THE INDIAN PUBLIC SCHOOL
GRADE 9 – PRE IB
SUMMATIVE ASSESSMENT – I, NOVEMBER 2022
ECONOMICS
Max. Marks – 100
PART A - MCQ
30 marks
1. The diagram shows the demand and supply for apples.
To what extent is the market for apples in disequilibrium at a price of $2.50 per kilo?
A Demand exceeds supply by 200 000 tonnes.
B Demand exceeds supply by 400 000 tonnes.
C Supply exceeds demand by 200 000 tonnes.
D Supply exceeds demand by 400 000 tonnes.
2. Which characteristic can exist both in monopoly and in perfect competition?
A freedom of entry
B many buyers
C many sellers
D perfectly elastic demand curve
3. In 2015, a large UK company attempted to acquire a rival US medical company to become
the world’s leading supplier. Both companies specialised in the manufacture of medicines
for treating rare diseases. Which term would describe the acquisition if it had been
successful?
A backwards vertical integration
B conglomerate integration
C forwards vertical integration
D horizontal integration
4. Economic growth can be defined as
A a reduction in a country’s rate of inflation.
B an increase in a country’s exports.
C an increase in a country’s population.
D an increase in a country’s productive capacity
5. The table shows government estimates of the private and external benefits and costs of
building a new dam
What is the difference between the social benefits and social costs of building the dam?
A $25 million
B $50 million
C $175 million
D $225 million
6. The diagram shows the global market for copper with an equilibrium point of X. Which
point represents the new equilibrium after the copper producers’ costs increase and there is
rapid global economic growth?
7. What is an advantage of labour-intensive production and what is an advantage of capitalintensive production?
8. The table shows the demand and supply for spices in a market in Africa.
What is the equilibrium price for spices?
A 10
B 20
C 30
D 40
9. Which market is likely to be the most competitive?
10. The diagram shows total cost (TC), total fixed cost (TFC) and total variable cost (TVC).
Which costs are shown by W, X and Y?
11. Which combination of characteristics describes a public good?
A
excludable and non-rival in consumption
B
excludable and rival in consumption
C
non-excludable and non-rival in consumption
D
non-excludable and rival in consumption
12. What is a microeconomic decision?
A
a central bank reducing interest rates
B
a gas firm reducing its prices
C
a government increasing income tax
D
a government increasing the national minimum wage
13. An economy relies on potash to make fertiliser. A new deposit of potash is discovered.
Which diagram shows this change in the market for potash?
14. Which cost of production falls continuously as output increases?
A
average fixed cost
B
average total cost
C
average variable cost
D
total variable cost
15. What are two aims that a government normally pursues when managing the performance
of the whole economy?
A
to encourage an increase in production and to prevent high inflation
B
to ensure no one is unemployed and to reduce exports
C
to give everyone equal incomes and to increase government revenue
D
to protect the environment and to reduce interest rates
16. A private sector firm is the only supplier of rail services between two cities.
What will stop the firm charging very high ticket prices?
A
barriers to entry into rail services
B
competition from public road transport
C
government policy encouraging monopoly power
D
high costs of maintaining rail tracks
17. What is correct for firms in perfect competition?
A
They achieve economies of scale.
B
They are price takers.
C
They make use of non-price competition.
D
They produce differentiated products.
18. The table shows data about a manufacturer’s market
What is the manufacturer’s total revenue if it sets a price of $31?
A $31
B $99
C $171
D $279
19. What will cause the demand curve for a good to shift to the right?
A
a decrease in the disposable income of consumers
B
a decrease in the price of a complement good
C
a decrease in the price of a substitute good
D
a decrease in the price of the good
20. In the diagram, which demand curve has perfectly elastic demand?
21. What is a macroeconomic aim of a government?
A
balance of payments stability
B
deflation
C
income inequality
D
unemployment
22. What could cause profits to be high in a monopoly market?
A
barriers to entry
B
diseconomies of scale
C
elastic demand for the product
D
high number of substitutes for the product
23. Why might measures to reduce unemployment also make inflation rise?
A
They encourage cheap imports.
B
They increase demand.
C
They reduce firms’ costs.
D
They require wages to fall.
24. When is the budget described as balanced?
A
when direct taxes and indirect taxes are equal
B
when exports and imports are equal
C
when government spending and government revenue are equal
D
when the demand for money and the supply of money are equal
25. An airline upgrades its services by providing bigger aircraft. The airline claims it will
reduce catering waste and lower carbon (CO2) emissions per passenger journey although
fares may rise. What is a private cost and an external benefit of this decision?
