Paper 3: A Level Multiple Choice · 9708/32
Cambridge International (CAIE) A-level Paper 3, November 2023
All 30 multiple choice questions from Cambridge International (CAIE) A-level Paper 3 (November 2023), A Level Multiple Choice. Each question shows its marks and topic, and opens the question paper and mark scheme at the right page.
Q1
The diagram shows the total utility of consumers Y and Z when each consumes bars of chocolate. What is the difference in the marginal utility of consumers Y and Z when each consumes four bars of chocolate?
- A0
- B5
- C10
- D30
Show the answer
The answer is C.
TopicUtility
Q2
When choosing to buy two products, the satisfaction gained by the consumption of different combinations of these two products can be represented by an indifference curve. Which statement about such an indifference curve diagram is correct?
- AThe range of indifference curves shows the combination of products a consumer can purchase with a given income.
- BIf an indifference curve is a downward-sloping straight line, the principle of diminishing marginal utility must be operating.
- CIndifference curves never cross, because this means that a consumer would be indifferent between combinations of two goods, even when one combination provides more of each good.
- DThe gap between indifference curves is always constant.
Show the answer
The answer is C.
Q3
Negative externalities, such as air pollution due to car emissions, can cause damage to people’s health in cities. Which response is most likely to occur from this situation?
- Acar manufacturers will automatically bear any external costs
- Bmarket failure will be resolved when private costs equal external costs
- Cmost people will decide to use buses rather than cars
- Dsome form of government intervention to improve economic efficiency
Show the answer
The answer is D.
TopicPrivate costs and benefits, externalities and social costs and benefits
Q4
The merger of two large firms in the Singapore market supplying taxis and private hire vehicles resulted in a single firm with 80% of the market. The remaining 20% of the market consisted of thousands of independent taxi drivers. Which statement best describes what has effectively occurred in the market structure?
- AThe market has become monopolistically competitive.
- BThe market has changed from an oligopoly to a monopoly.
- CThe market has changed from perfect competition to an oligopoly.
- DThe market remains an oligopoly.
Show the answer
The answer is B.
Q5
The diagram shows the cost and revenue curves of a profit-maximising, monopolistically competitive firm in long-run equilibrium. Which statement correctly describes the performance of this firm?
- AIt is allocatively efficient.
- BIt is making abnormal losses.
- CIt is making abnormal profits.
- DIt is making normal profits.
Show the answer
The answer is D.
TopicDifferent market structures7.5 Types of cost, revenue and profit, short-run and long-run production
Q6
A firm changes its aim and chooses to produce where marginal revenue (MR) is zero instead of where MR is equal to marginal cost (MC). Which explanation for this is not correct?
- AThe firm wishes to increase sales.
- BThe firm wishes to increase its output.
- CThe firm wishes to reduce prices.
- DThe firm wishes to gain more profits.
Show the answer
The answer is D.
Q7
A firm operating in the airline industry uses third degree price discrimination. Which condition is most likely to allow this to happen?
- AConsumers are able to buy cheaply and then sell the product at a higher price.
- BPrice elasticity of demand is the same for all consumers in the market.
- CThe firm faces a perfectly elastic demand curve.
- DThe firm is able to keep the different market segments separate.
Show the answer
The answer is D.
Q8
What is not an example of a moral hazard?
- APeople with a higher risk of unemployment are more likely to undertake training.
- BPeople with free dental care are less likely to take care of their teeth with good oral hygiene.
- CPeople with insurance against car theft are more likely to park their car in high crime areas.
- DPeople with unemployment benefits are less likely to undertake retraining if they become unemployed.
Show the answer
The answer is A.
TopicEfficiency and market failure9.3 Employment and unemployment
Q9
In recent years, the fuel cost of operating a jet aircraft has declined. Over the same period, improved design has led to much quieter aircraft. How would this affect the marginal private cost (MPC) and the marginal external cost (MEC) of air travel?
