Answer Happy

SECTION A Answer ALL the questions in this section. Answer the following questions, and where applicable, make use of the additional information available. Question 1 (4 marks) "Poland broke the shackles of Soviet communist domination three decades ago. Free for the first time since World War II, Poland cast off its yoke of government control and central planning in favour of an American-style free enterprise system where consumers, not elected officials or bureaucrats, drive investment, production and buying decisions." [100 MARKS] Source: https://www.chronline.com/stories/brune ... mers-pick- winners, 273515 Accessed: 14/10/21 The result to the Polish economy is that prices will determine... a. only the mix of output to be produced and the resources to be used in the production process. b. only the resources to be used in the production process and for whom the output is produced, c. the mix of output to be produced, the resources to be used in the production process, and for whom the output is produced. d. only for whom the output is produced and the mix of output to be produced. Question 2 (4 marks) "The four factors of production are needed in an efficient market to provide goods and services at an affordable price at the right time, place and mix,"... "Missing the calibration of these factors can be disastrous for the supplier and consumer." The supplier may face higher costs of production, forcing them to charge a higher price to the consumer or risk going out of business. Source: https://money.usnews.com/investing/inve ... production Accessed: 14/10/21 With regard to factors of production, which of the following statements is NOT true? a. Factors of production are also known as resources. b. In order to produce any good or a service, it is necessary to have factors of production. c. Factors of production include land, labour, capital, and entrepreneurship. d. Only those resources that are privately owned are counted as factors of production. Question 3 (4 marks) "The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some 50 miles of concrete highway." Source: https://www.juneauempire.com/opinion/op ... -over-all/ Accessed: 14/10/21 The dilemma that all nations confront in the above example is that... a. spending in national defence can be accomplished using the same resources at the same time.

b. an increase in spending in national defence implies more sacrifices of civilian goods and services. c. an increase in national defence is only possible if we produce more civilian goods and services. d. civilian goods and services can only be produced if we have adequate protection from the military. Question 4 Table 1.1: Production Possibilities for Brushes and Combs Combination Output of Cans K L M N Number of combs 4 3 2 1 Opportunity Cost Foregone brushes) NA Output of SUVs Figure 1.1 Number of brushes Referring to table 1.1, the opportunity cost of producing 17 brushes is... a. 2 combs b. 3.33 combs c. 17 combs d. 17 brushes PPI PP2 0 101 a. A movement from point B to A b. A movement from point E to F c. A movement from D to E d. A movement from PP1 to PP2 17 21 23 Question 5 (4 marks) Figure 1.1 is a hypothetical economy producing SUV's and Cars. Which of the following do not illustrate economic growth? Opportunity Cost (Foregone combs) NA (4 marks) Question 6 Figure 1.2 represents an economy producing brooms and mops. Which of the following would represent lockdown restrictions assuming that mops and brooms are essential products? Figure 1.2

Output of Ma PPI Output of Brooms a. A movement from C to A b. A movement from D to C c. No movement at C d. A movement from E to D PP2 Question 7 (4 marks) "Japan cut its economic view for the first time in four months as a surge in COVID-19 cases disrupted manufacturers' global supply chains and dampened consumer confidence. In a monthly assessment approved by the cabinet on Thursday, the government pointed to domestic and overseas virus situations as evident downside risks to the country's economic recovery." Source: https://www.reuters.com/world/asia-paci ... due-covid- revival-2021-09-16/ Accessed: 14/10/21 Japan's economic recovery can be aggregated and measured in terms of three major economic flows. These are: a. income, spending and saving. b. spending, production and saving. c. income, saving and production. d. income, spending and production. Question 8 (4 marks) "Consumption in Vietnam could grow by US$130 billion over the next decade as Asia continues to be the world's consumption growth engine, Vietnam News Agency (VNA) quoted a new report from McKinsey." Source: https://www.thestar.com.my/aseanplus/as ... r-markets- expected-to-grow-by-us130-billion-over-next-10-years Accessed: 14/10/21 In the simple circular flow of economic activity, goods, and services flow via: a. factor markets to goods markets. b. goods markets from households to firms. c. factor markets from firms to households. d. goods markets from firms to households.

Question 9. (4 marks) "U.S. consumer prices increased solidly in September as Americans paid more for food, rent and a range of other goods, putting pressure on the Biden administration to urgently resolve strained supply chains, which are hampering economic growth." Source: https://www.reuters.com/world/us/us-con ... 021-10-13/ Accessed: 14/10/21 By definition, demand is the quantity of goods... a. desired by consumers. b. ordered by consumers in a particular period. c. consumers are willing and able to buy at particular prices in a certain period. d. that consumers want to buy Question 10. "Consumer confidence nose-dives amid... supply chain problems" Which panel of Figure 1.3 illustrates 'supply chain problems' alongside a decrease in consumer confidence? Figure 1.3 a. A b. B c. C d. D 1 Quantity Quantity 69 Ph To Quantity ( 15 ✓ (4) (4 marks) Question 11 (4 marks) "As the economy picks up, demand for many inputs is outstripping supply, driving up prices for things as diverse as construction materials, energy, food ingredients, and semiconductors. Soon, that list will include Office 365 subscriptions You might not have heard about it from your sales rep yet, but Microsoft quietly announced that starting March 1, 2022 it will hike the price of many of its enterprise Office 365 and Microsoft 365 subscriptions. (Consumer and education subscription prices aren't changing-for now)" Source: https://www.cio.com/article/3634389/mic ... e-hit.html

