Cambridge International (CAIE) A-level Paper 3, March 2024

1. Aa decrease in marginal productivity
2. Ba decrease in marginal utility
3. Can increase in marginal productivity
4. Dan increase in marginal utility

TopicUtility7.5 Types of cost, revenue and profit, short-run and long-run production

1. Athe amount of two products achievable with given income and prices
2. Bthe different combinations of two goods that give a consumer equal utility
3. Cthe income available to buy the two goods
4. Dthe rate at which marginal utility changes as consumption changes

TopicIndifference curves and budget lines7.1 Utility

1. A$12 000
2. B$32 000
3. C$80 000
4. D$380 000

TopicPrivate costs and benefits, externalities and social costs and benefits

1. A1: demand; 2: labour; 3: returns to scale
2. B1: demand; 2: labour; 3: normal profit
3. C1: output; 2: inputs; 3: returns to scale
4. D1: output; 2: inputs; 3: supernormal profit

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

1. Aaverage costs: fall; demand curve: more elastic
2. Baverage costs: fall; demand curve: more inelastic
3. Caverage costs: rise; demand curve: more elastic
4. Daverage costs: rise; demand curve: more inelastic

TopicGrowth and survival of firms

1. AOW to OX
2. BOW to OY
3. COW to OZ
4. DOY to OZ

TopicDiffering objectives and policies of firms

1. Aoligopoly
2. Bmonopolistic competition
3. Cmonopoly
4. Dperfectly competitive

TopicDifferent market structures

1. Aincreasing monthly salaries of waiters in a restaurant to decrease their dependence on tips from customers
2. Blinking workers’ pay with the profits of the firm to motivate them to raise the profitability of the firm
3. Cmaking full fee payment in advance to a lawyer to motivate him to prepare a legal case well
4. Doffering permanent contracts to give workers job security

TopicGrowth and survival of firms9.3 Employment and unemployment

1. AIf R takes over S, this is an example of forwards vertical integration.
2. BIf S takes over V, this is an example of backwards vertical integration.
3. CIf T takes over S, this is an example of diversification.
4. DIf V takes over S, this is an example of horizontal integration.

TopicGrowth and survival of firms

1. Acontestable market
2. Bkinked demand curve
3. Cprincipal agent problem
4. Dprisoner’s dilemma

TopicDifferent market structures

1. AIt should provide information about the undesirable side-effects of the good.
2. BIt should give producers a subsidy, to allow consumers to purchase the product more cheaply.
3. CIt should impose an indirect tax on consumers, to reduce consumption to the socially efficient level.
4. DIt should not interfere at all, to allow the free market to generate maximum efficiency.

TopicGovernment policies to achieve efficient resource allocation and correct market failure7.4 Private costs and benefits, externalities and social costs and benefits7.3 Efficiency and market failure

1. AWaste collection is a public good.
2. BCosts of waste collection are bound to be lower if paid out of local taxes.
3. CPrivate companies are always less efficient than government companies.
4. DPrivate companies might put profits before customer needs.

TopicGovernment policies to achieve efficient resource allocation and correct market failure

1. AAn indirect tax equal to external costs is imposed on cigarettes and the demand falls.
2. BLimits are placed on a trade union’s restrictions that increase labour mobility.
3. CPrice controls on bread are removed which allow a free market to operate.
4. DTariffs are imposed on imported goods which cause the Gini coefficient to increase.

TopicGovernment failure in microeconomic intervention7.4 Private costs and benefits, externalities and social costs and benefits8.2 Equity and policies towards income and wealth redistribution

1. Aa decrease in the price of petrol vehicles
2. Ba decrease in the productivity of electric vehicles workers
3. Can increase in the price of electric vehicles
4. Dan increase in the wage rate of electric vehicles workers

TopicLabour market forces and government intervention7.5 Types of cost, revenue and profit, short-run and long-run production

1. AON1
2. BON2
3. CON3
4. DON4

TopicLabour market forces and government intervention7.6 Different market structures

1. Aa decrease in the use of credit cards by consumers
2. Ba switch from monthly to weekly payments of wages
3. Ca decrease in interest rates
4. Dan increase in the perceived risks involved in holding government bonds

