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CAPE Economics Unit 1 · 2008 · Paper 2

37 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.

Practise this paper
  1. 1(a)(i)12 marksWith the aid of a diagram illustrating education and medical services, explain what is meant by 'production possibilities frontier (PPF)'.
  2. 1(a)(ii)4 marksState TWO assumptions upon which the PPF is based.
  3. 1(b)(i)6 marksScarcity
  4. 1(b)(ii)6 marksChoice
  5. 1(b)(iii)6 marksIncreasing Opportunity Cost
  6. 1(c)(i)a3 marksAllocative Efficiency
  7. 1(c)(i)b3 marksProduction Efficiency
  8. 1(c)(ii)4 marksUsing the production possibilities frontier, illustrate the concepts of 'efficiency' and 'allocative efficiency'.
  9. 1(d)(i)3 marksDecrease in resources
  10. 1(d)(ii)3 marksImprovement in technology
  11. 2(a)(i)10 marksDemand
  12. 2(a)(ii)8 marksSupply
  13. 2(a)(iii)10 marksQuantity bought and sold
  14. 2(a)(iv)10 marksPrice
  15. 2(b)12 marksAnalyze the likely effects of an increase in oil prices on the market for food.
  16. 3(a)12 marksCompare and contrast THREE MAIN characteristics of perfect competition and monopolistic competition.
  17. 3(b)(i)6 marksCompetitive behaviour
  18. 3(b)(ii)6 marksOutput determination
  19. 3(b)(iii)6 marksPricing behaviour
  20. 3(c)20 marksEvaluate the performance of a perfect market and a monopolistic market in terms of profit and efficiency.
  21. 4(a)(i)12 marksPublic good
  22. 4(a)(ii)12 marksExternalities
  23. 4(a)(iii)15 marksAsymmetric information (moral hazard and adverse selection)
  24. 4(b)(i)5 marksExplain what is meant by a 'natural monopoly'.
  25. 4(b)(ii)3 marksState why a natural monopoly uses resources inefficiently if unregulated.
  26. 4(c)3 marksIdentify ONE pricing rule that a regulator may apply, and state how it may be used to achieve efficiency.
  27. 5(a)14 marksUsing a labour demand and a labour supply diagram explain how the share of income going to labour is determined.
  28. 5(b)10 marksDiscuss the division of the reward of labour into transfer earnings and rent.
  29. 5(c)(i)5 marksExplain what is meant by the term 'derived demand'.
  30. 5(c)(ii)5 marksExplain why the price of land in the busy commercial district of a major city is likely to be higher than the price of land in other areas.
  31. 5(d)16 marksDiscuss the relationship between factor rewards and cost of production of poultry on a medium to large size farm.
  32. 6(a)10 marksCompare and contrast the concepts of 'relative poverty' and 'absolute poverty'.
  33. 6(b)16 marksExplain how the basic needs approach to poverty differs from the poverty line approach.
  34. 6(c)(i)6 marksTaxes and subsidies
  35. 6(c)(ii)6 marksPublic housing
  36. 6(c)(iii)7 marksEducation and training
  37. 6(d)5 marksDetermine which of the methods (i), (ii) or (iii) in (c) above is more sustainable. Justify your answer.

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