CAPE Economics Unit 1 · 2011 · Paper 2

33 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)4 marksDraw and label a production possibility frontier (PPF) diagram.
2. 1(a)(ii)a)3 marksUsing the PPF diagram, explain the concept of scarcity.
3. 1(a)(ii)b)3 marksUsing the PPF diagram, explain the concept of choice.
4. 1(a)(ii)c)3 marksUsing the PPF diagram, explain the concept of opportunity cost.
5. 1(b)(i)3 marksState three assumptions underlying the production possibility frontier.
6. 1(b)(ii)a)3 marksUse the PPF diagram to distinguish the efficient level of production.
7. 1(b)(ii)b)3 marksUse the PPF diagram to distinguish the inefficient level of production.
8. 1(b)(ii)c)3 marksUse the PPF diagram to distinguish the unattainable level of production.
9. 2(a)(i)10 marksWith the aid of indifference curves, explain consumer equilibrium.
10. 2(a)(ii)3 marksUsing the indifference curves drawn previously, explain how consumer equilibrium changes as consumer income increases.
11. 2(b)(i)4 marksDraw a demand and supply diagram for a good.
12. 2(b)(ii)a)4 marksUse the demand and supply diagram to explain the effect on equilibrium price and quantity of an increase in consumer income.
13. 2(b)(ii)b)4 marksUse the demand and supply diagram to explain the effect on equilibrium price and quantity of an improvement in the technology used in producing a good.
14. 3(a)(i)2 marksExplain the concept of 'market structure'.
15. 3(a)(ii)4 marksIdentify four types of market structures.
16. 3(a)(iii)4 marksList four characteristics used to distinguish among market structures.
17. 3(b)(i)6 marksCompare monopoly and monopolistic competition in the short run and long run in terms of their major characteristics.
18. 3(b)(ii)3 marksCompare monopoly and monopolistic competition in the short run and long run in terms of conduct.
19. 3(b)(ii)3 marksCompare monopoly and monopolistic competition in the short run and long run in terms of profitability.
20. 3(b)(iv)3 marksCompare monopoly and monopolistic competition in the short run and long run in terms of resource-use efficiency.
21. 4(a)(i)8 marksWith the use of examples, distinguish between private costs and social costs.
22. 4(a)(ii)8 marksWith the use of examples, distinguish between public goods and private goods.
23. 4(b)9 marksIdentify three pricing options that the government can employ to regulate a natural monopoly and state the effect of each option.
24. 5(a)4 marksIdentify the rewards accruing to the owners of each factor of production: land, labour, capital, and enterprise.
25. 5(b)(i)6 marksDefine wage rate and marginal product, and explain the importance of each to a firm.
26. 5(b)(ii)10 marksWith the aid of a diagram, explain how the wage rate and the value of marginal product of labour determine the quantity of labour hired by a firm.
27. 5(c)5 marksExplain the relationship between the value of the marginal product of labour and the firm's labour demand curve.
28. 6(a)(i)4 marksDistinguish between 'wage differentials' and 'compensating wage differentials'.
29. 6(a)(ii)4 marksState four causes of wage differentials.
30. 6(a)(iii)4 marksUsing two causes identified previously, explain why wages differ.
31. 6(b)(i)2 marksDefine the concept of 'poverty'.
32. 6(b)(ii)4 marksDistinguish between 'absolute poverty' and 'relative poverty'.
33. 6(c)7 marksExplain why a legal minimum wage alleviates poverty in a monopsonistic labour market but not in a perfectly competitive labour market.