Cambridge International (CAIE) AS Paper 1, March 2025

1. ACompetition is promoted among firms which can increase productive efficiency.
2. BImmobility of the factors of production can lead to allocative inefficiency.
3. CPrice always reflects all the costs and all the benefits associated with production.
4. DThe entrepreneur is encouraged to innovate and take risks, motivated by profit.

TopicResource allocation in different economic systems

1. Aindustry X: short run; industry Y: long run
2. Bindustry X: long run; industry Y: long run
3. Cindustry X: long run; industry Y: very long run
4. Dindustry X: very long run; industry Y: very long run

TopicEconomic methodology

1. AW and Y
2. BW and X
3. CX and Z
4. DY and Z

TopicProduction possibility curves

1. AOther things did not remain equal.
2. BThe demand for the good was price inelastic.
3. CThe real price of the good fell.
4. DThe time period was the very short run.

TopicDemand and supply curves

1. Ain a large market with stable demand
2. Bin a market where consumers prefer a handmade product over a product made using machines
3. Cin a market where consumers require a variety of goods
4. Din a small market where consumers require a custom-made product

TopicFactors of production

1. Athe level of producer surplus
2. Bthe time period under consideration
3. Cthe total income spent on the good
4. Dwhether the good is a necessity

TopicPrice elasticity of supply

1. AOX represents the price above which no producer wishes to stay in the market.
2. BOZ represents the minimum price consumers are prepared to pay.
3. CPYZ represents the total consumer surplus.
4. DXYZ represents the total producer surplus.

TopicConsumer and producer surplus3.2 Methods and effects of government intervention in markets2.4 The interaction of demand and supply

1. A$81.00
2. B$84.00
3. C$92.00
4. D$108.00

TopicPrice elasticity, income elasticity and cross elasticity of demand2.4 The interaction of demand and supply

1. Achanging weather patterns
2. Bgovernment policy to promote consumption
3. Cgrowth in population
4. Dmore expensive substitutes

TopicDemand and supply curves

1. AIt will be in disequilibrium with excess demand of 100 units.
2. BIt will be in disequilibrium with excess supply of 100 units.
3. CIt will be in equilibrium with 100 units traded.
4. DIt will be in equilibrium with 200 units traded.

TopicThe interaction of demand and supply2.1 Demand and supply curves

1. AIt is between zero and one.
2. BIt is infinite.
3. CIt is unitary.
4. DIt is zero.

TopicPrice elasticity, income elasticity and cross elasticity of demand

1. Aan indirect tax
2. Ba subsidy
3. Cdirect provision
4. Dprovision of information

TopicMethods and effects of government intervention in markets2.1 Demand and supply curves

1. Abuy an amount equal to GH
2. Bbuy an amount equal to KJ
3. Cbuy an amount equal to LJ
4. Ddo nothing as the equilibrium price is below P1

TopicMethods and effects of government intervention in markets

1. AA skilled artist may keep a painting in stock whose value increases after their death.
2. BIndividuals can choose to spend all available income, leaving wealth unchanged.
3. CNot every form of individual wealth can be traded for money in a market.
4. DWealth is a stock which cannot be broken down into an individual’s different assets.

TopicAddressing income and wealth inequality

1. AAll three countries have seen an overall improvement in income equality.
2. BCosta Rica has the highest level of consumer income of all three countries.
3. CNew Zealand's income inequality worsened between 2018 and 2020.
4. DSweden's economy has the highest income equality of all three countries.

TopicAddressing income and wealth inequality

1. AAll equilibrium prices are maintained in the long run.
2. BDemand-pull inflation cancels out any cost-push inflation.
3. COnly disinflation is present in the economy in the long run.
4. DProlonged periods of inflation and deflation are avoided.

TopicPrice stability

TopicUnemployment

1. Apolicy: increased direct taxation; new final equilibrium point: F
2. Bpolicy: increased government; new final equilibrium point: G
3. Cpolicy: appreciation of the; new final equilibrium point: H
4. Dpolicy: decreased interest rates; new final equilibrium point: J

TopicAggregate demand and aggregate supply analysis

1. AIt will remain unchanged.
2. BIt will rise by exactly 20%.
3. CIt will rise by less than 20%.
4. DIt will rise by more than 20%.

TopicNational income statistics

1. AEconomic growth raises domestic consumption, leaving very little to sell to overseas consumers.
2. BEconomic growth raises domestic output, leading to lower prices and more price-competitive goods both at home and abroad.
3. CEconomic growth raises incomes and leads to rising demand for foreign goods.
4. DEconomic growth results in rising requirements of inputs from other countries.

TopicEconomic growth6.3 Current account of the balance of payments

1. AReal incomes are increased.
2. BThe costs of businesses are reduced.
3. CThe opportunity cost of unemployment has increased.
4. DThe standard of living has improved.

TopicSupply-side policy

1. Adirect taxes: decrease; indirect taxes: decrease; subsidies on food and public transport: increase
2. Bdirect taxes: decrease; indirect taxes: increase; subsidies on food and public transport: increase
3. Cdirect taxes: increase; indirect taxes: decrease; subsidies on food and public transport: increase
4. Ddirect taxes: increase; indirect taxes: increase; subsidies on food and public transport: decrease

TopicFiscal policy

1. Acontractionary fiscal policy
2. Bcontractionary monetary policy
3. Cexpansionary fiscal policy
4. Dexpansionary monetary policy

TopicMonetary policy5.2 Fiscal policy

1. AAggregate demand will also increase.
2. BLabour productivity levels will increase.
3. CWorkers will save any extra wages they earn.
4. DWorkers will spend any extra wages on imports.

TopicSupply-side policy4.3 Aggregate demand and aggregate supply analysis

1. AAll taxpayers pay the same proportion of income in taxes.
2. BLow-income earners pay a lower proportion of income in taxes than high-income earners.
3. CLow-income earners pay less in taxes than high-income earners.
4. DLow-income earners pay more in taxes than high-income earners.

TopicAddressing income and wealth inequality

1. Aaverage price of country X’s exports divided by the average price of country Y’s exports
2. Bthe ratio of an index of country X’s export prices to an index of its import prices
3. Cvalue of country X’s exports divided by the value of country Y’s exports
4. Dvalue of country X’s imports divided by the value of country Y’s imports

TopicThe reasons for international trade

1. AWhen its current account surplus exceeds that of its trading partners.
2. BWhen its inflation rate exceeds that of its trading partners.
3. CWhen its interest rate exceeds that of its trading partners.
4. DWhen its unemployment rate exceeds that of its trading partners.

TopicExchange rates

1. AEvent 1: a global recession resulting in; Event 2: Gross National Income (GNI)
2. BEvent 1: increased subsidies for exporters; Event 2: increased donations received
3. CEvent 1: removal of restrictions on imports; Event 2: removal of restrictions on
4. DEvent 1: rising imports of machinery to; Event 2: increased secondary income from

TopicCurrent account of the balance of payments

1. ACountry Q has a comparative advantage in the production of barley.
2. BCountry Q has an absolute advantage in producing both goods.
3. CCountry R has an absolute advantage in the production of barley.
4. DThere is no comparative advantage.

TopicThe reasons for international trade1.5 Production possibility curves

1. Adomestic output of oil will increase by 15 million units
2. Bimports of oil will decrease by 25 million units
3. Cthe domestic price of oil will decrease by $28
4. Dthe domestic price of oil will increase by $8

TopicProtectionism3.2 Methods and effects of government intervention in markets