TopicMoney and banking

1. Aa fall in inflation and an increase in lending for low income households
2. Ba fall in real wages and an increase in subsidies for technological improvements
3. Can increase in tariffs and lower taxes for new businesses
4. Dthe introduction of a national minimum wage and better working conditions

TopicEmployment and unemployment8.3 Labour market forces and government intervention

1. AThere is a higher level of trade unionisation in X.
2. BThere is more training and education in X.
3. CThere are greater incentives to find work in X.
4. DThere is a higher level of job vacancy information in X.

TopicEmployment and unemployment

1. AReal income decreased by 2% per head.
2. BReal income increased by 1% per head.
3. CReal income increased by 4% per head.
4. DThere was no change in real income per head.

TopicEconomic growth and sustainability

1. Aa decrease in the domestic rate of interest
2. Ba decrease in the rate of income tax
3. Can increase in trade tariffs on imports
4. Da revaluation of the exchange rate

TopicEffectiveness of policy options to meet all macroeconomic objectives

1. Aachieving a low and steady rate of inflation
2. Bachieving a more equal income distribution
3. Cachieving a surplus on the balance of payments
4. Dachieving a sustainable rate of economic growth

TopicGovernment macroeconomic policy objectives9.2 Economic growth and sustainability

1. Ahigher economic growth: less likely; lower unemployment: less likely; lower inflation: more likely
2. Bhigher economic growth: less likely; lower unemployment: more likely; lower inflation: less likely
3. Chigher economic growth: more likely; lower unemployment: more likely; lower inflation: less likely
4. Dhigher economic growth: more likely; lower unemployment: more likely; lower inflation: more likely

TopicEffectiveness of policy options to meet all macroeconomic objectives9.3 Employment and unemployment10.1 Government macroeconomic policy objectives

1. Aa depreciation of the country’s currency
2. Ba fall in the level of savings
3. Ca reduction in economic growth
4. Da reduction in unemployment

TopicEffectiveness of policy options to meet all macroeconomic objectives11.2 Exchange rates

1. AA tax rate cut from Y to Z will cause tax revenue to decrease.
2. BAt tax rates below Z a tax rate cut will cause tax revenue to increase.
3. CThe greater the rate of tax beyond Z, the smaller will be the tax revenue generated.
4. DTax revenue will always increase as the rate of income tax increases.

TopicEffectiveness of policy options to meet all macroeconomic objectives

1. AExcess capacity is available.
2. BImport tariffs are reduced.
3. CLocal substitutes of imported raw materials are unavailable.
4. DThe demand for exports is price inelastic.

TopicExchange rates

1. Aan appreciation of the exchange rate
2. Ban increase in the rate of income tax
3. Can increase in the rate of interest
4. Dan increase in the rate of sales tax

TopicEffectiveness of policy options to meet all macroeconomic objectives

1. ADeclining sales of German cars for export overseas.
2. BFalling earnings of foreign exchange from visitors to Germany.
3. CIncreasing transfers of aid to less developed countries.
4. DInvestment in a natural gas pipeline link to its main foreign supplier.

TopicPolicies to correct disequilibrium in the balance of payments

1. Afixed
2. Bfloating
3. Cmanaged float
4. Dtrade-weighted

TopicExchange rates

1. Adistribution of income: shift from curve 1 to curve 2; distribution of wealth: shift from curve 4 to curve 3
2. Bdistribution of income: shift from curve 2 to curve 1; distribution of wealth: shift from curve 3 to curve 4
3. Cdistribution of income: shift from curve 3 to curve 4; distribution of wealth: shift from curve 2 to curve 1
4. Ddistribution of income: shift from curve 4 to curve 3; distribution of wealth: shift from curve 1 to curve 2

TopicEquity and policies towards income and wealth redistribution

1. AA lower percentage of people will go to university.
2. BAverage life expectancy will rise.
3. CThe rate of population growth will increase.
4. DThe tertiary sector will decline in importance.

TopicCharacteristics of countries at different levels of development