CAPE Economics Unit 1 · 2009 · Paper 2

35 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 the term 'market'.
2. 1(a)(ii)a)8 marksUsing a demand and supply diagram, explain how the market allocates scarce resources in equilibrium.
3. 1(a)(ii)b)8 marksUsing the demand and supply diagram, explain how the market allocates scarce resources in disequilibrium.
4. 1(a)(ii)c)8 marksExplain the effect on equilibrium of a fall in the demand for the commodity using a demand and supply diagram.
5. 1(b)(i)6 marksWith reference to the market for milk, explain the economic effect of an effective price floor.
6. 1(b)(ii)12 marksExplain how an effective price floor leads to inefficient resource allocation.
7. 1(c)6 marksJustify governments' use of price floors despite their negative effects.
8. 2(a)(i)2 marksDefine the term 'supply'.
9. 2(a)(ii)6 marksExplain the law of supply.
10. 2(a)(iii)6 marksExplain how a change in supply differs from a change in the quantity supplied.
11. 2(b)(i)4 marksIdentify four major factors, other than the price of eggs, that influence the supply of eggs.
12. 2(b)(ii)12 marksState how each of the four factors identified in (b)(i) influences supply.
13. 2(c)20 marksExplain why each factor in (b)(i) influences supply the way it does.
14. 3(a)(i)2 marksDefine the term 'market structure'.
15. 3(a)(ii)4 marksIdentify four types of market structures.
16. 3(a)(iii)16 marksOutline four characteristics of the most efficient type of market structure.
17. 3(b)(i)16 marksCompare the characteristics of the monopolistic market structure with those of the perfectly competitive market structure.
18. 3(b)(ii)12 marksCompare the conduct and performance of the monopolistic and the perfectly competitive market structure in terms of output, price and profit in the short and long run.
19. 4(a)21 marksSelect any three pairs from (i) Private cost and social cost, (ii) Merit good and public good, (iii) Positive externality and negative externality, and (iv) Adverse selection and moral hazard, and distinguish between…
20. 4(b)(i)6 marksUsing suitable examples, explain how public goods cause market failure.
21. 4(b)(ii)6 marksUsing suitable examples, explain how externalities cause market failure.
22. 4(b)(iii)6 marksUsing suitable examples, explain how moral hazards cause market failure.
23. 4(c)11 marksExplain how governments can solve the problem caused by public goods.
24. 5(a)(i)a)2 marksState the formula for computing the Marginal Physical Product of Labour (MPP).
25. 5(a)(i)b)2 marksState the formula for computing the Average Physical Product of Labour (APP).
26. 5(a)(i)c)2 marksState the formula for computing the Value of Marginal Product (VMP).
27. 5(a)(ii)18 marksOn the answer sheet provided, complete the table assuming that the price of the product is 100 per unit and the wage rate is 200.
28. 5(b)(i)15 marksPlot the labour demand curve and the wage rate on the same diagram.
29. 5(b)(ii)7 marksDetermine the number of units of labour that the firm will employ and explain why.
30. 5(b)(iii)4 marksIf the workers become unionized, and their trade union successfully bargains for a wage rate of $400 (a 100% increase), how many workers will now be unemployed?
31. 6(a)(i)6 marksUsing a suitable example, explain the term 'poverty'.
32. 6(a)(ii)8 marksDistinguish between 'absolute poverty' and 'relative poverty'.
33. 6(b)(i)12 marksExplain and critique the basic needs approach to measuring poverty.
34. 6(b)(ii)12 marksExplain and critique the poverty line approach to measuring poverty.
35. 6(b)(iii)12 marksExplain and critique the UNDP's Human Development Index approach to measuring poverty.