Danho
ZIMSEC A Level · N2009

Economics Paper 1 November 2009

Questions
16

Sit this paper online

Questions
16
Pass mark
10
Sit this paper

Answer every question in the printed order, get marked at the end, then see the answers.

The questions

Question 1

types of economy
Which characteristic applies to a mixed economy?
  1. AIt is partly run by government and partly run by individuals.
  2. BPrices are determined by forces of demand and supply.
  3. CThe price mechanism alone allocates resources.
  4. DGoods are produced for everyone in the society.

Question 2

price mechanism
The price system allocates resources through interaction of demand and supply forces. Which one is not a function of prices?
  1. Asignalling function
  2. Bincentive function
  3. Cbartering function
  4. Drationing function

Question 3

externalities
In dam construction, which one is an externality?
  1. Adam wall holding the water
  2. Bearthmoving equipment used
  3. Cirrigation piping at site
  4. Dwater skiing facility in the area

Question 4

public goods
A municipal authority budget included construction of non-income generating facilities not taken up by the private sector. Such facilities are referred to as
  1. Aeconomic goods.
  2. Bfree goods.
  3. Cmerit goods.
  4. Dpublic goods.

Question 5

allocative efficiency
Allocative efficiency is realised when
  1. Athe economy is operating at minimum cost.
  2. Ba gain by one does not diminish others' welfare.
  3. Csociety gets as much from production as it puts in.
  4. Dthe economy is operating at the production possibility curve.

Question 30

national income / quantity theory of money
If nominal value of income rises by 20% and the amount of money in circulation remains the same, then
  1. Aper capita output has risen by 20%.
  2. Breal national income remains constant.
  3. Cthe general price level has fallen by 20%.
  4. Dthe income velocity of circulation has increased by 20%.

Question 31

real per capita income

The table shows national income, rates of population and inflation changes for countries A, B, C and D.

Which country, A, B, C or D experienced a rise in real per capita income?

  1. AA
  2. BB
  3. CC
  4. DD

Question 32

consumption and saving

The graphs show the relationship between consumption and saving in a closed economy with no government.

What is the value of dissaving at zero income?

  1. A$0
  2. B$800 bn
  3. C800bn+800 bn + y_1$
  4. Dy−y - 800 bn$

Question 33

fiscal policy / multiplier
Faced with unemployment, government decides to increase expenditure on goods and services. What situation yields the greatest increase in output in the economy?
  1. Ahigh unemployment, bank loans
  2. Bhigh unemployment, raising tax rates
  3. Clow unemployment, raising tax rates
  4. Dlow unemployment, issue bonds to non-bank sector

Question 34

inflationary gap / multiplier

The diagram shows the income and expenditure functions for an economy.

If the multiplier is 2, by how much should expenditure rise to close the inflationary gap?

  1. A$2 billion
  2. B$50 billion
  3. C$100 billion
  4. D$200 billion

Question 35

comparative advantage / international trade

With a given amount of resources, two countries produce Good Y and Good X as given in the diagrams below.

Which statement reflects what happens if the two countries agree to trade in mutual benefit?

  1. ABoth countries gain if they exchange at 1Y for 3X.
  2. BCountry A only gains as it produces more of both goods.
  3. CNeither country gains as their comparative advantage is in the same good.
  4. DBoth countries gain as they exchange at lower prices.

Question 36

GDP measurement

In an open economy.

Consumption expenditure = $100 billion
Investment expenditure = $40 billion
Government expenditure = $40 billion
Exports = $40 billion
Imports = $20 billion

What is the level of GDP?

  1. A$140 billion
  2. B$200 billion
  3. C$220 billion
  4. D$240 billion

Question 37

price elasticity of demand
Which factor will increase the price elasticity of demand for brand X of wine?
  1. Aavailability of close substitutes to the brand X of wine
  2. Bexpenditure on this brand of wine takes a small fraction of the family's total expenditure
  3. Cconsumers becoming addicted to the product
  4. Ddemand for this brand of wine considered in the short-run

Question 38

labour market / trade unions

The diagram shows the effect of a trade union in a monopoly labour market. The initial wage before the introduction of a trade union is W1W_1. The trade union pushes the wage rate to W2W_2.

What will be the resultant supply curve after the introduction of a trade union in this labour market?

  1. ACBS
  2. BW2BS
  3. CW1CBS
  4. DW3AD

Question 39

costs of production

The table shows a firm's total and marginal costs.

Calculate the average fixed cost of producing 7 units of output.

  1. A$1
  2. B$7
  3. C$60
  4. D$213

Question 40

price discrimination / monopoly

A discriminating monopolist sells his output in two segmented markets. The diagrams show the demand and marginal revenue curves in the two segmented markets.

Assuming marginal cost of production is $10 000, how much is the monopolist going to charge in each market?

  1. A$5 000 in Market A, $10 000 in Market B
  2. B$10 000 in Market A, $10 000 in Market B
  3. C$13 500 in Market A, $15 000 in Market B
  4. D$15 000 in Market A, $2 000 in Market B

More sittings of this paper

The answers, and why they are the answers

Sit the paper here to see which ones you got right. Danho explains every question, keeps your score, and works without a connection.

Get it on Google PlayDownload on the App Store