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

1. Ato obtain the same total utility from each commodity
2. Bto obtain the same total utility per $ spent on each commodity
3. Cto obtain the same utility from the last unit of each commodity
4. Dto obtain the same utility from the last $ spent on each commodity

TopicUtility

1. AThe consumer can express preferences between all possible combinations of goods.
2. BThe consumer has a limited income to spend.
3. CThe consumer will always behave rationally.
4. DThe consumer will always get positive utility from having more of the goods.

TopicIndifference curves and budget lines

1. Adiagram 1: falling returns to scale; diagram 2: average cost is greater than marginal cost
2. Bdiagram 1: falling returns to scale; diagram 2: rising returns to scale
3. Cdiagram 1: unit cost falls as output increases; diagram 2: falling average fixed costs
4. Ddiagram 1: unit cost falls as output increases; diagram 2: unit cost rises as output increases

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

1. Adecreased pressure on the provision of health care
2. Bexpenses incurred on surveillance of motorbike riders to ensure compliance
3. Cincreased life expectancy of motorbike riders
4. Dincreased profits of helmet manufacturers

TopicPrivate costs and benefits, externalities and social costs and benefits

1. AMarket concentration increased.
2. BSales of the top four firms fell.
3. CScotsdale and Welshpool’s profits rose.
4. DThe concentration ratio of the four largest firms fell.

TopicDifferent market structures

1. Aprice: rise; output: fall; profit: rise
2. Bprice: rise; output: fall; profit: fall
3. Cprice: unchanged; output: rise; profit: rise
4. Dprice: unchanged; output: unchanged; profit: fall

TopicTypes of cost, revenue and profit, short-run and long-run production7.8 Differing objectives and policies of firms

1. Aminimum pricing
2. Bpredatory pricing
3. Cprice discrimination
4. Dprice leadership

TopicDiffering objectives and policies of firms7.6 Different market structures

1. Aa decrease in consumption and an increase in price
2. Ba decrease in production and no change in price
3. Can increase in consumption and a decrease in production
4. Dan increase in price and no change in production

TopicPrivate costs and benefits, externalities and social costs and benefits

1. Amonopoly profit maximisation
2. Bprincipal agent problem
3. Cprisoner’s dilemma
4. Dsatisficing

TopicDifferent market structures7.8 Differing objectives and policies of firms7.7 Growth and survival of firms

1. Ahorizontal
2. Blateral
3. Cvertical backwards
4. Dvertical forwards

TopicGrowth and survival of firms

1. AIt is cheaper to use the plentiful supply of coal.
2. BMarkets will become more efficient.
3. CThe value of the positive externalities cannot be estimated.
4. DThe value of the negative externalities cannot be estimated.

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

1. AFirms face intense competition both at home and abroad.
2. BLabour costs are a high proportion of the total cost of the firm.
3. CThe minimum wage is not high enough to lower the profits of the firms.
4. DThe minimum wage introduced in monopsony is less than the marginal revenue productivity

TopicLabour market forces and government intervention

1. Aa fall in the wage rate
2. Ba fall in the price of the final product
3. Ca rise in the wage rate
4. Da rise in the price of the final product

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

1. A1
2. B2
3. C3
4. D4

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

1. AIncrease the general sales tax / VAT rate on luxury goods.
2. BIntroduce a minimum wage.
3. CInvest heavily in schools and education programmes.
4. DStimulate economic growth through skills and productivity training.

TopicEquity and policies towards income and wealth redistribution

1. Adivisibility
2. Bdurability
3. Cstandard of deferred payment
4. Dstore of value

TopicMoney and banking

1. Awhen there is a decline in the education levels of workers
2. Bwhen there is an increase in income tax rates
3. Cwhen there is an increase in labour mobility
4. Dwhen there is a rise in the rate of state unemployment benefits

TopicEmployment and unemployment

1. AEconomic efficiency has increased.
2. BInterest rates have increased.
3. CTaxation has increased.
4. DThe labour force has increased.

TopicEmployment and unemployment

1. Aa deflationary gap
2. Ba trade deficit
3. Can inflationary gap
4. Dan employment gap

TopicThe circular flow of income

1. Atax revenue: decrease; government expenditure: increase
2. Btax revenue: decrease; government expenditure: no change
3. Ctax revenue: increase; government expenditure: decrease
4. Dtax revenue: no change; government expenditure: increase

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

1. Abalance of payments surplus
2. Bhigher employment
3. Clower inflation
4. Dstronger exchange rate

TopicLinks between macroeconomic problems and their interrelatedness

1. AIt boosts economic activity.
2. BIt promotes the incentive to work.
3. CIt reduces the budget deficit.
4. DIt reduces the incentive to evade taxes.

TopicEffectiveness of policy options to meet all macroeconomic objectives8.2 Equity and policies towards income and wealth redistribution

1. AThe data are entirely consistent with the theory of the Phillips curve.
2. BThe data prove conclusively that the Phillips curve theory does not operate.
3. CThe data suggest that no conclusions can be reached about the validity of the Phillips curve theory.
4. DThe data suggest that the theory of the Phillips curve is correct, though with time lags.

TopicLinks between macroeconomic problems and their interrelatedness9.3 Employment and unemployment

1. Aa faster rate of economic growth
2. Ba higher Human Development Index
3. Ca lower Gini coefficient
4. Da lower tax / GDP ratio

TopicEquity and policies towards income and wealth redistribution7.3 Efficiency and market failure

1. Aexpenditure-reducing
2. Bexpenditure-switching
3. Cexpansionary monetary
4. Dcontractionary monetary

TopicPolicies to correct disequilibrium in the balance of payments

1. Aa credit in the capital account
2. Ba credit in the current account
3. Ca debit in the capital account
4. Da debit in the current account

TopicPolicies to correct disequilibrium in the balance of payments

1. Afloating rate decreases: depreciation; fixed rate increases: appreciation
2. Bfloating rate decreases: depreciation; fixed rate increases: revaluation
3. Cfloating rate decreases: devaluation; fixed rate increases: appreciation
4. Dfloating rate decreases: devaluation; fixed rate increases: revaluation

TopicExchange rates

1. A% of raw materials used to make batteries supplied by country N: 10; income elasticity of demand for electric cars outside country N: 0.5
2. B% of raw materials used to make batteries supplied by country N: 10; income elasticity of demand for electric cars outside country N: 1.5
3. C% of raw materials used to make batteries supplied by country N: 90; income elasticity of demand for electric cars outside country N: 0.5
4. D% of raw materials used to make batteries supplied by country N: 90; income elasticity of demand for electric cars outside country N: 1.5

TopicPolicies to correct disequilibrium in the balance of payments11.5 Relationship between countries at different levels of development

1. ACapital gains tax has been reduced.
2. BIncome tax has been made more progressive.
3. CInheritance tax has been reduced.
4. DThe tax-free allowance has been decreased for everyone.

TopicEquity and policies towards income and wealth redistribution

1. AAbsolute advantage replaces comparative advantage as the basis for trade.
2. BFirms’ supply chains are shortened.
3. CTrade is less likely to suffer from international economic shocks.
4. DThere are higher standards of living.

TopicGlobalisation