CAPE Economics Unit 1 · 2010 · Paper 2

27 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)3 marksUsing suitable examples, explain the concept of total utility.
2. 1(a)(ii)3 marksUsing suitable examples, explain the concept of marginal utility.
3. 1(a)(iii)3 marksUsing suitable examples, explain the law of diminishing marginal utility.
4. 1(b)(i)5 marksCopy and complete Table 1.
5. 1(b)(ii)5 marksUsing information from Table 1, draw the consumer's demand curve for bread.
6. 1(b)(iii)4 marksDetermine how many loaves of bread and how many bags of buns the consumer can buy with a budget of $5 to maximize satisfaction, and explain your answer.
7. 1(b)(iv)2 marksIf the price of a loaf of bread rises to $2, identify what combination of bread and buns will maximize the consumer's utility.
8. 2(a)(i)2 marksDefine the term 'demand'.
9. 2(a)(ii)4 marksExplain the 'law of demand'.
10. 2(a)(iii)4 marksExplain how a 'change in demand' differs from a 'change in the quantity demanded'.
11. 2(b)(i)3 marksIdentify THREE factors, other than the price of beef, that influence the demand for beef.
12. 2(b)(ii)12 marksDiscuss why EACH factor identified in 2(b)(i) influences the demand for beef.
13. 3(a)(i)9 marksCompare the characteristics of monopolistic competition with those of oligopoly, focusing on the number of firms, entry and exit barriers, and the nature of the product.
14. 3(a)(ii)4 marksAssess the role of advertising in monopolistic competition.
15. 3(b)12 marksWith the aid of a short-run diagram and a long-run diagram, explain output level, pricing (relative to AR, ATC, and MC), and the profits of the firm in monopolistic competition in both the short run and the long run.
16. 4(a)4 marksExplain the term 'market failure' with special emphasis on the efficiency criterion.
17. 4(b)(i)8 marksUsing suitable examples, explain how market failure is caused by public goods.
18. 4(b)(ii)8 marksUsing suitable examples, explain how market failure is caused by monopolies.
19. 4(c)5 marksAssess government's response to market failure caused by public goods and monopolies.
20. 5(a)(i)4 marksCalculate for EACH unit of labour the marginal product.
21. 5(a)(ii)4 marksCalculate for EACH unit of labour the value of the marginal product if the price of the product is $1.50.
22. 5(b)(i)12 marksAssuming that the wage rate is $15.00, draw a diagram showing the value of the marginal product curve and the wage rate.
23. 5(b)(ii)5 marksAssuming the wage rate is $15.00, state how much labour will be employed and explain why.
24. 6(a)19 marksWith the aid of a competitive labour market diagram, discuss how wage rate and employment level are determined in a labour market, including demand and supply curves, equilibrium, disequilibrium, and shifts of the…
25. 6(b)(i)2 marksExplain the role of governments in the determination of wage rates.
26. 6(b)(ii)2 marksExplain the role of trade unions in the determination of wage rates.
27. 6(b)(iii)2 marksExplain the role of employers' associations in the determination of wage rates.