ZIMSEC A Level Economics Paper 1 June 2019

Question 1

production possibility curve

The diagram below shows the Production Possibility Curve (PPC) of a country X. [Diagram: potatoes on the vertical axis with levels c, d and b marked from the top down, and bread on the horizontal axis with levels e and a marked. The concave PPC runs from c on the potatoes axis down to the bread axis. Point F sits on the curve at potato level d and bread level e; point G sits on the curve at potato level b and bread level a.]

With reference to the PPC above

Athe opportunity cost of producing Oa bread is Ob potatoes.
Bthe opportunity cost of producing Oa bread is bc potatoes.
Cthe opportunity cost of producing a loaf of bread is higher at F than at G.
Dthe opportunity cost of producing one more pocket of potatoes is higher at G than at F.

Question 2

basic economic questions

The "How to produce" question in Economics refers to the way in which

Ascarce resources are allocated among competing needs.
Bthe state sets output targets in a command economy.
Cfactors of production may be combined to produce output.
Da firm decides on its profit maximizing rate of output.

Question 3

consumer surplus

What does consumer surplus indicate?

Athat more will be demanded at lower prices than higher prices
Bthat consumers get more value from a good than is represented by the price
Cthat the allocation of resources is decided by the interaction of buyers and sellers
Dthat it is impossible to increase consumer well-being by changing the way in which income is spent

Question 4

short run and long run

The short-run period in Economics is described as a time period in which

Aat least one factor of production is available.
Ball factors of production are fixed.
Call factors of production are variable.
Dat least one factor of production is fixed.

Question 5

externalities

Which of the following is not an example of an externality?

Athrowing empty coke cans into the street
Bthe cost to the owner of an attractive garden
Ccleaning a rubbish-fitted site to build a hospital
Daeroplanes taking-off from an airport near a residential area

Question 6

supply

The graph below shows the supply curve for tea in an economy. [Diagram: price on the vertical axis and quantity of tea on the horizontal axis. Two parallel upward sloping supply curves are drawn, the lower one labelled $S_1$ and the upper one labelled $S_2$ , with arrows showing the shift from $S_1$ up and to the left to $S_2$ .]

What could possibly cause the supply curve to shift from $S_1$ to $S_2$ ?

Aa positive change in consumer taste for tea
Ba decrease in the cost of producing tea
Can increase in the cost of producing tea
Dan increase in the price of coffee

Question 7

inferior goods

When an individual's income rises, ceteris paribus, their demand for kapenta, an inferior good,

Arises.
Bfalls.
Cremains unchanged.
Drises then falls.

Question 8

demand and supply

If both demand and supply increase then

Aboth price and quantity traded will rise.
Bprice will rise and quantity traded is uncertain.
Cprice change is uncertain and quantity traded will increase.
Dsuch simultaneous changes are complex such that it is difficult to tell the result of such movements.

Question 9

production possibility curve

The following information about a production possibility curve are true except that

Apoints inside the PPC are inefficient.
Ball points along the PPC are productively efficient.
Call points along the PPC are allocatively efficient.
Dthe PPC is constructed on the assumption that there is fixed supply of resources.

Question 10

law of diminishing returns

If more labour is added to a fixed amount of capital, the rate at which output increases begins to decline. This illustrates diminishing marginal

Acost.
Butility.
Cprofit.
Dproductivity.

Question 11

oligopoly

The kinked demand curve faced by an oligopolist is based on the assumption that rivals will

Afollow a price increase but not a price decrease.
Bfollow a price decrease but not a price increase.
Cfollow both a price decrease and a price increase.
Dignore both a price increase and a price decrease.

Question 12

perfect competition

If a firm in a perfectly competitive industry raises its price above the market price

Aits sales will drop to zero.
Bits sales will fall marginally.
Call other firms in the industry will follow suit.
Dits sales will stay the same.

Question 13

marginal revenue product

The table below shows the number of workers and the total output per week.

No of workers	Total output per week (units)
1	100
2	109
3	116
4	120

Given that the price per unit of output is $10.00, what is the marginal revenue product for the third worker?

A$40
B$70
C$90
D$116

Question 14

income elasticity of demand

The income elasticity of demand for a good is 0,5. If income rises by 30%, what is the percentage change in quantity demanded?

