Cambridge A Level Economics 9708 — 2024 Oct/Nov Paper 3 · Variant 1

This document has 12 pages. IB24 11_9708_31/4RP © UCLES 2024 [Turn over *9144495206* Cambridge International AS & A Level ECONOMICS 9708/31 Paper 3 A Level Multiple Choice October/November 2024 1 hour 15 minutes You must answer on the multiple choice answer sheet. You will need: Multiple choice answer sheet Soft clean eraser Soft pencil (type B or HB is recommended) INSTRUCTIONS  There are thirty questions on this paper. Answer all questions.  For each question there are four possible answers A, B, C and D. Choose the one you consider correct and record your choice in soft pencil on the multiple choice answer sheet.  Follow the instructions on the multiple choice answer sheet.  Write in soft pencil.  Write your name, centre number and candidate number on the multiple choice answer sheet in the spaces provided unless this has been done for you.  Do not use correction fluid.  Do not write on any bar codes.  You may use a calculator. INFORMATION  The total mark for this paper is 30.  Each correct answer will score one mark.  Any rough working should be done on this question paper.

2 © UCLES 2024 9708/31/O/N/24 1 The diagram shows a total utility curve for a consumer. At which point does marginal utility equal zero? total utility quantity O A B C D 2 What is a characteristic of an indifference curve? A It will remain concave to the origin of the diagram. B It will remain convex to the origin of the diagram. C It can intersect other indifference curves at any point. D The lower the indifference curve, the greater the satisfaction attainable. 3 A Belgian traffic study concluded that there would be significant benefits if 10% of car drivers switched to using motorcycles during peak traffic times. Which result would be considered a cost of this change? A reduced travel times B reduced car emissions C reduced safety standards D reduced traffic queues

3 © UCLES 2024 9708/31/O/N/24 [Turn over 4 The diagram shows a firm’s long-run average cost curve (LRAC). O cost output X Y LRAC What could explain the shape of the curve from X to Y? A a decrease in total fixed cost B increasing returns to scale C internal diseconomies of scale D more than one factor of production is variable

4 © UCLES 2024 9708/31/O/N/24 5 The diagram shows the average revenue (AR) and average cost (AC) curves for a firm X that manufactures electronic goods. Firm X then completes a takeover of firm Y that supplies its component parts making them cheaper. The original average revenue and average cost curves of firm X are AR1 and AC1. O price quantity AR2 AR1 AR3 AC3 AC1 AC2 What is the position of the average cost curve and the average revenue curve after the takeover? average cost average revenue A AC1 AR3 B AC2 AR1 C AC2 AR3 D AC3 AR2 6 LMN Ltd operates as a relatively small, family-owned producer in an industry dominated by a few large firms. Its product is unique so the owners are confident they will be able to sell enough to provide them with sufficient revenue to allow a minimum acceptable level of performance for the firm. Other than survival, what is the most likely objective of LMN Ltd? A profit maximising B profit satisficing C revenue maximising D sales maximising

5 © UCLES 2024 9708/31/O/N/24 [Turn over 7 The diagram shows the short-run average cost, SRAC, and long-run average cost, LRAC, curves for a firm producing computers. It usually produces 2000 computers per week. An increase in demand requires the firm to produce 3000 computers per week. 0 100 80 40 30 2000 3000 4000 cost $ output SRAC1 SRAC2 SRAC3 LRAC How much will the average costs change in the long run if the firm makes a permanent decision to produce 3000 computers per week? A $20 B $40 C $50 D $60 8 What is a characteristic of monopolistic competition? A no barriers to entry B identical products C price takers D small number of buyers and sellers 9 What is likely to have its cause in the separation of ownership and control in a firm? A contestable markets B diseconomies of scale C principal-agent problem D prisoner’s dilemma

6 © UCLES 2024 9708/31/O/N/24 10 Firms X and Y merge in a horizontal integration. What must be true about the industry and the stage of production in which X and Y operate? industry stage of production A different different B different same C same different D same same 11 Which government policy would not be classified as regulation? A a ban on cocaine consumption B compulsory wearing of seatbelts in cars C licences for the extraction of water from rivers D taxation of cigarettes 12 A government removes a subsidy on a rural school bus service. What is the effect of this on the market for this bus service? A Deadweight loss decreases. B Private marginal costs increase. C Private marginal benefit decreases. D Social marginal costs decrease.

7 © UCLES 2024 9708/31/O/N/24 [Turn over 13 The graph shows the percentage growth in average earnings for an economy. 4 2 0 –2 –4 average wage growth % Jan 2024 April 2024 What is the most likely cause of the pattern shown in the graph? A a decrease in the supply of labour B a decrease in the interest rate C an increase in productivity D an increase in the size of the labour force 14 The table shows the output of chairs at a factory when different numbers of workers are employed. number of workers 0 1 2 3 4 5 number of chairs produced 0 7 17 26 34 40 When will diminishing marginal returns to labour set in? A when the second worker is employed B when the third worker is employed C when the fourth worker is employed D when the fifth worker is employed

8 © UCLES 2024 9708/31/O/N/24 15 In the diagram, D represents the long-run demand curve for labour in a firm operating in an imperfect market. When there is a fall in the amount of capital invested per worker, the marginal revenue productivity of labour (MRP) curve shifts from MRP1 to MRP2. O D wages labour employed L1 W1 W2 L2 L3 MRP2 MRP1 How does this shift affect the amount of labour employed in the long run, when wages fall? A It falls from L3 to L2. B It increases from L1 to L2. C It increases from L2 to L3. D It remains the same at L1. 16 Which statement about money is correct? A It consists solely of deposits held by commercial banks. B It functions as a medium of exchange. C Its monetary value equals its production costs. D It operates only when there is a double coincidence of wants. 17 In country X, unemployment is rising at the same time as the number of job vacancies is increasing. What is the most likely reason for this? A Economic growth is falling. B Economic growth is rising. C Geographical mobility of labour is rising. D Occupational immobility of labour is rising.