26. In which case is success for the government in achieving the first aim likely to cause
problems in achieving the second?
27. Which combination is usually found in a monopoly?
A
many buyers and many sellers
B
many buyers and single seller
C
single buyer and many sellers
D
single buyer and single seller
28. What can cause the supply curve for a product to shift to the right?
A
an increase in demand for the product
B
an increase in government subsidies to producers
C
an increase in indirect taxes on the product
D
an increase in the costs of production
29. What is an example of a public good?
A
healthcare
B
street lights
C
unemployment benefits
D
vaccinations
30. The following information refers to a firm producing shoes.
At which level of output does the firm maximise profits?
PART B - STRUCTURED QUESTIONS
70 marks
SECTION – A
Answer this question
Low-cost airlines
1. For several decades, low-cost airlines have been competing on short-distance flights not
just with established airlines, but also with train travel and car travel. Now they are
starting to compete with established airlines on long-distance flights. In response to this
increased competition there have been some horizontal mergers occurring between the
established airlines. It is predicted that by 2030 China will become the world’s largest
domestic air travel market, with 20% of all global air travel. The USA is currently the
dominant market and it is predicted that between 2015 and 2030 the country will order
6160 of the 28000 passenger aircraft that will be produced. India, which has both stateowned and private-sector airlines, is experiencing a great increase in both internal flights
and flights to other countries. More airports are being built in India, with more facilities
being provided inside and around the airports. For example, more taxi firms are being set
up to take passengers to and from the airports. The rapid expansion of air travel in India
and other countries is having an impact on the market for pilots, as shown in Fig. 1
How rapidly the Indian air travel market will grow will be influenced by a number of
factors. These include the extent to which business travel will grow and how rapidly
demand for foreign holidays will increase. Demand for these forms of air travel is, in turn,
influenced by changes in price. The price elasticity of demand for air travel has been
estimated at −1.2. One factor that influences prices, and so the inflation rate, is changes in
taxation.
(a) Identify, using information from the extract:
(i) a substitute for air travel
[1]
(ii) a complement to air travel.
[1]
(b) Explain two advantages that firms may gain from a horizontal merger.
[4]
(c) Calculate, using information from the extract:
(i) the percentage of the new passenger aircraft that the USA is predicted to purchase
between 2015 and 2030
[2]
(ii) the percentage change in demand for air travel if the price of air travel falls by
15%.
[2]
(d) Analyse why demand for a luxury holiday may be price elastic.
[3]
(e) Discuss whether airlines should be state-owned or operated by the private sector.
[5]
(f) Analyse how average cost can change for low-cost airlines
[6]
(g) Analyse the advantages that consumers may gain from a competitive market for
airlines.
[6]
SECTION – B
Answer any two questions from this section
2. France exports and imports a wide range of its products. It is the world’s top exporter of
luxury perfume and the 7th largest exporter of soap. Changes in technology affect the size
of firms and products that they produce. The French government plans to upgrade its
infrastructure for all households to have internet access.
(a) Define exports
[2]
(b) Explain two causes that shift the supply curve of products to the right.
[4]
(c) Analyse, using a demand and supply diagram, how an increase in income will affect
the market for a perfume.
[6]
(d) Discuss whether or not it is an advantage to keep a firm small.
[8]
3. The price elasticity of demand (PED) for sugar in most countries is less than 1. In 2017,
the price of sugar fell. However, the price of specialised, higher quality sugar grown in
countries such as Mauritius fell by less than the average global price. Efficient producers,
such as some farmers in Brazil that have a low fixed cost of production, were also less
affected by the fall in price.
(a) State the formula used to calculate PED.
[2]
(b) Explain two reasons why the price of sugar may fall.
[4]
(c) Analyse the possible reasons why a producer’s fixed cost may increase.
[6]
(d) Discuss whether
whether or
or not
notamonopolies
charge
high
prices
governmentwill
should
allow
monopolies.
[8]
4. China is the world’s largest producer of gold and India is the world’s largest buyer of gold.
Gold mining in China is becoming more capital-intensive which is making the supply of
gold less price inelastic. The wages of workers employed in the industry are rising but
other costs of production are falling. A reduction in gold mining, it was argued, would
reduce the market failure caused by the pollution from the waste released. Over 99% of
extracted ore is waste to the environment.
(a) What is meant by an industry being ‘capital-intensive’?
[2]
(b) Explain two reasons why the supply of a product may be price inelastic.
[4]
(c) Analyse what effect an increase in output will have on fixed, variable and average
costs.
[6]
(d) Discuss whether or not indirect taxation can reduce market failure
[8]