Grade 10 Economics Exam
September 2012
Time: 60 Minutes
Marks: 90
INSTRUCTIONS
1
There are forty-five 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 with a cross (X) on the
attached Answer Sheet.
2
Each correct answer will score two marks. Marks will not be deducted for a wrong
answer. Any rough working should be done in this booklet.
THIS QUESTION PAPER CONSISTS OF 13 PAGES AND ONE ANSWER SHEET
1.
The table shows the market supply for a raw material and the individual demand of
the three firms, X, Y and Z, which are its only buyers.
What is the equilibrium market price of the raw material?
A. $7
2.
B. $8
C. $9
D. $10
In 2008 the demand curve for new cars in the European Union shifted to the left.
Which change could have caused such a shift?
A.
B.
C.
D.
an increase in real disposable income
an increase in the cost of borrowing
an increase in the price of new cars
an increase in the price of train travel
3.
Worldwide, the film industry has increased its expenditure to over $1 billion each
year on successful anti-piracy measures which it finances by charges on DVD
products.
4.
In 2008 a disease killed a significant number of sheep used to produce wool.
How would the short-run effect be shown on a demand and supply diagram for
wool?
A.
B.
C.
D.
a movement down the existing supply curve
a movement up the existing supply curve
a shift to the left of the supply curve
a shift to the right of the supply curve
Grade 10 Economics: September 2012
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5.
Between 2006 and 2007, the price of skimmed milk powder on the world market
rose from $1000 per tonne to $2400 per tonne.
Assuming that the market is a free market, what will result from the price change?
A.
B.
C.
D.
6.
Consumers will buy more complements to skimmed milk powder.
Farmers will increase the size of their dairy herds to supply more milk.
Firms processing milk into skimmed milk will switch to producing substitutes.
Governments will introduce a system of rationing.
Due to changes in the costs of production, an industry’s supply curve shifted at
various times from S1 to either S2 or S3.
If a shift in supply was due to a seasonal increase in the cost of raw materials, what
would have been the effect on demand?
A.
B.
C.
D.
7.
The demand curve would move from D1 to D2.
The quantity demanded would move from x to w.
The quantity demanded would move from x to y.
The quantity demanded would remain the same at x.
The table shows the changes in two influences on the demand for and supply of
televisions.
If these two changes occurred at the same time, in which case is it impossible for
the price of televisions to rise?
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8.
Drought in African countries often results in poor harvests. Other countries then
help by sending quantities of food.
What are the likely results of these events for the price of food in the droughtaffected countries?
Which statement is correct?
A.
B.
C.
D.
9.
It will fall and then rise.
It will rise and continue to rise.
It will rise and remain at this higher level.
It will rise and then fall.
The points in the scatter diagram indicate the prices and quantities sold of an
agricultural commodity in different time periods.
It may be concluded that these points were generated primarily by changes over
time in
A.
B.
C.
D.
10.
advertising.
consumers’ incomes.
supply.
the price of a substitute commodity.
The graphs, drawn to the same scale, show the demand curves of four firms. The
market price is $10. The price then falls to $8.
Which firm will have the largest increase in total revenue?
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11.
If the equation for a market demand curve is Q d = 15 – 1/5P and the equation for a
market supply curve is Qs = –1 + 3/5P, the market equilibrium price and quantity are
A.
B.
C.
D.
12.
P = 25; Q = 10
P = 20; Q = 11
P = 15; Q = 12
P = 10; Q = 13
The diagram shows an initial equilibrium point (X) in a market and a new equilibrium
point (Y).
Which combination of changes in demand and supply could have caused the
movement from X to Y?
A
B
C
D
demand
decrease
decrease
increase
increase
supply
decrease
increase
decrease
increase
Use the figure below to answer Question 13.
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13.
Rank the absolute value of the coefficient of the price elasticity of demand, from
highest to lowest, across points A, B and C. The correct ordering is
A.
B.
C.
D.
A, B and C.
A, C and B.
C, B and A.
