Section A
Q11 mark
1 Which one of the following is a role of the government in a mixed economy?
- ATo provide public goods such as street lighting and flood defences
- BTo subsidise goods that cause external costs
- CTo tax goods that cause external benefits
- DTo introduce regulations that cause excessive administration costs
Show the answer
The answer is A.
TopicMarket failure: externalities
Q21 mark
2 Which one of the following is an example of market failure?
- AExcessive administration costs associated with government regulation
- BDiminishing marginal utility occurring as consumption increases
- CRising stock market prices causing a market bubble
- DUnintended consequences after the introduction of a tax
Show the answer
The answer is C.
TopicGovernment intervention and government failure
Q31 mark
Which one of the following diagrams best illustrates the impact of the earthquake on Nepal's economy assuming it continued to operate at full employment? A B Capital Capital goods M goods L Y X L M X Y L M M L 0 Consumer 0 Consumer goods goods C D Capital Capital goods L Y goods L X X Y L L 0 Consumer 0 Consumer goods goods
Show the answer
The answer is B. Open the question paper to read the options.
TopicThe nature of economics
Q41 mark
Which one of the following explains why consumers do not change mobile phone service provider?
- AConsumers are good at computation
- BConsumers aim to maximise utility
- CConsumers exhibit habitual behaviour
- DConsumers feel valued by alternative providers
Show the answer
The answer is C.
TopicBehavioural economics and consumer choice
Q51 mark
Which one of the following can be deduced from the diagram?
- AGovernment spending rises by VUQeQ1
- BTotal revenue of rice producers falls by VUQeQ1
- CConsumer surplus rises by PeUVP1
- DProducer surplus falls by PeUVP1
Show the answer
The answer is D.
TopicThe price mechanism, consumer and producer surplus
Q61 mark
Which one of the following is the producer incidence of the subsidy?
- ARs 217 500 000
- BRs 435 000 000
- CRs 1 812 500 000
- DRs 2 247 500 000
Show the answer
The answer is A.
TopicGovernment intervention and government failure
Section B
Q7Draw4 marks
Draw a diagram to illustrate the impact of the introduction of the maximum price on the market for gas in Romania.
Mark splitKnowledge 1Application 3
TopicGovernment intervention and government failure
Q8Explain4 marks
With reference to Statement 1 and Statement 2, explain the difference between positive statements and normative statements.
Mark splitKnowledge 2Application 2
TopicThe nature of economics
Q9Explain4 marks
Explain one likely impact of this proposed regulation to stop the sale of energy drinks to children under the age of 18 in South Carolina.
Mark splitKnowledge 1Application 1Analysis 2
TopicGovernment intervention and government failure
Q10Calculate4 marks
Using the data in the table, ceteris paribus, calculate the income elasticity of demand for new cars in Singapore. Show your workings.
Mark splitKnowledge 1Application 3
TopicElasticities of demand and supply
Q11Explain4 marks
Explain the likely impact of a 10% increase in the price of Coca Cola on the demand for Pepsi cola.
Mark splitKnowledge 1Application 1Analysis 2
TopicElasticities of demand and supply
Section C
Case study
The global market for palm oil
Extracts: Figure 1: Price changes of selected vegetable oils, 2018 · Figure 2: Global palm oil production in 2017 (million tonnes) · Figure 1: based on data taken from https://www.indexmundi.com/commodities/ · Figure 2: adapted from http://www.worldagriculturalproduction.com/crops/palmoil.aspx · Extract A: adapted from https://www.thestar.com.my/business/business-news/2018/12/08/palm-dips-under-pressure- · Extract B: adapted from https://engagethechain.org/palm-oil and https://www.theguardian.com/commentisfree/2018/
In the extracts: Indonesia Malaysia Thailand Colombia, Palm, Endangered, Indonesian, Lower, Millions, Orangutans, Rapeseed, Soybean, Sunflower
Q12(a)Define2 marks
Define the term 'equilibrium' (Extract A, line 2).
Mark splitKnowledge 2
TopicDemand, supply and market equilibrium
Q12(b)Explain4 marks
With reference to Extract A, explain the impact of the availability of substitutes on the price elasticity of demand for palm oil.
Mark splitKnowledge 2Application 2
TopicElasticities of demand and supply
Q12(c)Analyse6 marks
With reference to the information provided, analyse two reasons why the price of palm oil decreased in 2018. 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 Figure 2 and Extract A, examine the likely price elasticity of supply for palm oil.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicElasticities of demand and supply
Q12(e)Discuss14 marks
With reference to Extract B, discuss the externalities associated with the production of palm oil. Illustrate your answer with an appropriate diagram.
Mark splitEvaluation 6
TopicMarket failure: externalities
Section D
Q13OptionalEvaluate20 marks
Evaluate the impact of these indirect taxes charged on petrol.
Mark splitEvaluation 8
TopicGovernment intervention and government failure
Q14OptionalEvaluate20 marks
Evaluate reasons for the underconsumption of travel insurance.
Mark splitEvaluation 8
TopicBehavioural economics and consumer choice
