Section A
Q11 mark
1 Which one of the following is an example of government failure?
- AOverconsumption of sugar that creates external costs
- BSmuggling of petrol resulting from the introduction of an indirect tax
- CAn increase in the price of timber that creates an incentive to increase its production
- DGovernment provision of flood defences to resolve the free rider problem
Show the answer
The answer is B.
TopicGovernment intervention and government failure
Q21 mark
2 Which one of the following is most likely to have a forward market?
- AGold
- BHousing
- CHigher education
- DStreet lighting
Show the answer
The answer is A.
TopicMoney and financial markets
Q31 mark
Which one of the following can be deduced from the table?
- AVegetables and rice are normal goods
- BMeat and rice are inferior goods
- CFish is a complement for rice
- DMaize is a substitute for rice
Show the answer
The answer is D.
TopicDemand, supply and market equilibrium
Q41 mark
Which one of the following can be deduced from the diagram?
- AThe demand for coffee is income inelastic
- BThe supply of coffee is price elastic
- CAn increase in the price of a jar of coffee by £1 will increase total revenue
- DA decrease in the price of a jar of coffee by £1 will increase total revenue
Show the answer
The answer is C.
TopicElasticities of demand and supply
Q51 mark
Which one of the following can explain the behaviour of those consumers who switched to cheaper electricity suppliers?
- AConsumers experienced habitual behaviour
- BConsumers aimed to maximise their utility
- CConsumers had poor computational skills
- DConsumers aimed to minimise their utility
Show the answer
The answer is B.
TopicBehavioural economics and consumer choice
Q61 mark
Which one of the following shows the value of income elasticity of demand?
- A-4.00
- B-0.25
- C+0.25
- D+4.00
Show the answer
The answer is D.
TopicElasticities of demand and supply
Section B
Q7Draw4 marks
Draw a diagram to illustrate the likely impact of this population change on Germany's production possibility frontier. Include an arrow to show the direction of the shift.
Mark splitKnowledge 1Application 3
TopicThe nature of economics
Q8Explain4 marks
With reference to China, explain the difference between 'capital goods' and 'consumer goods'.
Mark splitKnowledge 2Application 2
TopicThe nature of economics
Q9Explain4 marks
Explain one microeconomic reason why the Singapore Government provides streetlights.
Mark splitKnowledge 1Application 1Analysis 2
TopicMarket failure: externalities
Q10Calculate4 marks
Ceteris paribus, calculate the price elasticity of supply of wheat. Show your workings.
Mark splitKnowledge 1Application 3
TopicElasticities of demand and supply
Q11Explain4 marks
Explain the impact of the introduction of this indirect tax on the market for food products containing salt added by manufacturers. Illustrate your answer with an appropriate diagram.
Mark splitKnowledge 1Application 1Analysis 2
TopicGovernment intervention and government failure
Section C
Case study
The markets for copper, electricity and battery electric buses (BEBs)
Extracts: Figure 1: World price of copper, $ per metric tonne, March 2020 to December 2020 · Extract A: Copper prices rise · Figure 2: Electricity generation by different sources in Denmark, 2018 · Extract B: Battery electric buses (BEBs) · Figure 1: based on data taken from https://www.indexmundi.com/commodities/?commodity=copper&months=60 · Extract A: adapted from 'Copper price forecast 2020 and beyond: will the market recover from Covid-19 disruptions?',
In the extracts: Nicole Willing, BEBs, Copper, They, USA, Battery, Bus, Capital, Children, China
Q12(a)Define2 marks
Define the term 'external costs' (Extract B, line 3).
Mark splitKnowledge 2
TopicMarket failure: externalities
Q12(b)Explain4 marks
With reference to Figure 2, explain the difference between 'renewable resources' and 'non renewable resources'.
Mark splitKnowledge 2Application 2
TopicThe nature of economics
Q12(c)Analyse6 marks
With reference to Figure 1 and Extract A, analyse two reasons why 'the world price of copper increased significantly' between May and December 2020. 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 A, examine two likely effects of an increase in the price of copper on plumbing firms that replace water pipes in customers' homes.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicElasticities of demand and supply
Q12(e)Discuss14 marks
With reference to Extract B and your own knowledge, discuss the possible effects of a subsidy paid to manufacturers of battery electric buses (BEBs). Illustrate your answer with an appropriate diagram.
Mark splitEvaluation 6
TopicMarket failure: externalities
Section D
Q13OptionalEvaluate20 marks
Evaluate the impact of imposing this maximum price on the market for white rice in Sri Lanka.
Mark splitEvaluation 8
TopicGovernment intervention and government failure
Q14OptionalEvaluate20 marks
Evaluate possible microeconomic reasons why education might be underconsumed.
Mark splitEvaluation 8
TopicMarket failure: externalities