- Aa downward shift of both the MPC and the MEC curves
- Ba downward shift of the MPC curve and a movement left along the MEC curve
- Ca movement left along both the MPC and the MEC curves
- Da movement left along the MPC curve and a downward shift of the MEC curve
Show the answer
The answer is A.
TopicPrivate costs and benefits, externalities and social costs and benefits9.1 The circular flow of income
Q10
Firm K operates in a competitive market. Firm L is a monopsony employer. Both firms are operating at an equilibrium level of output. Trade unions are introduced with the result that wages in each firm are increased. What is the likely effect on each firm if trade unions enter the labour market?
- Afirm K: employment will decrease; firm L: employment will decrease
- Bfirm K: employment will decrease; firm L: employment will increase
- Cfirm K: employment will increase; firm L: employment will decrease
- Dfirm K: employment will increase; firm L: employment will increase
Show the answer
The answer is B.
Q11
A backward-sloping supply curve of labour is one where, beyond a certain point, the supply of labour
- Adecreases as the demand for labour rises.
- Bincreases as the demand for labour rises.
- Cdecreases as wages rise.
- Dincreases as wages rise.
Show the answer
The answer is C.
Q12
What is the economic result of a universal basic income (UBI)?
- Areduces the incentive to work: no; improves equality: no
- Breduces the incentive to work: no; improves equality: yes
- Creduces the incentive to work: yes; improves equality: no
- Dreduces the incentive to work: yes; improves equality: yes
Show the answer
The answer is D.
TopicEquity and policies towards income and wealth redistribution
Q13
Which combination of fiscal policy measures would be most effective in reducing income inequality?
- Atop rates of income tax: increase; indirect taxes: increase; value of state benefits: increase
- Btop rates of income tax: increase; indirect taxes: reduce; value of state benefits: increase
- Ctop rates of income tax: reduce; indirect taxes: increase; value of state benefits: reduce
- Dtop rates of income tax: reduce; indirect taxes: reduce; value of state benefits: reduce
Show the answer
The answer is B.
TopicEquity and policies towards income and wealth redistribution
Q14
At present, motorists who drive their cars within area 1 on the map pay a daily congestion charge of $8. Which car journeys would decrease in number if the congestion charge area were extended to include area 2?
- Ajourneys from point X to point Z
- Bjourneys from point X to point Y
- Cjourneys from point Y to point Z
- Djourneys from point Z to point Y
Show the answer
The answer is B.
TopicGovernment policies to achieve efficient resource allocation and correct market failure
Q15
What is most likely to lead to an increase in the size of the national income?
- Aa fall in interest rates on savings accounts
- Ba fall in the prices of imported goods
- Ca decrease in government spending
- Dan increase in direct taxes
Show the answer
The answer is A.
TopicThe circular flow of income10.3 Effectiveness of policy options to meet all macroeconomic objectives
Q16
Which government policy is most likely to improve occupational mobility?
- Adecreased income tax rates
- Bincreased government spending on education and training
- Cincreased government spending on infrastructure
- Dincreased subsidies to firms to employ school leavers
Show the answer
The answer is B.
TopicEffectiveness of policy options to meet all macroeconomic objectives
Q17
The table shows the marginal propensity to consume (MPC), marginal propensity to save (MPS), marginal rate of taxation (MRT) and marginal propensity to import (MPM) for a four-sector economy. What is the size of the multiplier?
- A1
- B2
- C5
- D10
Show the answer
The answer is B.
Q18
What is likely to happen when the productive capacity of a free enterprise economy increases over a long period of time?
- AFuture generations will be less well-off than present generations.
- BIncreasing the production of one good cannot be done without decreasing the production of another.
- CIndividuals will have more choices due to a wider range of consumer goods.
- DRising levels of output will cause per capita incomes to equalise.
Show the answer
The answer is C.
Q19
The accelerator principle refers to a relationship between investment and
- Athe level of GDP.
- Bchanges in GDP.
- Cthe level of interest rates.
- Dchanges in interest rates.
Show the answer
The answer is B.
TopicThe circular flow of income10.3 Effectiveness of policy options to meet all macroeconomic objectives
Q20
What is likely to be the effect of an increase in the budget deficit?
