Cambridge A Level Economics 9708 — 2025 Oct/Nov Paper 3 · Variant 3

This document has 12 pages. Any blank pages are indicated. 11_9708_33_2025_1.7b © UCLES 2025 [Turn over *0494423139* Cambridge International AS & A Level ECONOMICS 9708/33 Paper 3 A Level Multiple Choice October/November 2025 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.

Why would an economy wish to achieve economic efficiency? 1 to achieve an equal distribution of income A to achieve full employment B to ensure resources are not wasted C to ensure international competitiveness D A firm has set a low price in the short run to act as a barrier to entry for new firms entering the market. This is an example of which pricing strategy? 2 limit pricing A predatory pricing B price discrimination C price leadership D A dentist is found to have charged patients for treatment they did not need. What is the likely cause of this market failure? 3 a minimum price A asymmetric information B non-excludability C productive inefficiency D The diagram shows the average total cost for a firm. At what level of output does marginal cost exceed average total cost? 4 costs quantity A B C D average total cost 11_9708_33_2025_1.7b © UCLES 2025 2

The diagram shows the effect of a demand curve shift from D1 to D2 for a profit maximising firm. 5 MR2 D2 D1 MR1 MC = ATC J K H L M N G F O Q price quantity What has happened to the firm’s total revenue and the deadweight welfare loss? deadweight welfare loss total revenue decreases by KLN decreases to OGLQ A increases by KLN decreases to OGLQ B decreases by KLN increases to OHKQ C increases by KLN increases to OHKQ D A firm sells 10 000 units per month at a price of $10. The firm’s total fixed cost is $40 000 per month. The firm makes only normal profit. What is the average variable cost for this output? 6 $8.00 D $6.00 C $4.00 B $2.00 A [Turn over © UCLES 2025 3 11_9708_33_2025_1.7b

The diagram shows the long-run total cost (LRTC) curve of a firm. 7 O costs W X Y Z LRTC output At which output is the long-run average total cost at its minimum? OZ D OY C OX B OW A Assuming there are no externalities, where would a nationalised firm set output to maximise social welfare? 8 where average revenue equals average cost A where average revenue equals marginal cost B where marginal revenue equals marginal cost C where marginal revenue is zero D There has been an increase in labour productivity. Which combination of effects is most likely? 9 effect on wage rate shift of supply curve for labour shift of demand curve for labour increase inward none A decrease outward none B increase none inward C increase none outward D © UCLES 2025 4 11_9708_33_2025_1.7b

Which method of government intervention may correct market failure caused by the under-consumption of a merit good? 10 minimum price A privatisation B indirect taxation C subsidy D Some governments introduce rent controls (maximum prices) on houses rented from private landlords. They impose such rent controls to improve living standards for individuals with low incomes. What might be the effects of rent controls in the long run? 11 The long-run supply of rental houses will contract. A The number of unoccupied privately rented houses will increase over time. B The price of owner-occupied houses will increase. C There will be no effect on the supply of rental housing. D To reduce the damage done by cigarette smoking, the government of a country increases the indirect tax on cigarettes and makes it illegal to smoke in public. Which combination of circumstances is most likely to result in government failure in its attempt to reduce the damage done by cigarette smoking? 12 government spending on law enforcement price elasticity of demand for cigarettes high > 1 A low > 1 B high < 1 C low < 1 D Which stage of the business (trade) cycle is most likely to be characterised by an increasing negative output gap? 13 boom A recession B recovery C trough D [Turn over © UCLES 2025 5 11_9708_33_2025_1.7b

Sometimes monetary policy is ineffective. The supply of money (MS) is assumed to be controlled by the central bank. The demand for money is LP. There has been an increase in real income in the economy. Which position on the diagram makes expansionary monetary policy ineffective? 14 O rate of interest LP1 LP2 LP MS2 MS1 MS3 A B D C quantity of money Which policy is most likely to lead to a reduction in the natural rate of unemployment? 15 an increase in government expenditure on goods and services A an increase in government expenditure on training schemes to address skill shortages B an increase in the period when the unemployed are eligible for welfare benefits C an increase in the minimum wage D On a diagram showing a production possibility curve, what definitely represents long-run economic growth? 16 a change in the slope of the curve A a movement from a point below the curve to a point on the curve B a movement from one point to another along a given curve C an outward shift of the curve D © UCLES 2025 6 11_9708_33_2025_1.7b

