Cambridge A Level Economics 9708 — 2023 May/June Paper 1 · Variant 1

Question 1

1 What is ‘a produced means of further production’? A capital B enterprise C labour D land

Accepted Answer

A

Question 2

2 A hospital management board decides to reallocate $800 000 from its $1.2m new buildings budget to spend on cancer care. What is the opportunity cost of this decision? A a cost of $400 000 B a cost of $800 000 C the cost of healthcare for cancer patients D the loss of some new buildings

Accepted Answer

D

Question 3

3 The diagram shows the change in a country’s production possibility curve from XX to YY. Y food X O Y X drink What would explain this change? A Consumers chose to consume more food and less drink. B Government taxed food production and subsidised drink production. C Productivity rose in food production and fell in drink production. D There were more imports of food and more exports of drink.

Accepted Answer

C

Question 4

4 A factory manufactures chairs. The manufacturing process is divided into a number of tasks. What is a likely disadvantage of this division of labour? A decrease in motivation B decrease in output C decrease in productivity D decrease in quality of the final product

Accepted Answer

A

Question 5

5 Which row correctly describes the relationship between two goods implied by the value of the cross elasticity of demand? value of the cross description elasticity of demand A –2.0 weak complements B –0.5 weak substitutes C +0.5 weak substitutes D +2.0 strong complements

Accepted Answer

C

Question 6

6 What does consumer surplus measure? A the excess profit earned by the producer of a good B the opportunity cost to the consumer of not buying a good C the price the marginal consumer is willing to pay for a good D the consumer’s gain from purchasing a good at a price below what they are willing to pay

Accepted Answer

D

Question 7

7 When the price of good X is $2.00, the quantity supplied is 100 000. The price elasticity of supply of good X is 0.8 in the short run and 1.4 in the long run. The price of good X increases to $2.20. What is the increase in the quantity supplied of good X between the short run and the long run? A 6000 B 60 000 C 114 000 D 140 000

Accepted Answer

A

Question 8

8 The diagram shows the European market for diesel fuel and the original equilibrium is at M. S1 price M G H N J D1 D2 O R T quantity Europeans want low-emission cars and therefore the demand for diesel fuel has decreased from D1 to D2. Which area represents the new producer surplus for companies supplying diesel fuel? A GMNH B JGM C JHN D JNR

Accepted Answer

C

Question 9

9 In which situation is the demand for a product said to be price elastic? A The quantity demanded responds to a change in price. B An increase in price brings about a decrease in the quantity demanded. C An increase in price induces consumers to spend more on the product. D A decrease in price brings about an increase in revenue.

Accepted Answer

D

Question 10

10 Golf club membership fees in Singapore have risen as a result of restrictions on travel to cheaper golf courses in neighbouring countries and the closure of some local courses. The supply of golf club memberships is determined by the current number of courses. If the original equilibrium was at X, which point shows the result of these changes? S2 S1 S3 membership fees B $ C A D X D1 D2 O quantity of memberships

Accepted Answer

B

Question 11

11 The diagram shows the demand and supply curves for solar energy in India. The initial equilibrium point is at X. The Indian government increases the subsidy to solar energy producers. At the same time, there is a rise in the price of alternative sources of energy. What is the new equilibrium position? S2 price of A S1 solar energy S3 D X B D2 C D1 D3 O quantity of solar energy

Accepted Answer

B

Question 12

12 A specific tax is placed on the sale of bottles of lemonade. In the diagram, S is the supply curve before imposition of the tax and St is the supply curve after tax. St price W S U X D T O quantity Which distance represents the specific tax on each bottle? A UT B WT C WU D WX

Accepted Answer

B

Question 13

13 Demand for medical face masks exceeds supply during a disease outbreak. What is the most likely cause of this excess demand? A Some consumers do not have effective demand. B The demand for medical face masks is price inelastic in the short run. C The price of medical face masks is fixed below the equilibrium price. D The supply of medical face masks is inelastic in the short run.

Accepted Answer

C

Question 14

14 The diagram shows the demand and supply curves for a good. S price P1 P D O Q1 Q Q2 quantity The government fixes a maximum price of OP1. What would happen? A Consumers would have to be rationed to quantity OQ1. B The government would have to introduce a subsidy of PP1. C The market equilibrium quantity OQ would be demanded and supplied. D The supply of quantity OQ2 would be guaranteed.

Accepted Answer

C

Question 15

15 Which statement correctly describes absolute advantage? A It is when a country has a higher opportunity cost in producing a good than another country. B It is when a country has a lower wage cost in producing a good than another country. C It is when the relative prices of exports of a country are greater than the relative prices of its imports. D It is when a country’s output of a good is greater per unit of resource than another country.

Accepted Answer

D

Question 16

16 The table shows the income and wealth of Yasmin. items $ children’s welfare benefits 1 000 dividends from shares 1 000 property owned 40 000 savings in bank 1 000 shares 2 000 wages 10 000 What is the value of Yasmin’s wealth? A $41 000 B $43 000 C $44 000 D $45 000

Accepted Answer

B

Question 17

17 Which group is most likely to suffer during high inflation? A borrowers B importers C producers D fixed wage earners

Accepted Answer

D

Question 18

18 Which statement explains why the aggregate demand curve is downward sloping? A As prices fall, the demand for exports becomes more elastic. B As prices fall, fewer goods are imported. C As prices fall, the rate of interest will rise. D As prices fall, real wealth rises and so spending increases.

