CAPE Economics Unit 1 · 2006 · Paper 1

46 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)2 marksExplain briefly why scarcity affects both the rich and the poor.
2. 1(b)2 marksList TWO of the major choices that a country must make because of scarcity.
3. 1(c)2 marksState the opportunity cost of building the third school.
4. 2(a)2 marksCalculate the slope of the supply curve.
5. 2(b)2 marksDetermine the equilibrium price using the data in Table 1.
6. 2(c)2 marksExplain why there will be a shortage of compact discs if they are sold at a price of $2.00 each.
7. 3(a)2 marksCalculate the elasticity of demand for compact discs using the mid-point formula.
8. 3(b)2 marksDetermine whether the demand for compact discs is elastic, inelastic, or unit elastic, and explain your answer.
9. 3(c)2 marksList TWO factors that determine the elasticity of demand for compact discs.
10. 4(a)2 marksDefine the term 'marginal utility'.
11. 4(b)(i)1 markExplain how the purchase of additional units of a commodity will affect total utility.
12. 4(b)(ii)1 markExplain how the purchase of additional units of a commodity will affect marginal utility.
13. 4(c)2 marksExplain why a consumer may purchase more of a commodity if its price is less than its marginal utility, all things being equal.
14. 56 marksComplete columns 4 (Total Costs), 5 (Average Total Costs), and 6 (Marginal Costs) in the answer booklet.
15. 6(a)2 marksDefine the term 'market structure'.
16. 6(b)2 marksIn a market there are many firms producing identical goods. Explain whether this is a case of monopolistic competition or perfect competition.
17. 6(c)2 marksIn which market structure are there price leaders and price followers?
18. 7(a)(i)1 markState the level of output at which the firm is producing.
19. 7(a)(ii)1 markIdentify which intersection, A, B, C or D, indicates the output level.
20. 7(b)2 marksExplain whether the firm is likely to experience normal profits, economic profits, or a loss.
21. 7(c)2 marksExplain what will happen to output in the long run.
22. 8(a)2 marksDefine the term 'multinational corporation'.
23. 8(b)2 marksList TWO resources that a multinational corporation may contribute to your country or to any member state of CARICOM.
24. 8(c)2 marksState TWO reasons why a multinational corporation might want to establish itself in any CARICOM country.
25. 9(a)2 marksDefine the term 'market failure'.
26. 9(b)2 marksState TWO factors that account for market failure.
27. 9(c)(i)1 markState the type of market structure in an industry that is likely to produce greater output.
28. 9(c)(ii)1 markState the type of market structure in an industry that is likely to charge a higher price.
29. 10(a)2 marksList TWO measures of industrial concentration.
30. 10(b)2 marksExplain how ONE of the measures listed in 10(a) is calculated.
31. 10(c)2 marksExplain why a good with positive externality should be subsidised.
32. 11(a)2 marksExplain briefly the difference between interest and profits.
33. 11(b)2 marksJohn told Jane that the price of sugar is an important factor influencing the price of land on which sugar cane is planted. Explain why this may be so.
34. 11(c)2 marksList TWO factors of production and explain how the reward of any ONE of them relates to the cost of production.
35. 12(a)2 marksDefine the term 'value of the marginal product of labour' (marginal revenue product of labour).
36. 12(b)2 marksExplain why a perfectly competitive firm will pay a wage equal to the value of the marginal product of labour.
37. 12(c)2 marksDefine the terms 'transfer earnings' and 'rent'.
38. 13(a)(i)2 marksDefine the term 'labour supply'.
39. 13(a)(ii)2 marksDefine the term 'labour force participation rate'.
40. 13(b)2 marksIdentify TWO from the list who are NOT included in the labour force.
41. 14(a)2 marksExplain how relative poverty differs from absolute poverty.
42. 14(b)2 marksList TWO causes of poverty in your country.
43. 14(c)2 marksExplain whether land is more or less equally distributed than income in your country.
44. 15(a)(i)2 marksExplain the term 'moral hazards'.
45. 15(a)(ii)2 marksExplain the term 'adverse selection'.
46. 15(b)2 marksState TWO measures which the government of your country can implement to alleviate poverty.