CAPE Economics Unit 1 · 2005 · Paper 2

56 questions and parts from this paper. Open one to see it in full, then practise it on Quelpr and get it marked against the mark scheme.

1. 1(a)12 marksCopy and complete the table for APP, MPP, AVC, and MC.
2. 1(b)(i)2 marksDefine Average Physical Product (APP) OR provide the formula for calculating it.
3. 1(b)(ii)2 marksDefine Marginal Physical Product (MPP) OR provide the formula for calculating it.
4. 1(b)(iii)2 marksDefine Average Variable Cost (AVC) OR provide the formula for calculating it.
5. 1(b)(iv)2 marksDefine Marginal Cost (MC) OR provide the formula for calculating it.
6. 1(c)2 marksState what happens to average physical product (APP) and marginal physical product (MPP) as output increases.
7. 1(d)2 marksState what happens to average variable cost (AVC) and marginal cost (MC) as output increases.
8. 1(e)(i)4 marksExplain how output will be affected when a variable input is added to a fixed input.
9. 1(e)(ii)4 marksExplain how increasing levels of output affect costs.
10. 1(f)12 marksDraw a diagram showing the marginal cost curve (MC) and the price ($200) of the product.
11. 1(g)6 marksIdentify what level of output the firm will produce and state how you arrived at your answer.
12. 2(a)(i)2 marksDefine the term 'Demand'.
13. 2(a)(ii)2 marksDefine the term 'Supply'.
14. 2(b)2 marksBriefly explain the difference between a 'change in demand' and a 'change in the quantity demanded'.
15. 2(c)(i)2 marksCopy the provided diagram representing demand and supply for digital cameras into your answer booklet.
16. 2(c)(ii)2 marksIdentify the equilibrium price and state the quantity of digital cameras traded at that price.
17. 2(d)(i)5 marksList FIVE factors that will influence the demand for digital cameras.
18. 2(d)(ii)12 marksExplain how FOUR of the factors listed in (d)(i) will affect the demand for digital cameras.
19. 2(e)6 marksWith the aid of a diagram show how an increase in ONE of the four factors in (d)(ii) will affect the demand curve.
20. 2(f)(i)5 marksList FIVE factors that will influence the supply of digital cameras.
21. 2(f)(ii)12 marksExplain how FOUR of the factors listed in (f)(i) will affect the supply of digital cameras.
22. 3(a)3 marksDefine the term 'market structure'.
23. 3(b)8 marksList FOUR types of market structures that exist in the CARICOM region and give ONE example of EACH type.
24. 3(c)25 marksSelect TWO of the market structures listed in (b) and compare them with respect to: (i) Barriers to entry, (ii) Number of firms and buyers, (iii) Nature of the goods they produce, (iv) Market power and control over…
25. 3(d)(i)6 marksDefine the following terms: (a) Efficiency, (b) Consumer surplus, (c) Producer surplus.
26. 3(d)(ii)8 marksDiscuss the efficiency with which resources are used in: (a) a monopoly, (b) perfect competition.
27. 4(a)2 marksDefine the term 'market failure'.
28. 4(b)6 marks'The price of oil is rising due to political instability in some oil-producing countries.' Explain why this is NOT an indication of market failure.
29. 4(c)(i)8 marksDefine monopolistic power and explain how it causes market failure.
30. 4(c)(ii)8 marksDefine externalities and explain how they cause market failure.
31. 4(c)(iii)8 marksDefine public good and explain how it causes market failure.
32. 4(d)(i)6 marksExplain how regulation can be used to remove the effects of monopoly power.
33. 4(d)(ii)6 marksExplain how taxation or subsidy can be used to remove the effects of externalities.
34. 4(d)(iii)6 marksExplain how government intervenes to ensure optimal production of public goods.
35. 5(a)(i)2 marksExplain the meaning of 'Functional distribution of income'.
36. 5(a)(ii)2 marksExplain the meaning of 'Inequality'.
37. 5(a)(iii)2 marksExplain the meaning of 'Gini co-efficient'.
38. 5(a)(iv)2 marksExplain the meaning of 'Lorenz curve'.
39. 5(b)(i)3 marksState the range of values of the Gini co-efficient.
40. 5(b)(ii)6 marksExplain what the values of the Gini co-efficient indicate about the equal OR unequal distribution of income.
41. 5(c)(i)3 marksList THREE measures that government can take to achieve an equal distribution of income.
42. 5(c)(ii)9 marksExplain how EACH of the measures listed in (c)(i) is used to achieve the goal of income equity.
43. 5(d)(i)3 marksDefine the term 'poverty'.
44. 5(d)(ii)6 marksExplain the difference between absolute poverty and relative poverty.
45. 5(e)6 marksExplain how the unequal distribution of income affects the standard of living of the citizens in a country.
46. 5(f)6 marksDiscuss the role of education in the elimination of poverty.
47. 6(a)2 marksDefine the term 'social welfare'.
48. 6(b)8 marksList FOUR services that governments in the region provide for their citizens free of charge OR at below cost.
49. 6(c)(i)5 marksDiscuss how vote getting influences governments' decision to provide the welfare services listed in (b).
50. 6(c)(ii)5 marksDiscuss how welfare equity influences governments' decision to provide the welfare services listed in (b).
51. 6(c)(iii)5 marksDiscuss how beneficial externality influences governments' decision to provide the welfare services listed in (b).
52. 6(d)(i)5 marksDefine asymmetric information and give an example.
53. 6(d)(ii)5 marksDefine moral hazard and give an example.
54. 6(d)(iii)5 marksDefine adverse selection and give an example.
55. 6(e)(i)2 marksDefine the term 'minimum wage rate'.
56. 6(e)(ii)8 marksDiscuss TWO effects that the minimum wage rate may have on the welfare of workers.