Accessed: 14/10/21 An increase in the price of Office 365 subscriptions above the equilibrium will... a. Shift the Office 365 subscriptions' supply curve to the right. b. Shift the Office 365 subscriptions' demand curve to the right. c. Cause a surplus of Office 365 subscriptions. d. Cause a shortage of Office 365 subscriptions. Question 12 (4 marks) There is an increase in the number of adverts highlighting the danger of consuming sugar. Which of the following is likely to occur in the market for sugarless sweets, as a result of this? a. An increase in both the equilibrium price and quantity traded. b. A decrease in equilibrium price and an increase in equilibrium quantity traded. c. A decrease in both the equilibrium price and quantity traded. d. An increase in the equilibrium price and a decrease in the equilibrium quantity traded. Question 13 If the price elasticity of demand is 2.0, and a firm raises its price by 10 percent, the total revenue will.... a. Not change. b. Fall by an undeterminable amount given the information available. c. Rise. d. Fall by 20 percent. Question 14. If the price elasticity of demand is 0.15, and the price is doubled, this will lead to a a. 30 percent increase. b. 15 percent decrease. c. 0.30 percent increase. d. 0.15 percent decrease. (4 marks) (4 marks) in the quantity demanded. Question 15 (4 marks) Which of the following statements is NOT true regarding the production function and the production possibilities curve? a. Both the production function and the production possibilities curve maximise the amount of output attainable. b. The production function describes the capacity of a single firm, whereas the production possibilities summarises the output capacity of the entire economy. c. A production function tells us the maximum amount of output attainable from the use of all resources. d. The production possibilities curve expresses the ability to produce various combinations of goods given the use of all resources.

Question 16 The average physical product of four units of labour in Figure 1.4 Figure 1.4 (units per day) 12 a. 40 units per day b. 10 units per day c. 12 units per day d. 4 units per day Question 18 1 Question 17 Which of the following is always upward-sloping? a. The marginal cost curve when it is below the average total cost curve. b. The marginal cost curve when it is above the average total cost curve. c. The average fixed cost curve when it is below the marginal cost curve. d. The average total cost curve when it is above the marginal cost curve. Fertilizer Seeds Wate Labor Input (workers per day) a. $925 b. -$75 c. -$2,000 Total output Assuming that the apple farmer could earn $2, 000 as an employee elsewhere, then the total economic profit/loss in Table 1.2 is... Wages Property taxes lates est payments on borrowed funds Sales of apples Assume an apple farmer incurs the following costs and revenues Table 1.2 $200 $75 $250 $750 $600 (4 marks) $1,200 $4,000 (4 marks) (4 marks)

d. -$1, 075 Question 19 If the market price for the perfectly competitive firm represented in Figure 1.5 is $4... Figure 1.5 a. 1 b. 3 Question 20 QUANTITY a. The firm should produce 13 units. b. The firm should shut down. c. The firm will make an economic loss in the long-run. d. The firm should continue to produce though it will not recover its variable costs. MC (4 marks) It was reported that General Motors planned to essentially quit making cars and trucks in the United States for nine weeks from mid-May through July 2009 and Omaha Power planned to close one of its nuclear plants permanently. Based on these particular news reports, what is the difference between GM's and Omaha Power's decisions? ATC Quantity 1 Ave a. Omaha Power was trying to get rid of excess inventory, and GM was trying to become more efficient. b. GM was trying to maximise profits while Omaha Power was trying to minimise losses. c. GM's decision to idle plants was a short-run shutdown decision. Omaha Power, by contrast, made a long-run decision to exit a specific market. 3 d. There is no difference between GM's and Omaha Power's decisions; both were trying to get rid of excess inventory. Question 21 The perfectly competitive firm represented in Table 1.3 will produce a profit maximising quantity of... Table 1.3 4 Price $500 $450 $400 $350 $300 (4 marks) Total Cost $400 $650 $950 $1,300 $1,700 (4 marks) 4

C. 4 d. 5 Question 22 In Figure 1.6, the total deadweight loss is represented by the area... Figure 1.6 a. BDKJ b. CDFE c. ABGHE d. ABDC Quantity (per unit of time) Question 23 (4 marks) The kinked oligopoly demand curve does NOT describe the demand curve for monopolistic competition because in monopolistically competitive markets... a. Firms are not as interdependent as oligopolistic firms. b. Firms have no market power. c. There is not as much product differentiation as in oligopoly. d. There is no non-price competition. Price a. $18. b. $70. c. $72. Question 24 Table 1.4 represents a monopoly. The firm will earn a profit equal to... 511 $10 39 581 57 Demand Demand Data Quantity 9 10 Table 1.4 Cost Data Cutput 6 8 9 10 (4 marks) Total Cost 548 552 $57 563 $70 (4 marks)