- Aan increase in effective demand
- Ban increase in unemployment
- Ca reduction in inflation
- Da reduction in the volume of spending
Show the answer
The answer is A.
TopicEffectiveness of policy options to meet all macroeconomic objectives
Q21
The table gives details of the inflation and unemployment rates for different countries in 2008 and Which countries experienced a trade-off between their inflation and unemployment rates?
- ACanada and Germany
- BCanada only
- CFrance and Japan
- DFrance only
Show the answer
The answer is C.
TopicLinks between macroeconomic problems and their interrelatedness
Q22
Which government policy would boost economic growth but not necessarily promote economic development?
- Acreating a more equal distribution of income and wealth
- Bdiverting government spending from industry to education
- Cencouraging the extraction of finite natural resources
- Dintroducing tighter controls on air pollution
Show the answer
The answer is C.
TopicEconomic development
Q23
Which policy measure to encourage economic growth might be based on the concept of the Laffer curve?
- Acuts in direct taxes
- Bexchange rate depreciation
- Cinvestment subsidies
- Dquantitative easing
Show the answer
The answer is A.
TopicEffectiveness of policy options to meet all macroeconomic objectives9.2 Economic growth and sustainability11.2 Exchange rates
Q24
The exchange rate of an economy appreciates. Assuming that the Marshall–Lerner condition holds in this economy, what is the likely outcome for imported inflation and unemployment?
- Aimported inflation: falls; unemployment: falls
- Bimported inflation: falls; unemployment: rises
- Cimported inflation: rises; unemployment: falls
- Dimported inflation: rises; unemployment: rises
Show the answer
The answer is B.
TopicExchange rates
Q25
Which characteristics are most commonly found in low-income countries?
- Asaving ratio: low; capital-output ratio: low
- Bsaving ratio: high; capital-output ratio: low
- Csaving ratio: low; capital-output ratio: high
- Dsaving ratio: high; capital-output ratio: high
Show the answer
The answer is A.
TopicCharacteristics of countries at different levels of development
Q26
What has not accompanied global economic growth over the last 25 years?
- Aa depletion of non-renewable resources
- Bdecreased international trade
- Cgrowing urbanisation
- Dincreased atmospheric pollution
Show the answer
The answer is B.
Q27
When assessing income distribution in an economy, which change in the Gini coefficient suggests that a country is distributing its income more equally?
- AIt has moved closer to one.
- BIt has moved closer to zero.
- CIt has moved from negative to positive.
- DIt has moved from positive to negative.
Show the answer
The answer is B.
TopicEquity and policies towards income and wealth redistribution
Q28
In 2021, a very large cargo ship carrying over 18 000 cargo containers blocked the Suez Canal for seven days. It delayed over 350 other cargo ships, causing shortages of products in markets around the world as supplies were disrupted. Which consequence of globalisation is best illustrated by this event?
- Acheaper products for consumers
- Bgreater choice of products for consumers
- Cincreased interdependence between countries
- Dincreased migration of labour between countries
Show the answer
The answer is C.
TopicGlobalisation
Q29
The table shows data for Namibia and Spain from 2014 to 2017. What can be concluded about whether there has been an increase in economic growth and economic development in Namibia and Spain between 2014 and 2017?
- Aeconomic growth: Namibia only; economic development: Namibia only
- Beconomic growth: Spain only; economic development: Namibia and Spain
- Ceconomic growth: Spain only; economic development: neither country
- Deconomic growth: neither country; economic development: Spain only
Show the answer
The answer is C.
TopicEconomic development
Q30
The graphs show the Human Development Index (HDI) and its component parts for Zimbabwe. Between years 3–7, which components of HDI have comparable changes to its overall change?
- Aeducation, GNI per capita and life expectancy
- Beducation and GNI per capita only
- Ceducation and life expectancy only
- DGNI per capita and life expectancy only
Show the answer
The answer is C.
TopicEconomic development
Question text is quoted from the question papers, © Cambridge University Press & Assessment (UCLES), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.