CAPE Economics Unit 1 · 2015 · Paper 2

43 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)5 marksCopy and complete Table 1 to show the total utility and marginal utility derived from consuming 1 to 5 chocolate bars.
2. 1(a)(ii)a)2 marksDefine total utility.
3. 1(a)(ii)b)2 marksDefine marginal utility.
4. 1(a)(ii)c)2 marksDefine the law of diminishing marginal utility.
5. 1(a)(iii)a)1 markState the point at which Romain begins to lose satisfaction from consuming each additional chocolate bar.
6. 1(a)(iii)b)1 markState the point at which Romain maximizes his satisfaction from consuming chocolate bars.
7. 1(b)(i)2 marksDefine the term 'consumer surplus'.
8. 1(b)(ii)4 marksDraw Romain's demand curve.
9. 1(b)(iii)2 marksOn the demand curve drawn in (b)(ii), shade and label the total consumer surplus.
10. 1(c)4 marksWith reference to marginal utility theory, justify the shape of Romain's demand curve for chocolate bars.
11. 2(a)(i)2 marksDefine the term 'market equilibrium'.
12. 2(a)(ii)5 marksCopy and complete Table 2 to show the quantity of pens demanded and supplied at prices 1, 2, 3, and 4.
13. 2(a)(iii)a)3 marksUsing the data from Table 2, draw a diagram displaying the demand curve and supply curve for pens.
14. 2(a)(iii)b)2 marksIndicate the equilibrium price and quantity on the diagram drawn.
15. 2(a)(iv)a)1 markIf the government sets a price of $2 per pen, state the name of this type of price intervention.
16. 2(a)(iv)b)3 marksExplain, giving details, the market outcome at this price of $2 per pen.
17. 2(b)(i)5 marksIllustrate the effect of the $1 specific tax on the diagram drawn in (a)(iii).
18. 2(b)(ii)4 marksAnalyse the total welfare effect (consumer surplus, producer surplus, government revenue, and deadweight loss) of the tax, referring to the diagram in (b)(i).
19. 3(a)(i)a)2 marksDefine the term 'price discrimination'.
20. 3(a)(i)b)2 marksOutline ONE form of price discrimination that may be used by a firm.
21. 3(a)(ii)4 marksOutline TWO conditions that are necessary for price discrimination to occur.
22. 3(a)(iii)3 marksExplain ONE reason why a firm would opt to apply price discrimination.
23. 3(b)4 marksList TWO types of market structures that exist in CARICOM and give ONE example of EACH.
24. 3(c)(i)6 marksIllustrate, using a diagram, the profit-maximizing output and price for a monopolistic firm.
25. 3(c)(ii)4 marksAnalyse why a perfectly competitive firm is more efficient than a monopolistic firm.
26. 4(a)(i)2 marksDefine the term 'market failure'.
27. 4(a)(ii)2 marksDefine the term 'Pareto efficiency'.
28. 4(a)(iii)2 marksDefine the term 'productive efficiency'.
29. 4(b)(i)3 marksState THREE reasons why competition or regulatory authorities may prevent a merger of TWO major companies in an industry.
30. 4(b)(ii)a)4 marksExplain how public goods contribute to market failure, stating an example.
31. 4(b)(ii)b)4 marksExplain how merit goods contribute to market failure, stating an example.
32. 4(c)8 marksDiscuss TWO measures used by governments to correct market failure.
33. 5(a)(i)2 marksDefine the term 'wage differentials'.
34. 5(a)(ii)a)2 marksIdentify TWO factors that may cause imperfections in the labour market on the demand side.
35. 5(a)(ii)b)2 marksIdentify TWO factors that may cause imperfections in the labour market on the supply side.
36. 5(b)(i)4 marksDistinguish between 'geographical mobility' and 'occupational mobility'.
37. 5(b)(ii)8 marksDiscuss TWO effects of labour mobility on wages across different CARICOM territories.
38. 5(c)7 marksUsing a well-labelled diagram, analyse the effect of a monopoly trade union in determining wages and the level of employment under perfect competition.
39. 6(a)(i)3 marksExplain the concept of 'income inequality'.
40. 6(a)(ii)3 marksIdentify THREE measures used to reduce income inequality.
41. 6(b)(i)2 marksList TWO ways of measuring poverty.
42. 6(b)(ii)9 marksExplain THREE economic costs of poverty.
43. 6(c)8 marksAssess TWO economic benefits of this poverty alleviation expenditure by CARICOM governments.