Economics Paper 2 June 2019

1. Aevery firm sells an identical product at a price that is set entirely by the market
2. Bone single firm supplies the whole market and there are no close substitutes for it
3. Cthere are thousands of small sellers, none of whom can influence the ruling market price
4. Deach chain has to weigh how its rivals will react before it changes its own prices

1. Abranding and advertising in order to win customers away from rivals
2. Bselling ten everyday grocery items at fifty pence each for a limited period
3. Ccutting the shelf price of staple items such as bread, eggs and butter
4. Dmatching a rival chain's price reduction within a day of it being announced

1. Araise their prices by the same amount, so the firm loses hardly any customers
2. Bcut their prices sharply, so the firm gains customers from them at the new price
3. Cleave the industry altogether, so the firm is left supplying the whole market
4. Dhold their own prices steady, so the firm loses a large share of its customers

1. Amarginal cost is equal to marginal revenue
2. Btotal revenue reaches its highest possible value for the period
3. Caverage total cost is equal to the average revenue per unit sold
4. Dmarginal cost is at the lowest point of the marginal cost curve

1. Athere are very many members whose costs of production differ widely
2. Bdemand in the market changes sharply from one month to the next
3. Cthe members are few in number and have similar costs of production
4. Deach member is free to sell whatever quantity it wishes at any price

1. Aprice elastic, because the quantity sold rose more than proportionately to the price cut
2. Bprice inelastic, because the quantity sold rose less than proportionately to the price cut
3. Cunitary elastic, because the gain in revenue exactly offset the loss on each unit sold
4. Dperfectly inelastic, because the quantity sold did not respond to the price cut at all

1. Amore shops opening in remote rural areas, which large chains tend to prefer
2. Blower spending on advertising, because the chains already know each other's plans
3. Clower prices, because the chains compete hard for one another's customers
4. Da wider spread of small independent grocers serving each neighbourhood

1. Aprices change from one day to the next, which makes household budgeting hard
2. Bthe firms are forced to sell below average cost for long periods at a time
3. Cthe firms may collude and behave like a single monopolist, raising prices
4. Dthe number of product lines on sale grows far beyond what shoppers want

Answer this when you sit the paper.

1. Aa limit on the quantity of goods a firm is permitted to bring into the country
2. Ba payment or bonus to exporters to encourage them to sell more abroad
3. Ca subsidy paid to households that buy goods produced in other countries
4. Da tax charged on goods as they leave the country for foreign markets

1. Aa reduction in the rate of corporate income tax
2. Ban increase in the national minimum wage
3. Ca quota limiting the quantity that may be brought in
4. Dan export incentive scheme paid to local producers

Answer this when you sit the paper.

1. Aleaves both the consumption of goods and the level of foreign reserves exactly as they were
2. Braises the volume of goods available to consumers but drains the country's foreign currency
3. Craises both the volume of goods available to consumers and the country's foreign reserves
4. Dreduces the volume of goods available to consumers and raises the country's foreign reserves

1. Araising income tax in order to reduce the spending of households
2. Braising interest rates in order to slow down lending by the banks
3. Cincreasing tariffs on all raw materials brought in from abroad
4. Dtraining workers so that they become more productive in their jobs

1. Athe goods produced by subsidised firms disappear from the home market
2. Ba firm shielded by a subsidy may become inefficient and slow to innovate
3. Cevery subsidy has to be recovered through a higher rate of value added tax
4. Dthe firms receiving a subsidy are barred from selling in export markets

1. Araw materials attract higher tariffs than finished goods in most export markets
2. Braw material prices are lower and far more volatile on world markets
3. Craw materials are far more costly to produce than manufactured goods are
4. Draw materials cannot be transported economically over long distances at all

1. Athe primary sector is labour intensive, so mining and farming create many jobs
2. Bworld prices for raw materials are steadier than the prices of manufactures
3. Craw materials sell for a higher price per tonne than processed goods do
4. Dthe country is able to earn export income without using natural resources

1. Aexport taxes are lifted altogether once ore has been refined in the country
2. Bthe world price of unrefined ore rises whenever a smaller quantity is sold
3. Cthe tonnage that the country's mines are able to extract each year increases
4. Deach tonne sold is worth considerably more once it has been processed