Section A
Q11 mark
1 The diagrams show the production possibility frontiers for Singapore's economy. It is operating at point X on the production possibility frontier LL. Singapore's population is expected to increase by 90 000 next year. In which one of the diagrams does the movement from X to Y illustrate this expected increase in population if the economy still operates at its maximum productive potential? A B Capital Capital goods M goods L Y X L M X Y L M M L 0 0 Consumer Consumer goods goods C D Capital Capital goods L goods L Y X X Y L L 0 0 Consumer Consumer goods goods
Show the answer
The answer is A. Open the question paper to read the options.
TopicThe nature of economics
Q21 mark
2 Which one of the following is a function of the price mechanism?
- ATo create an incentive for producers to decrease the quantity supplied when the price increases.
- BTo encourage government intervention to allocate scarce resources.
- CTo provide a signal to producers and consumers about changes in supply and demand when prices change.
- DTo ration scarce resources by allowing prices to decrease when demand increases.
Show the answer
The answer is C.
TopicThe price mechanism, consumer and producer surplus
Q31 mark
3 Which one of the following is a cause of government failure?
- AExcessive administrative costs involved in meeting environmental regulations.
- BA market bubble causing the price to rise excessively.
- CThe existence of free riders leading to the under-production of public goods.
- DUnder-production of foods with external benefits.
Show the answer
The answer is A.
TopicGovernment intervention and government failure
Q41 mark
Which one of the following is the consumer incidence of the subsidy?
- A€60 900
- B€63 000
- C€123 900
- D€283 500
Show the answer
The answer is B.
TopicGovernment intervention and government failure
Q51 mark
5 The diagram shows a demand curve for rice. Price of rice per tonne A B C Demand D Quantity of rice per month, tonnes At which point on the demand curve will the price elasticity of demand be unitary?
- A
- B
- C
- D
Show the answer
The answer is B.
TopicElasticities of demand and supply
Q61 mark
Which one of the following can be deduced from the table?
- ACheese has relatively price inelastic demand.
- BPublic transport is a normal good.
- CAn increase in real income will result in a less than proportionate decrease in demand for ice cream.
- DA decrease in real income will result in a more than proportionate decrease in the demand for motor cars.
Show the answer
The answer is D.
TopicElasticities of demand and supply
Section B
Q7Draw4 marks
Draw a diagram to illustrate the impact of the introduction of the indirect tax on the equilibrium price and quantity of petrol in Saudi Arabia.
Mark splitKnowledge 1Application 3
TopicDemand, supply and market equilibrium
Q8Explain4 marks
With reference to the market for car manufacturing, explain one benefit of the 'division of labour'.
Mark splitKnowledge 2Application 2
TopicThe nature of economics
Q9Explain4 marks
Explain whether Lake Poopó is a free good or an economic good.
Mark splitKnowledge 1Application 1Analysis 2
TopicThe nature of economics
Q10Calculate4 marks
Using the data in the table, calculate the equilibrium price for bottled water after the advertising campaign. Show your workings. You may wish to use the last column in your calculation.
Mark splitKnowledge 1Application 3
TopicDemand, supply and market equilibrium
Q11Explain4 marks
Explain the likely impact of this change on producer surplus in the market for sand. Illustrate your answer with a diagram.
Mark splitKnowledge 1Application 1Analysis 2
TopicThe price mechanism, consumer and producer surplus
Section C
Case study
The market for cocoa
Extracts: Figure 1: - Price of cocoa beans, US$ per tonne, June 2015 to June 2017 · Extract A: - The price of cocoa falls · Extract B: - Cocoa production can damage the environment · Extract C: - Minimum price scheme in the Côte d'Ivoire · Figure 1: based on data taken from http://www.indexmundi.com/commodities/?commodity= · Extract A: adapted from 'Cocoa prices to stay low in short term even as chocolate markets are strong'
In the extracts: Ivoire The Côte, Rainforest Alliance, Cocoa, Indonesia, Ivoire's
Q12(a)Define2 marks
Define the term 'substitutes' (Extract A, line 12).
Mark splitKnowledge 2
TopicDemand, supply and market equilibrium
Q12(b)Explain4 marks
With reference to Extract A, explain one factor that is likely to influence the price elasticity of supply for cocoa beans.
Mark splitKnowledge 2Application 2
TopicElasticities of demand and supply
Q12(c)Analyse6 marks
With reference to Figure 1 and Extract A, analyse one reason why the price of cocoa beans 'fell below $2 000 per tonne' (Extract A, line 8) in April 2017. Illustrate your answer with a supply and demand diagram.
Mark splitKnowledge 2Application 2Analysis 2
TopicDemand, supply and market equilibrium
Q12(d)Examine8 marks
With reference to Extract B, examine the external costs associated with the production of cocoa beans.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicMarket failure: externalities
Q12(e)Discuss14 marks
With reference to Extract C, discuss the likely effects of the reduction in the minimum (guaranteed) price for cocoa. Illustrate your answer with an appropriate diagram.
Mark splitEvaluation 6
TopicDemand, supply and market equilibrium
Section D
Q13OptionalEvaluate20 marks
Evaluate the reasons why many consumers do not switch energy suppliers.
Mark splitEvaluation 8
TopicBehavioural economics and consumer choice
Q14OptionalEvaluate20 marks
Evaluate reasons for this under-investment in flood defences. Make reference to public goods in your answer.
Mark splitEvaluation 8
TopicMarket failure: public goods, information and immobility
