Cambridge A Level Economics 9708 — 2023 Oct/Nov Paper 3 · Variant 3

Question 1

1 The diagram shows the marginal utility (MU) from the consumption of quantities of good X. 10 marginal 8 utility 6 4 MU 2 0 0 1 2 3 4 5 6 quantity of X What happens to the total utility as consumption of X rises from 1 to 6 units? A It falls continuously. B It falls and then rises. C It rises continuously. D It rises and then falls.

Accepted Answer

D

Question 2

2 An indifference curve is typically drawn with a convex shape. Which economic concept explains the reason for this convex shape? A allocative efficiency B diminishing marginal rate of substitution C Pareto optimality D the equi-marginal principle

Accepted Answer

B

Question 3

3 What is most likely to increase the principal–agent problem? A ensuring the actions of agents are known by the managers B linking the rewards of managers with the profitability of the firm C removing from managers the opportunity to hold shares D preparing contracts that compel agents to work in the interest of the principal

Accepted Answer

C

Question 4

4 The table shows a firm’s total fixed cost and total variable cost. total fixed total variable output cost cost $ $ 1 1000 1000 2 1000 2000 3 1000 3000 4 1000 4000 5 1000 5000 6 1000 6000 What can be concluded from the table? A Average fixed cost falls. B Average fixed cost is constant. C Average variable cost falls. D Average variable cost rises.

Accepted Answer

A

Question 5

5 The diagrams relate to industry X. P5 is the original production possibility curve. average costs market for X production possibility curves price ATC1 price D S3 good P6 S4 $ $ Y ATC2 P5 P7 O quantity O quantity O good X An improvement takes place in manufacturing techniques in industry X. Which changes take place? new production average costs market for X possibility frontier A ATC1 to ATC2 S3 to S4 P7 B ATC1 to ATC2 S4 to S3 P6 C ATC2 to ATC1 S3 to S4 P6 D ATC2 to ATC1 S4 to S3 P7

Accepted Answer

A

Question 6

6 The world’s largest coffee restaurant chain purchased a large coffee bean farm in Costa Rica. The farm has research and development facilities to study specific diseases that devastate the coffee bean crop. How is this type of takeover classified? A horizontal integration B organic growth C vertical backward integration D vertical forward integration

Accepted Answer

C

Question 7

7 Which condition is necessary for a firm to practise third degree price discrimination effectively? A All consumers and producers must be in the same geographical location. B Customers must be divided into separate markets for the same product. C Each separate market must have identical price elasticities of demand. D Price undercutting is required to enter a monopolistic market.

Accepted Answer

B

Question 8

8 A traffic study concluded that there would be significant benefits if 10% of car drivers switched to using motorcycles during peak traffic times. Which benefit of this change would be considered a private benefit? A faster journeys for those who continued to go by car B faster journeys for those who switched to motorcycles C increased safety for cyclists D reduced levels of air pollution for pedestrians

Accepted Answer

B

Question 9

9 Which conditions are most likely to reduce the accuracy of cost-benefit analysis in decision making? proportion of external % of total costs and costs and benefits to total benefits that are in total costs and benefits the future A high high B high low C low high D low low

Accepted Answer

A

Question 10

10 What is consistent with a movement towards Pareto optimality? A when negative externality lowers the utility of an individual B when consumption of a good is non-rival C when reallocation of resources can make someone better off without making any other person worse off D when trade takes place to make one nation better off at the expense of its trading partner

Accepted Answer

C

Question 11

11 The diagram shows the short-run supply curve and long-run supply curve of labour. short run wage rate long run X Y Z D O quantity of labour Which area turns from economic rent in the short run to transfer earnings in the long run? A X B X + Y C Y D Y + Z

Accepted Answer

C

Question 12

12 Which policies might a government introduce to increase the marginal productivity of labour? tax allowances better for capital education goods A no no B no yes C yes no D yes yes

Accepted Answer

D

Question 13

13 What is most likely to increase relative poverty in a country? A increasing means-tested benefit levels B increasing the power of trade unions C making the tax system more progressive D removing the national minimum wage

Accepted Answer

D

Question 14

14 Which policy is not designed to correct a market failure? A government provision of healthcare B price controls on large firms C regulations to limit smoke pollution D introducing import quotas

Accepted Answer

D

Question 15

15 To control the cost of living, governments have sometimes imposed a maximum price on certain goods that is below the free market price. What is often an undesirable side effect of such a policy? A accelerating general inflation B an increase in profits above normal profits C an increase in the stocks of unsold goods held by firms D shortages of the good

Accepted Answer

D

Question 16

16 When is an increase in national income most likely to induce an increase in investment spending? A when firms have spare production capacity B when firms use labour-intensive production C when the increase in income is regarded as permanent D when the increase in income is regarded as temporary

Accepted Answer

C

Question 17

17 What is a function of money? A It can be divided into small units. B It can be easily carried. C It is a standard of deferred payment. D It is widely accepted.

Accepted Answer

C

Question 18

18 A pandemic encourages many workers in developed countries to work from home, leading to a closure of city centre businesses such as coffee shops and retailers. If this way of working continues after the pandemic, what is the most likely result? A Frictional unemployment will decrease. B The geographical mobility of labour will increase. C Structural unemployment will increase. D Voluntary unemployment will increase.

Accepted Answer

C

Question 19

19 In its 2020 population census, China reported that the total population was just below 1.4 billion. The birth rate had continued to decline, the number of those reaching retirement age had increased and the percentage size of the workforce had decreased. Which change of policy would most quickly sustain China’s economic growth in view of these population changes? A Allow more immigration of labour. B Encourage women to leave work to have more children. C Increase research in technology to improve labour productivity. D Tax the labour force more to pay for the increasing number of pensions.

