CAPE Economics Unit 1 · 2006 · Paper 2

45 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)(i)2 marksDefine 'equilibrium price'.
2. 1(a)(ii)2 marksDefine 'Pareto efficiency'.
3. 1(a)(iii)2 marksDefine 'price ceiling'.
4. 1(b)(i)12 marksDiscuss four main factors that influence the demand for beef.
5. 1(b)(ii)12 marksDiscuss four main factors that influence the supply of beef.
6. 1(c)(i)6 marksExplain why all low-income families may not be able to increase their milk consumption.
7. 1(c)(ii)4 marksExplain how consumers and producers will react to the price ceiling.
8. 1(c)(iii)3 marksExplain what the government might do to maintain the legal price.
9. 1(c)(iv)3 marksExplain what the government might do to ensure low-income families benefit from the pricing policy.
10. 1(d)4 marksIdentify one advantage and one disadvantage of the free market allocation of resources.
11. 2(a)(i)2 marksDefine the term 'production function'.
12. 2(a)(ii)9 marksState where each of the three stages of production begins and ends.
13. 2(a)(iii)9 marksWith the aid of the diagram on page 3, explain why production tends to occur in Stage TWO of the production stages rather than Stage ONE or Stage THREE.
14. 2(b)6 marksExplain the law of diminishing returns.
15. 2(c)(i)2 marksConstant returns to scale
16. 2(c)(ii)2 marksIncreasing returns to scale
17. 2(c)(iii)2 marksDecreasing returns to scale
18. 2(c)(iv)2 marksEconomies of scale
19. 2(d)(i)8 marksDiscuss one reason for economies of scale and one reason for diseconomies of scale.
20. 2(d)(ii)8 marksExplain how economies and diseconomies of scale influence the shape of the long-run average cost curve of a firm.
21. 3(a)2 marksDefine the term 'market structure'.
22. 3(b)8 marksState four assumptions on which perfect competition is based.
23. 3(c)(i)6 marksState three types of market structures other than perfect competition, and give an example of each.
24. 3(c)(ii)6 marksExplain how each of the types mentioned in (c)(i) differs from perfect competition.
25. 3(d)6 marksAn industry's long-run average cost is falling even after demand is met. Describe the type of market structure that this industry is likely to represent.
26. 3(e)(i)16 marksDraw a diagram showing this situation. Label the axes, the cost and revenue curves, and indicate the profit made by firms.
27. 3(e)(ii)6 marksExplain what will happen to profit, the number of firms, and output in the long run.
28. 4(a)(i)5 marksPublic goods
29. 4(a)(ii)5 marksExternalities
30. 4(a)(iii)4 marksAsymmetric information
31. 4(b)21 marksExplain how each of the concepts listed in 4(a) causes a market to fail.
32. 4(c)(i)5 marksTaxation
33. 4(c)(ii)5 marksSubsidies
34. 4(c)(iii)5 marksRegulation
35. 5(a)12 marksDefine each of the four broad types of resources: land, labour, capital (including human capital), and entrepreneurship. State the role each plays in the production process.
36. 5(b)(i)12 marksComplete the table in your answer booklet.
37. 5(b)(ii)4 marksState the number of units of labour that AURO INC employs.
38. 5(c)(i)6 marksDraw a backward-bending supply curve of labour and identify the region where the income effect exceeds the substitution effect.
39. 5(c)(ii)4 marksExplain why part of the curve has a negative slope.
40. 5(d)12 marksGive four reasons why wages differ.
41. 6(a)(i)4 marksExplain the term 'poverty line'.
42. 6(a)(ii)6 marksUse the concept of poverty line to distinguish between persons who are 'absolutely poor' and persons who are 'relatively poor'.
43. 6(b)18 marksExplain how three of the following factors contribute to poverty: (i) Non-ownership of resources, especially human capital; (ii) Unemployment; (iii) Large family size; (iv) Single parent, female-headed family; (v)…
44. 6(c)(i)4 marksDiscuss the term 'welfare programme'.
45. 6(c)(ii)18 marksDiscuss three areas from among health, education, housing, and employment in which the government of your country supports programmes aimed at poverty reduction.