9 © UCLES 2024 9708/31/O/N/24 [Turn over 18 An increase in which variable affecting labour markets is most likely to reduce the natural rate of unemployment? A the level of unemployment benefit B the militancy of trade unions C the national minimum wage D the participation on training courses 19 A consumer has an income of $1000 per week. The consumer spends 80% of this on goods and services. Following an increase in the consumer’s income to $1200 per week, consumption increases to $900 per week. Which statement is correct? A The average propensity to consume does not change. B The initial average propensity to consume is 5. C The marginal propensity to consume is 0.5. D The marginal propensity to consume is 2. 20 The table shows data about the population of a country. total population 2 000 000 labour force 1 200 000 number of people employed 900 000 number of people unemployed 300 000 What is the rate of unemployment? A 25% B 33% C 60% D 75% 21 What is not an aim of macroeconomic policy? A economic development B exchange rate stability C Pareto optimality D satisfactory balance of payments

10 © UCLES 2024 9708/31/O/N/24 22 The diagram shows an increase in aggregate demand (AD) from AD1 to AD2. O price level real output LRAS AD2 AD1 SRAS How can the subsequent impact on short-run and long-run macroeconomic equilibrium positions be shown using expectations-augmented Phillips curves? O inflation % long-run Phillips curve short-run Phillips curve 2 short-run Phillips curve 1 short-run Phillips curve 3 unemployment rate % K F G H J A F to G to H B F to G to K C F to J to H D F to J to K 23 How could high interest rates increase a country’s rate of inflation? A by increasing the current borrowing costs of business B by increasing the current borrowing costs of government C by increasing the foreign exchange rate of the currency D by increasing the opportunity cost of spending

11 © UCLES 2024 9708/31/O/N/24 [Turn over 24 What is most likely to influence subsequent increases in national income as a result of a government policy of reduced interest rates? A marginal cost B marginal efficiency of capital C marginal product D marginal utility 25 Which policy to reduce a current account deficit on the balance of payments could be described as an expenditure-switching policy? A a decrease in government spending B a decrease in the exchange rate of the country’s currency C an increase in domestic income taxes D an increase in domestic interest rates 26 Which components are included in the financial account of the balance of payments? foreign direct investment interest, profits and dividends A   key B    = included C    = not included D   27 It is often argued that the UN Human Development Index (HDI) is a better indicator of economic development than income per capita because it adjusts for A average hours worked by the population. B environmental pollution. C inequality in income distribution. D life expectancy at birth. 28 Some conditions for providing foreign aid to low-income countries can be restrictive. Which kind of aid fits this description? A food aid in the event of natural catastrophes such as severe drought B grants that are tied to purchasing donor country goods C loans that are repaid over a long period at a low rate of interest D technical assistance using highly skilled worker transfers to provide support

12 Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at www.cambridgeinternational.org after the live examination series. Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge. © UCLES 2024 9708/31/O/N/24 29 What is most likely to cause the living standards of a country to rise? A an increase in the number of doctors B an increase in the gold reserves C an increase in the number of people per house D an increase in the money supply 30 Globalisation means that goods and services, capital and labour are traded on a worldwide basis. Which combination illustrates that each trade partner can benefit when a low-income country trades with a high-income country? the low-income country the high-income country A contracts are not always fulfilled due to corrupt practices agrees to increase investment in the infrastructure of low-income countries B experiences liquidity problems that restrict investment transfers short-term government loans repayable at high interest rates C multinational companies repatriate profits from mining of rare minerals for export receives supplies at high prices from multinationals to meet excess demands for rare metals D supplies seasonal labour to overcome shortages for picking fruit crops repatriates wages to families of seasonal workers

This document consists of 3 printed pages. © Cambridge University Press & Assessment 2024 [Turn over Cambridge International AS & A Level ECONOMICS 9708/31 Paper 3 Multiple Choice October/November 2024 MARK SCHEME Maximum Mark: 30 Published This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the examination. Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for Teachers. Cambridge International will not enter into discussions about these mark schemes. Cambridge International is publishing the mark schemes for the October/November 2024 series for most Cambridge IGCSE, Cambridge International A and AS Level components, and some Cambridge O Level components.

9708/31 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2024 © Cambridge University Press & Assessment 2024 Page 2 of 3 Question Answer Marks 1 C 1 2 B 1 3 C 1 4 B 1 5 B 1 6 B 1 7 B 1 8 A 1 9 C 1 10 D 1 11 D 1 12 B 1 13 D 1 14 B 1 15 B 1 16 B 1 17 D 1 18 D 1 19 C 1 20 A 1 21 C 1 22 D 1 23 A 1 24 B 1 25 B 1 26 A 1 27 D 1 28 B 1

9708/31 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2024 © Cambridge University Press & Assessment 2024 Page 3 of 3 Question Answer Marks 29 A 1 30 D 1