Accepted Answer

A

Question 20

20 Other things remaining equal, what will reduce the level of national income in an economy? A a fall in planned savings B a fall in the marginal propensity to import C an increase in the average propensity to consume D a reduction in the level of defence expenditure

Accepted Answer

D

Question 21

21 What, according to the accelerator principle, will cause the level of investment to fall? A a decrease in confidence B a decrease in the rate of growth of national income C an increase in the price of capital equipment D an increase in the rate of interest

Accepted Answer

B

Question 22

22 What is measured on the vertical axis of the Phillips curve? A the rate of change of real wages B the rate of change of take-home pay C the rate of inflation D the rate of interest

Accepted Answer

C

Question 23

23 South Africa has attempted to improve the level of economic growth by attracting foreign direct investment (FDI). FDI GDP growth 3.50 4 % of 3.00 % of 3 GDP 2.50 GDP 2 1 2.00 0 1.50 –1 1.00 –2 0.50 –3 0 –4 2008 2010 2012 2014 2016 2018 2008 2010 2012 2014 2016 2018 year year What can be deduced from this diagram about the relationship between FDI and GDP growth between 2008 and 2018? A The relationship between level of FDI and GDP growth is generally weak. B Increases in FDI are in line with improvements in GDP growth. C Lowering FDI is linked to stable GDP growth. D Negative GDP growth is linked to a lack of inflows of FDI.

Accepted Answer

A

Question 24

24 Which change would be most likely to indicate that a country has experienced economic development? A an appreciation in the country’s currency B an improvement in the average citizen’s quality of life C an improvement in the country’s trade balance D an increase in the country’s real GDP

Accepted Answer

B

Question 25

25 The table gives some economic indicators for four countries. Which country is closest to achieving the principal aims of government economic policy? balance of change in GDP rate of inflation unemployment payments (%) (%) (%) (% of GDP) A 0.47 0.8 3.4 +3.3 B 1.13 0.9 10.5 –0.1 C 1.18 1.1 6.9 –3.3 D 1.45 0.1 4.6 +8.5

Accepted Answer

D

Question 26

26 What is a government macroeconomic aim? A a fall in the general price level of goods and services B an increase in monopoly regulation C lower taxes on consumer goods D a minimum wage for low paid agricultural workers

Accepted Answer

A

Question 27

27 Which row correctly identifies the characteristics of a low-income economy? dependency Gini coefficient per capita on the primary value real income sector A high high high B high high low C high low low D low high low

Accepted Answer

B

Question 28

28 What is the role of the International Monetary Fund (IMF)? A to advise countries that are experiencing trade disagreements B to help charities providing emergency assistance to countries in need C to offer short-term assistance to countries with balance of payments problems D to provide interest-free credit to developing countries for infrastructure purposes

Accepted Answer

C

Question 29

29 The diagram shows the international trading position of a country that had tariffs on imports. The country removed the tariffs on imports. price Sdomestic $ Pe PW + T Sworld + tariff PW Sworld no tariff Ddomestic O Q1 Q2 Q3 Q4 quantity What was the quantity of imports into this country after the removal of the tariffs? A Q1Q2 B Q1Q4 C Q2Q3 D Q3Q4

Accepted Answer

B

Question 30

30 Under which circumstances will low wages and low-cost land in a low-income country not attract foreign investment in manufacturing? A if the country creates genuine independence for their central bank B if the country embarks on a programme of privatisation C if the country lacks well-developed infrastructure D if the country permits repatriation of profits

Accepted Answer

C

Cambridge A Level Economics 9708 — 2023 Oct/Nov Paper 3 · Variant 3

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · The diagram shows the marginal utility (MU) from the consumption of quantities of good X

Q2 · An indifference curve is typically drawn with a convex shape

Q3 · What is most likely to increase the principal–agent problem?

Q4 · The table shows a firm’s total fixed cost and total variable cost

Q5 · The diagrams relate to industry X

Q6 · The world’s largest coffee restaurant chain purchased a large coffee bean farm in Costa…

Q7 · Which condition is necessary for a firm to practise third degree price discrimination…

Q8 · A traffic study concluded that there would be significant benefits if 10% of car drivers…

Q9 · Which conditions are most likely to reduce the accuracy of cost-benefit analysis in…

Q10 · What is consistent with a movement towards Pareto optimality?

Q11 · The diagram shows the short-run supply curve and long-run supply curve of labour

Q12 · Which policies might a government introduce to increase the marginal productivity of…

Q13 · What is most likely to increase relative poverty in a country?

Q14 · Which policy is not designed to correct a market failure?

Q15 · To control the cost of living, governments have sometimes imposed a maximum price on…

Q16 · When is an increase in national income most likely to induce an increase in investment…

Q17 · What is a function of money?

Q18 · A pandemic encourages many workers in developed countries to work from home, leading to a…

Q19 · In its 2020 population census, China reported that the total population was just below…

Q20 · Other things remaining equal, what will reduce the level of national income in an economy?

Q21 · What, according to the accelerator principle, will cause the level of investment to fall?

Q22 · What is measured on the vertical axis of the Phillips curve?

Q23 · South Africa has attempted to improve the level of economic growth by attracting foreign…

Q24 · Which change would be most likely to indicate that a country has experienced economic…

Q25 · The table gives some economic indicators for four countries

Q26 · What is a government macroeconomic aim?

Q27 · Which row correctly identifies the characteristics of a low-income economy?

Q28 · What is the role of the International Monetary Fund (IMF)?

Q29 · The diagram shows the international trading position of a country that had tariffs on…

Q30 · Under which circumstances will low wages and low-cost land in a low-income country not…

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