4. DInvestment is a function of the rate of interest.

TopicThe circular flow of income

1. Alow unemployment level
2. Bmore equal income distribution
3. Cstable exchange rate
4. Dsteady price level

TopicEffectiveness of policy options to meet all macroeconomic objectives

1. Afull employment: ; stable price level: ; current account surplus: 
2. Bfull employment: ; stable price level: ; current account surplus: 
3. Cfull employment: ; stable price level: ; current account surplus: 
4. Dfull employment: ; stable price level: ; current account surplus: 

TopicEffectiveness of policy options to meet all macroeconomic objectives

1. ACompetitive pricing of exports may create employment potential in country X.
2. BForeign importers may depreciate their own currencies and reduce any advantage gained by country X.
3. CInelastic demand for imported raw materials may lead to cost inflation in country X.
4. DLoss of import duties by country X may reduce government backing for trade promotion.

TopicPolicies to correct disequilibrium in the balance of payments

1. Aincreased exploitation of a country’s mineral resources
2. Binvestment financed by borrowing from abroad
3. Cinvestment financed by high rates of domestic savings
4. Dtechnological innovations in production processes

TopicEconomic growth and sustainability11.4 Characteristics of countries at different levels of development

1. Achanges in the distribution of GDP: no; level of poverty: no; real income per capita: yes
2. Bchanges in the distribution of GDP: no; level of poverty: yes; real income per capita: no
3. Cchanges in the distribution of GDP: yes; level of poverty: yes; real income per capita: no
4. Dchanges in the distribution of GDP: yes; level of poverty: yes; real income per capita: yes

TopicEconomic development8.2 Equity and policies towards income and wealth redistribution

1. AKuznets curve
2. BLaffer curve
3. CLorenz curve
4. DPhillips curve

TopicLinks between macroeconomic problems and their interrelatedness8.2 Equity and policies towards income and wealth redistribution10.3 Effectiveness of policy options to meet all macroeconomic objectives

1. Amean years of schooling
2. Baverage life expectancy at birth
3. Clevel of real GNP per head
4. Dsize of population

TopicEconomic development

1. Aan increase in income tax rates
2. Ban increase in interest rates
3. Can increase in tariff rates
4. Dan increase in the supply of money

TopicPolicies to correct disequilibrium in the balance of payments10.3 Effectiveness of policy options to meet all macroeconomic objectives

1. Aeconomic growth: decrease; pressure on wage rises: decrease
2. Beconomic growth: decrease; pressure on wage rises: increase
3. Ceconomic growth: increase; pressure on wage rises: decrease
4. Deconomic growth: increase; pressure on wage rises: increase

TopicLabour market forces and government intervention9.2 Economic growth and sustainability