Section A
Q11 mark
Which one of the following is a disadvantage of a free market economy?
- AThe profit incentive encourages investment
- BThe non-provision of public goods
- CThe possibility of government failure
- DAn equal distribution of income
Show the answer
The answer is B.
TopicGovernment intervention and government failure
Q21 mark
Which one of the following is most likely to result from the introduction of a minimum guaranteed price for milk above the equilibrium price?
- AAn excess supply of milk
- BAn excess demand for milk
- CAn increase in consumer surplus
- DA decrease in producer surplus
Show the answer
The answer is A.
TopicDemand, supply and market equilibrium
Q31 mark
Which one of the following is a function of money?
- ATo create a moral hazard
- BTo extend property rights
- CTo regulate financial markets
- DTo act as a medium of exchange
Show the answer
The answer is D.
TopicMoney and financial markets
Q41 mark
Which one of the following can be deduced from the diagram?
- AThe movement from W to X has an opportunity cost of 42 consumer goods
- BThe movement from Y to Z has an opportunity cost of 30 consumer goods
- CThe movement from X to Y has an opportunity cost of 17 capital goods
- DThe movement from Y to X has an opportunity cost of 28 capital goods
Show the answer
The answer is C.
TopicThe nature of economics
Q51 mark
Which one of the following can be deduced from the chart?
- AElectricity was mostly generated using renewable resources
- BElectricity was mostly generated using non-renewable resources
- C58% of electricity was generated using non-renewable resources
- D26% of electricity was generated using renewable resources
Show the answer
The answer is B.
TopicThe nature of economics
Q61 mark
Ceteris paribus, which one of the following can be deduced from this information?
- AAll three types of vehicle are normal goods
- BAll three types of vehicle are inferior goods
- CAll three types of vehicle are complements of petrol vehicles
- DAll three types of vehicle are substitutes for petrol vehicles
Show the answer
The answer is D.
TopicElasticities of demand and supply
Section B
Q7Draw4 marks
Draw a diagram to illustrate the impact of imposing this indirect tax on aviation fuel for private jets.
Mark splitKnowledge 1Application 3
TopicGovernment intervention and government failure
Q8Explain4 marks
Explain one reason why there might have been a housing market bubble in Australia in 2021.
Mark splitKnowledge 1Application 1Analysis 2
TopicDemand, supply and market equilibrium
Q9Explain4 marks
With reference to the information given, explain the difference between the rationing function and the incentive function of the price mechanism.
Mark splitKnowledge 2Application 2
TopicThe price mechanism, consumer and producer surplus
Q10Calculate4 marks
Ceteris paribus, calculate the income elasticity of demand for bus journeys. Show your workings.
Mark splitKnowledge 1Application 3
TopicElasticities of demand and supply
Q11Explain4 marks
Ceteris paribus, explain the likely impact on producer surplus in the hotel market in Czechia. Illustrate your answer with a supply and demand diagram.
Mark splitKnowledge 1Application 1Analysis 2
TopicThe nature of economics
Section C
Case study
The cocoa market
Extracts: Figure 1: World price of cocoa, dollars per kilogram, November 2022 to · Extract A: Cocoa price rises rapidly · Figure 2: Estimated price elasticity of supply for cocoa · Extract B: The true cost of cocoa production · Extract C: Subsidies for cocoa farmers in Ghana · Figure 1: adapted from:
In the extracts: Jul Aug Sep Oct, Mar Apr May Jun, Nov Dec Jan Feb, Ghana, Côte, Ivoire, Cocoa, Estimated, Chocolate, Flooding
Q12(a)Define2 marks
Define the term 'forward market'. (Extract A, line 10)
Mark splitKnowledge 2
TopicMoney and financial markets
Q12(b)Analyse6 marks
With reference to Figure 1 and Extract A, analyse one supply factor and one demand factor that caused the price of cocoa to increase by approximately 68% between November 2022 and November 2023. Illustrate your answer with a supply and demand diagram.
Mark splitKnowledge 2Application 2Analysis 2
TopicDemand, supply and market equilibrium
Q12(c)Explain4 marks
With reference to Figure 2, explain the term 'price inelastic supply'. Refer to the short-run and the long-run in your answer.
Mark splitKnowledge 2Application 2
TopicElasticities of demand and supply
Q12(d)Examine8 marks
With reference to Extract C, examine two effects of the Government of Ghana's decision to end the subsidies paid to cocoa farmers.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicElasticities of demand and supply
Q12(e)Discuss14 marks
With reference to Extract B, discuss the likely external costs associated with cocoa production. Illustrate your answer with an externalities diagram.
Mark splitEvaluation 6
TopicMarket failure: externalities
Section D
Q13OptionalEvaluate20 marks
Evaluate the possible benefits of introducing a tradeable pollution permit scheme.
Mark splitEvaluation 8
TopicMarket failure: externalities
Q14OptionalEvaluate20 marks
Evaluate the microeconomic benefits of increased spending on education.
Mark splitEvaluation 8
TopicMarket failure: externalities
