Economics Paper 3 June 2023

1. Agovernment awards it an automatic tax exemption for good conduct.
2. Bit is guaranteed a monopoly position in its industry.
3. Cits production costs fall automatically regardless of output.
4. Dtrust built over time lowers disputes and encourages repeat business.

1. Aretained profit reinvested from the business's own earnings.
2. Bnew shares sold to an outside investor.
3. Ca hire purchase agreement on new equipment.
4. Da bank overdraft arranged with the entrepreneur's bank.

1. Await several years before any funds are released at all.
2. Bgive up part ownership of the business to the bank.
3. Caccept that the bank will manage the business day to day.
4. Drepay the loan with interest regardless of how trade is going.

1. Araise the company's total revenue from data sales.
2. Breduce the company's total revenue from data sales.
3. Cleave the company's total revenue from data sales unchanged.
4. Dhave no effect on the quantity of data bundles bought.

1. Apersonal customers receive the service free of charge.
2. Bbusiness customers always use less data than personal customers.
3. Cbusiness demand for the service is more price inelastic than personal demand.
4. Dbusiness customers are legally required to pay a higher tariff.

Answer this when you sit the paper.

1. Athe exact production cost of every other industry in the economy.
2. Bthe interest rate charged by the central bank on its own loans.
3. Cthe price ceiling set permanently by government regulation.
4. Dthe price and output decisions of its few close rivals.

1. Arivals do not match the rise, so it loses a large share of its customers.
2. Bthe firm's total revenue always increases as a result.
3. Crivals match the rise, so its own sales barely fall.
4. Drivals immediately raise their prices by an even larger amount.

1. Aa wide variety of differentiated products among which to choose.
2. Ba single standardised product sold at the lowest possible cost.
3. Ca guaranteed low price fixed permanently by law.
4. Dcomplete freedom from any form of advertising.

1. Arent is unrelated to how much a plot of land can produce.
2. Bmore productive land earns a surplus over the least productive land still in use.
3. Cgovernment fixes a minimum rental price on all farmland.
4. Devery plot of land in the country is equally fertile.

1. Athe total supply of land is fixed, so rising demand alone pushes rent up.
2. Bgovernment abolishes all forms of land taxation nationwide.
3. Cthe marginal productivity of every factor of production is always equal.
4. Dsoil fertility rises automatically as population grows.

Answer this when you sit the paper.

1. Alowering the cost of financing new investment projects.
2. Bguaranteeing the firm a larger share of the domestic market.
3. Craising the cost of borrowing, discouraging new investment.
4. Dreducing the wages the firm must pay its employees.

1. Athe number of banks licensed to operate in the country.
2. Bthe demand for and supply of money in the economy.
3. Cthe government's total annual tax revenue.
4. Dthe total value of a country's exports each year.

1. Athe theory assumes interest rates never change over time.
2. Ba large informal and partly dollarised economy responds weakly to local interest rate changes.
3. Cthe country has no central bank able to influence money supply.
4. Devery Zimbabwean household holds a large portfolio of tradable bonds.

1. Aconglomerate diversification.
2. Bhorizontal integration.
3. Cbackward vertical integration.
4. Dforward vertical integration.

1. Aselling shares in the company to the general public.
2. Bborrowing heavily from banks to open every new branch itself.
3. Callowing others to trade under its brand for a fee, using their own capital.
4. Dmerging with its largest competitor in the same industry.

1. Aremoving all competition from larger established firms.
2. Babsorbing labour that large-scale formal employment cannot accommodate.
3. Celiminating the need for any government tax revenue at all.
4. Dguaranteeing every SME access to cheap bank finance.

1. Auniversally high levels of domestic savings and investment.
2. Ba heavy dependence on primary sector production such as agriculture and mining.
3. Ca fully industrialised manufacturing base larger than the primary sector.
4. Dvery low rates of population growth compared to developed countries.

1. Aremove trade barriers between themselves while each keeps its own external tariff.
2. Bcharge a single common tariff on goods from outside the area.
3. Callow free movement of labour and capital between all members.
4. Dadopt one common currency issued by a single central bank.

1. Athe size of the domestic market instantly becomes irrelevant to firms.
2. Bgovernment automatically gains extra tariff revenue on all regional trade.
3. Cdomestic firms are guaranteed protection from any foreign competition.
4. Dthey may be undercut by more efficient producers from other member states.

1. Acounting only wages paid, and no other type of income.
2. Bsumming only the value added at each stage of production.
3. Csumming the full sale value of every good produced twice.
4. Dignoring the agricultural sector entirely in the total.

1. Aonly the profit earned by registered companies.
2. Bthe value of exports minus the value of imports.
3. Cgovernment spending on goods and services alone.
4. Dwages, rent, interest and profit earned by all factors of production.

Answer this when you sit the paper.

1. Agovernment to taxpayers, since tax revenue always falls.
2. Bexporters to importers, since export prices always fall.
3. Cborrowers to lenders, since debts are repaid in money worth more.
4. Dlenders to borrowers, since debts are repaid in money worth less.

1. Aforcing all firms to lower their selling prices by law.
2. Bincreasing the cost of imported goods directly.
3. Cincreasing the wages paid to public sector workers.
4. Ddiscouraging borrowing and spending, reducing aggregate demand.

1. Aa rise in real wages for every worker in the economy.
2. Bthe complete elimination of demand-pull inflation.
3. Cshortages and a parallel market at higher unofficial prices.
4. Dan immediate and permanent increase in the quantity supplied.

1. Araising the price of a good with a negative externality toward its true social cost.
2. Blowering the price of every good sold in the economy.
3. Cremoving all forms of taxation from merit goods.
4. Dguaranteeing a fixed profit to every firm taxed.

1. Aeliminate the need for the good to be produced at all.
2. Breduce the quantity of the good that is consumed.
3. Cencourage consumption closer to the socially optimal level.
4. Draise the market price paid by every consumer.

1. Alimited capacity to monitor and enforce the rules that are passed.
2. Bthe complete absence of any market failure in the economy.
3. Can oversupply of environmental and safety inspectors nationwide.
4. Dregulation being entirely unnecessary in a developing economy.

1. Aboth exports and imports are perfectly price inelastic.
2. Bthe country has no foreign currency reserves at all.
3. Cthe government simultaneously raises all import tariffs to zero.
4. Dthe combined price elasticity of demand for exports and imports exceeds one.

1. Alowering interest rates to attract more foreign capital.
2. Braising wages across the whole economy immediately.
3. Creducing aggregate demand, which reduces demand for imports.
4. Dincreasing government spending on imported goods.

1. Aguarantee an immediate and permanent trade surplus.
2. Bprovoke retaliation from trading partners and shelter inefficient local firms.
3. Cremove the need for the country to export anything at all.
4. Deliminate smuggling and parallel market activity completely.

1. Athe quantity of the currency demanded equals the quantity supplied.
2. Bexports and imports are always exactly equal in value.
3. Cthe central bank fixes the rate by law.
4. Dgovernment sets a permanent ceiling on the exchange rate.

1. Afixes import prices permanently regardless of the currency's value.
2. Bprovides an automatic correction mechanism for balance of payments imbalances.
3. Cguarantees the currency will never depreciate.
4. Dremoves any link between the exchange rate and inflation.

1. Athe government loses the ability to ever influence the currency.
2. Bforeign exchange reserves become entirely unnecessary to hold.
3. Ca thin, shallow foreign exchange market can make the rate highly volatile.
4. Dthe exchange rate becomes permanently and perfectly stable.