Accepted Answer

D

Question 19

19 The diagram shows the aggregate demand (AD) and aggregate supply (AS) for an economy. AS2 general price AS1 level AD O real output Which changes in subsidies and indirect taxes would have caused the change from AS1 to AS2? A higher subsidies and higher indirect taxes B higher subsidies and lower indirect taxes C lower subsidies and higher indirect taxes D lower subsidies and lower indirect taxes

Accepted Answer

C

Question 20

20 The graph gives the percentage unemployed for all people aged 16 and over, and for young people aged 16–24. 30 percentage 25 unemployed aged 16–24 aged 16–24 aged 16–24 20 15 aged 16 and over aged 16 and over aged 16 and over 10 5 0 2010 2012 2014 2016 2018 2020 year What is the consequence for consumer expenditure on products consumed by the 16–24 age group over the period 2010–2020? A a fall in consumer expenditure across the whole period B an initial fall in consumer expenditure followed by a rise C an initial rise in consumer expenditure followed by a fall D a rise in consumer expenditure across the whole period

Accepted Answer

C

Question 21

21 In the diagram, the intersection of AD and LRAS at point X represents the current macroeconomic equilibrium. Which point could represent the new equilibrium after the introduction of an increase in the retirement age? LRAS2 LRAS LRAS1 general price level B C D X AD1 A AD AD2 O real GDP

Accepted Answer

C

Question 22

22 The table shows data on the Japanese balance of trade in goods. exchange rate exports imports year yen / dollar $bn $bn 2016 109 635 585 2017 111 689 645 What can be concluded from this data? A The demand for Japanese exports was price inelastic. B The Japanese current account was in surplus. C The majority of Japanese imports were essential goods. D The Marshall–Lerner condition for Japan is greater than 1.

Question 23

23 The diagram shows production possibility curves for two countries, India and Japan. 600 rice 500 India Japan 0 0 200 tea Which combination of outputs would be achieved if each country specialised in the product in which it has a comparative advantage? rice tea A 600 200 B 600 500 C 1200 200 D 1200 1000

Accepted Answer

A

Question 24

24 A country’s currency has depreciated against all the currencies of its main trading partners. How will the depreciation affect its terms of trade? A The terms of trade will improve. B The terms of trade will not change. C The terms of trade will worsen. D The terms of trade will worsen only if the depreciation causes inflation.

Accepted Answer

C

Question 25

25 A country with a floating exchange rate experiences a large surplus on the current account of its balance of payments. What is likely to decrease as a consequence? A the exports of capital from the country B the level of employment in the country C the prices of imports into the country D the value of the country’s currency

Accepted Answer

C

Question 26

26 Which measure is aimed directly at promoting international trade? A decreasing existing quotas B increasing interest rates C subsidies paid to export industries D wage subsidy schemes during recessions

Accepted Answer

C

Question 27

27 What would be classified as a supply-side policy measure? A a law to reduce the power of trade unions B a reduction in the government’s fiscal deficit C an open market sale of securities D the imposition of a tariff on imported goods

Accepted Answer

A

Question 28

28 What is the equivalent of a country’s national debt? A the accumulated borrowing of the government B the difference between government spending and taxation C the interest paid by the government on all the money it owes D the total money owed by all households in the country

Accepted Answer

A

Question 29

29 A country experiences a fall in the value of exports and an increase in the value of imports of goods and services. What are the effects of these changes? balance of aggregate payments on demand goods and services A fall improve B fall worsen C rise improve D rise worsen

Accepted Answer

B

Question 30

30 A government orders its central bank to buy its domestic currency on the foreign exchange markets in the belief that this will improve the balance of payments. What does this suggest? A Demand for the country’s exports is price inelastic. B The country’s Marshall–Lerner condition is greater than 1. C The government has a budget deficit. D The overall balance of payments is in surplus.

Cambridge A Level Economics 9708 — 2023 May/June Paper 1 · Variant 1

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · What is ‘a produced means of further production’?

Q2 · A hospital management board decides to reallocate $800 000 from its $1.2m new buildings…

Q3 · The diagram shows the change in a country’s production possibility curve from XX to YY

Q4 · A factory manufactures chairs

Q5 · Which row correctly describes the relationship between two goods implied by the value of…

Q6 · What does consumer surplus measure?

Q7 · When the price of good X is $2.00, the quantity supplied is 100 000

Q8 · The diagram shows the European market for diesel fuel and the original equilibrium is at M

Q9 · In which situation is the demand for a product said to be price elastic?

Q10 · Golf club membership fees in Singapore have risen as a result of restrictions on travel…

Q11 · The diagram shows the demand and supply curves for solar energy in India

Q12 · A specific tax is placed on the sale of bottles of lemonade

Q13 · Demand for medical face masks exceeds supply during a disease outbreak

Q14 · The diagram shows the demand and supply curves for a good

Q15 · Which statement correctly describes absolute advantage?

Q16 · The table shows the income and wealth of Yasmin

Q17 · Which group is most likely to suffer during high inflation?

Q18 · Which statement explains why the aggregate demand curve is downward sloping?

Q19 · The diagram shows the aggregate demand (AD) and aggregate supply (AS) for an economy

Q20 · The graph gives the percentage unemployed for all people aged 16 and over, and for young…

Q21 · In the diagram, the intersection of AD and LRAS at point X represents the current…

Q22 · The table shows data on the Japanese balance of trade in goods

Q23 · The diagram shows production possibility curves for two countries, India and Japan

Q24 · A country’s currency has depreciated against all the currencies of its main trading…

Q25 · A country with a floating exchange rate experiences a large surplus on the current…

Q26 · Which measure is aimed directly at promoting international trade?

Q27 · What would be classified as a supply-side policy measure?

Q28 · What is the equivalent of a country’s national debt?

Q29 · A country experiences a fall in the value of exports and an increase in the value of…

Q30 · A government orders its central bank to buy its domestic currency on the foreign exchange…

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