The diagram shows equilibrium in the money market at point X. If there is an increase in the level of income in the economy, which point shows the new equilibrium in the short term? 17 X D rate of interest O quantity of money Q1 Q2 MS1 MS2 LP3 r3 r2r1 r4r5 LP1 LP2 X A B C D Which combination of policies is most likely to reduce cyclical unemployment but might increase frictional unemployment? 18 unemployment benefits direct taxes decrease decrease A increase decrease B decrease increase C increase increase D What would cause the short-run Phillips curve to shift to the right? 19 A B C the unemployment rate is above the natural rate of unemployment, decreasing inflationary expectations the unemployment rate is above the natural rate of unemployment, increasing inflationary expectations the unemployment rate is below the natural rate of unemployment, decreasing inflationary expectations the unemployment rate is below the natural rate of unemployment, increasing inflationary expectations D [Turn over © UCLES 2025 7 11_9708_33_2025_1.7b

Which macroeconomic policy is most likely to be used as a long-run means of reducing inflationary pressures? 20 exchange rate policy A fiscal policy B supply-side policy C monetary policy D The table identifies pairs of possible government aims. The achievement of aim 1 needs to be consistent with the achievement of aim 2. Which row shows the combination where both aims are likely to be achieved. 21 aim 2 aim 1 higher foreign exchange rate A low rate of inflation B more even distribution of income C lower rate of unemployment current account surplus higher rate of saving sustainable economic development rapid economic growth D The central bank of an economy decreases the money supply in an attempt to reduce inflation. Under which conditions is this policy most likely to be effective? 22 responsiveness of aggregate demand to interest rate changes exchange rate low fixed A high fixed B low floating C high floating D © UCLES 2025 8 11_9708_33_2025_1.7b

A government reduces both the income tax paid by all earners and the amount of means-tested benefits paid to those receiving low or no incomes. What is most likely to be its objective? 23 a more equitable income distribution A a reduction in the rate of inflation B a reduction in the trade deficit C an increase in the rate of economic growth D What is not a likely feature of a customs union? 24 common external tariffs with non-member nations A elimination of tariffs between member nations B elimination of quotas between member nations C shared common currency among member nations D A central bank officially lowers the price of its currency relative to an agreed rate in terms of other currencies. What type of central bank policy is this? 25 appreciation A depreciation B devaluation C revaluation D Which combination of events would cause the biggest increase in real GDP per capita? 26 general price level population GDP falls falls rises A rises falls rises B falls rises rises C rises rises rises D [Turn over © UCLES 2025 9 11_9708_33_2025_1.7b

A low-income country receives aid from a high-income country. When will this aid give maximum benefit in the long term to the low-income country? 27 purpose of the aid type of aid purchase of agricultural machinery grant A payment of food subsidies grant B purchase of agricultural machinery loan C payment of food subsidies loan D Which variable is included in the calculation of both the Human Development Index (HDI) and the Multidimensional Poverty Index (MPI)? 28 child mortality rate A gross national income (GNI) per capita B life expectancy at birth C years of schooling D © UCLES 2025 10 11_9708_33_2025_1.7b

Which diagram is not an example of a Kuznets curve? 29 Gini coefficient O A Human Development Index O income per capita B inequality O income per capita C inequality O D The table shows the value of the Gini coefficient for an economy from 2018 to 2020. 30 Gini coefficient year 0.29 0.28 0.27 2018 2019 2020 What is most likely to explain the change in the value of the Gini coefficient between 2018 and 2020? an increase in indirect taxes A an increase in long-term unemployment B an increase in the national minimum wage C an increase in population D © UCLES 2025 11 income per capita development 11_9708_33_2025_1.7b

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 2025 11_9708_33_2025_1.7b 12 BLANK PAGE

This document consists of 3 printed pages. © Cambridge University Press & Assessment 2025 [Turn over Cambridge International AS & A Level ECONOMICS 9708/33 Paper 3 Multiple Choice October/November 2025 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 2025 series for most Cambridge IGCSE, Cambridge International A and AS Level components, and some Cambridge O Level components.

9708/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 2 of 3 Question Answer Marks 1 C 1 2 A 1 3 B 1 4 D 1 5 D 1 6 C 1 7 C 1 8 B 1 9 D 1 10 D 1 11 A 1 12 D 1 13 B 1 14 A 1 15 B 1 16 D 1 17 A 1 18 B 1 19 D 1 20 C 1 21 B 1 22 D 1 23 D 1 24 D 1 25 C 1 26 A 1 27 A 1 28 D 1

9708/33 Cambridge International AS & A Level – Mark Scheme PUBLISHED October/November 2025 © Cambridge University Press & Assessment 2025 Page 3 of 3 Question Answer Marks 29 B 1 30 C 1