Aa 15% fall
Ba 30% fall
Ca 15% rise
Da 60% rise

Question 15

inflation and unemployment

A situation where both inflation and unemployment are high is known as

Adeflation.
Bdepression.
Crecession.
Dstagflation.

Question 16

comparative advantage

The primary benefit that comes as a result of a nation employing its resources in accordance with the principle of comparative advantage is

Aa larger output resulting from a more efficient use of resources.
Bgreater equality of income resulting from an increase in the number of workers.
Can increase in the profitability of business enterprises resulting from an increase in capital formation.
Dan expansion in capital investment resulting from a reallocation of resources away from consumption.

Question 17

unemployment

The table shows information in the population of a country.

Class	Population in millions
Under 15	20
Employed	16
Pensioners	9
Unemployed	4
Physically unable to work	1
Total population	50

Calculate the unemployment rate.

A8%
B10%
C20%
D32%

Question 18

unemployment

During an economic recession sales decline leading to some workers losing their jobs. This type of unemployment is referred to as

Acyclical.
Bfrictional.
Cstructural.
Dtechnological.

Question 19

monetary policy

Which of the following would be classified as an expansion monetary policy?

Aan increase in special deposits
Ban increase in money supply
Can increase in interest rates
Dan increase in the exchange rate

Question 20

national income accounting

If 2 000 is the base year for real GDP calculation then we know for certain that nominal GDP

Ais equal to real GDP in 2000.
Bis less than real GDP in 2000.
Cis greater than real GDP in 2000.
Din 1999 was greater than real GDP in 2000.

Question 21

circular flow of income

The following statements for the circular flow of income are true except

Athere are two sets of markets in an economy being goods market and factor market.
Bfirms are buyers in the factor market and sellers in the goods market.
Cfirms are buyers in the goods market and sellers in the factor market.
Dfirms are the largest purchasers of capital goods.

Question 22

taxation

A value added tax (VAT) is generally viewed as

Aprogressive, because the consumption expenditure of the rich is greater than that of the poor.
Bregressive, because low income households spend a greater proportion of their income on goods that attract VAT.
Cproportional, because the VAT rate is constant across goods that attract VAT.
Dregressive, because the VAT burden increases as households' incomes increase.

Question 23

exchange rates

The exchange rate between the Zimbabwe dollar and the Botswana Pula is Z$1 = P12. If a car costs Z$16 000 then its cost in Pula is

AP192 000.
BP19 200.
CP13 333.
DP1 333.

Question 24

trade protection

Tariffs benefit domestic producers by

Aincreasing government revenue.
Breducing the prices of imported goods.
Creducing sales of domestically produced goods.
Dincreasing sales of domestically produced goods.

Question 25

marginal revenue productivity theory

All of the following are limitations of the Marginal Revenue Productivity (MRP) theory except

Alabour is perfectly mobile.
Bit assumes that more productive workers are paid higher wages.
Call factors of production are held constant in supply during production.
Dit is not possible to calculate the marginal revenue product of workers in the service sector.

Question 26

aggregate demand and supply

The diagrams below show aggregate demand and aggregate supply curves in four countries. [Four diagrams labelled A to D, each with price level on the vertical axis and output on the horizontal axis. A has a downward sloping AD and an upward sloping AS through the origin. B has a downward sloping AD and a vertical AS. C has a vertical AD and an upward sloping AS. D has a downward sloping AD and a horizontal AS.]

In which country will an increase in government expenditure leave the level of national output unchanged?

Question 27

taxation

Use the information in the given table to answer the question below.

Income	Income tax paid
$500	$30.00
$826	$49.56
$960	$57.60
$1 355	$81.00

The description of the tax system applied is

Aprogressive.
Bregressive.
Cproportional.
Dprogressive and proportional.

Question 28

development indicators

Which of the following are components of the Human Development Index (HDI)?

Apopulation growth, literacy rate and life expectancy
Bliteracy rate, life expectancy and Gross Domestic Product per head
Cinfant mortality rate, life expectancy and population growth
DGross Domestic Product per head, population growth and life expectancy

Question 29

national income determination

The following information is given for a closed economy with no government:

Consumption: $c = 50 + 0,8y$
Investment: $I = 80$

Calculate the level of savings.

A80
B100
C130
D650

Question 30

functions of money

Which of the following functions of money enable firms to conduct credit transactions?

Aunit of account
Bstore of value
Cmeans of deferred payments
Dmedium of exchange

Question 31

the multiplier

In a closed economy with no government, the consumption function is given by:

$C = 100 + 0.8Y$

What is the value of the multiplier?

A0.2
B0.8
C1.25
D5

Question 32

indirect taxes and welfare

The diagram below shows the demand and supply curves. $S_0$ is supply before tax and $S_1$ is supply after tax. [Diagram: price on the vertical axis with $P_1$ , $P_e$ and $P_0$ marked from the top down, quantity on the horizontal axis with $q_1$ and $q_e$ marked. The demand curve D slopes downwards, $S_0$ is the original upward sloping supply curve and $S_1$ lies above and to the left of it. Point c is the pre-tax equilibrium at $P_e$ and $q_e$ ; point a is the post-tax equilibrium at $P_1$ and $q_1$ ; b lies on the vertical through $q_1$ at price $P_e$ and d lies on the same vertical at price $P_0$ .]

What is the effect of the imposition of the tax?

Aloss of consumer surplus of an area bcd only.
Bloss of producers and consumer surplus of area abc.
Closs in producer and consumer surplus of area adc.
Dloss in consumer surplus ( $P_1P_eba$ ) and producer's surplus of bcd.

Question 33

demand

The diagram below shows the demand curves $D_1$ and $D_2$ for a product. [Diagram: price on the vertical axis and quantity on the horizontal axis. Two parallel downward sloping demand curves are drawn, the lower one labelled $D_1$ and the upper one labelled $D_2$ , with arrows showing the shift outwards from $D_1$ to $D_2$ .]

The shift of the demand curve from $D_1$ to $D_2$ could be as a result of

Aa decrease in the quantity supplied.
Ban increase in the price of a complement.
Ca decrease in the consumers' incomes.
Dan increase in the price of a substitute.

Question 34

sampling methods

If each economic agent has an equal chance of being selected into a sample group, then this is

Aquota sampling.
Bcluster sampling.
Csimple random sampling.
Dmulti-stage sampling

Question 35

balance of payments

Expenditure switching cures a balance of payments deficit through

Astimulating the total level of demand in an economy.
Bsubsidizing of the local industries.
Cimposition of tariffs and quotas.
Dexport promotions to increase demand.

Question 36

balance of trade

An economy has the following current account statistics.

Export of goods: $350m
Export of services: $250m
Import of goods: $400m
Import of services: $225m

Calculate the balance of trade?

A-$50
B-$25
C+$25
D+$50

Question 37

price controls

The diagram below shows a product market with OP as the equilibrium price. [Diagram: price on the vertical axis with N above P, quantity on the horizontal axis with $q_1$ , $q_0$ and $q_2$ marked. The upward sloping supply curve S and downward sloping demand curve D cross at the equilibrium price P and quantity $q_0$ . A horizontal line at N, labelled price ceiling, lies above the equilibrium and meets the demand curve at $q_1$ and the supply curve at $q_2$ .]

Government imposes a maximum price above the equilibrium P to price denoted by N. The effect on consumer demand is

Aa fall in quantity demanded from $q_0$ to $q_1$ .
Ban increase in quantity demanded from $q_1$ to $q_0$ .
Can increase in demand from $q_1$ to $q_0$ .
Dno effect on quantity demanded.

Question 38

investment

The curve I below shows the relationship between interest rate and the level of derived stock of capital. [Diagram: rate of interest on the vertical axis and capital stock on the horizontal axis, with a single curve labelled I at both ends falling steeply from the top left and flattening out towards the right.]

What does curve I represent?

Athe marginal efficiency of capital
Bthe transmission mechanism of capital
Cthe accelerator principle
Dthe liquidity preference

Question 39

measures of central tendency

Students in an Economics class obtained the following marks in their mid-year examination:

47; 49; 55; 56; 52; 52; 70; 66; 61; 53

Calculate the median mark.

Question 40

data presentation

Which of the following is not a method of presenting data?

Aquestionnaire
Bbar graph
Cpie chart
Dfrequency polygon