The coefficients are the same at A, B and C.
Use the figure below to answer Question 14.
14.
At price P1 and quantity Q1
A.
B.
C.
D.
15.
If the cross elasticity of demand between bread rolls and cheese is –3.0, this
implies that these goods are
A.
B.
C.
D.
16.
demand curve D1 is the most price elastic.
demand curve D2 is the most price elastic.
demand curve D3 is the most price elastic.
the coefficient of the price elasticity of demand across the three demand curves
cannot be compared from the information given.
luxuries.
complements.
necessities.
substitutes.
If the cross elasticity of demand for two goods, A and B, is +5.0, then this implies
that these goods must be
A.
B.
C.
D.
luxuries.
complements.
necessities.
substitutes.
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17.
If the quantity of porridge traded increases by 50% when the price of milk falls by
25% then, ceteris paribus, it can be concluded that
A.
B.
C.
D.
18.
the demand for milk is price inelastic.
the demand for porridge is price elastic.
porridge and milk are complements.
porridge and milk are substitute products.
Ceteris paribus, every time the price of cashew nuts falls by R1/kg, the quantity of
cashew nuts demanded increases by 10kg per day. From this we can infer that
A. the higher the price of cashews, the more price inelastic the demand curve
becomes.
B. the price elasticity of demand for cashews is constant.
C. as price rises, demand at first becomes more price elastic and then later
becomes less price elastic.
D. as price falls, demand becomes less price elastic.
19.
Total revenue from the sale of biltong will increase if
A.
B.
C.
D.
20.
If the income elasticity of demand for candles is +0.5, then this implies that candles
are
A.
B.
C.
D.
21.
inferior goods.
luxury goods.
necessities.
capital goods.
Ceteris paribus, if a 10% increase in income has caused a 20% decrease in the
quantity of paraffin demanded (at the current price), then from this we can conclude
that paraffin is
A.
B.
C.
D.
22.
income decreases and biltong is a normal good.
income increases and biltong is viewed as an inferior good.
its price falls and demand is price elastic.
its price rises and demand is price elastic.
price elastic.
a luxury good.
an inferior good.
price inelastic.
If an individual’s income rises by 10%, ceteris paribus, her demand for a luxury
good
A.
B.
C.
D.
increases by more than 10%.
decreases by more than 10%.
increases, but by less than 10%.
cannot be predicted without additional information.
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23.
If the price elasticity of supply of cell phones in a country is +0.8, whilst the price
elasticity of demand is –1.7, then a specific tax placed on cell phones will be borne
A.
B.
C.
D.
24.
If the supply of a product is perfectly price elastic, and the coefficient of the price
elasticity of demand over the relevant range is –4.0, then the imposition of an
excise tax of R2 placed on each unit of the product will cause the equilibrium price
to rise by ________; the burden of the tax will be borne ________; and employment
levels in the industry producing the product will ________.
A.
B.
C.
D.
25.
entirely by consumers.
more by consumers than by producers.
more by producers than by consumers.
Either b or c could be correct, depending upon the elasticity of supply.
In a country where the demand for petrol (gas) is price-inelastic, the incidence of
any increase in petrol tax will be mainly on...
A.
B.
C.
D.
27.
R2; entirely by consumers; fall
less than R2; more by consumers than producers; fall
less than R2; more by producers than consumers; fall
R2; entirely by consumers; remain unchanged
If the supply of wheat in a country is represented by a normal, upward-sloping curve
and the price elasticity of demand for wheat is –0.5, then a specific tax of R1 placed
on each unit of wheat will be borne
A.
B.
C.
D.
26.
more by producers than by consumers.
about equally by producers and consumers.
more by consumers than by producers.
None of the above statements are correct.
the company that refines the oil.
the motorist who buys the petrol.
the petrol station that sells the petrol.
the wholesale company that stores the petrol.
A product with infinite elasticity of supply has sales of 1000 units a week at a price
of $1 per unit. Price elasticity of demand is 1.5 over the relevant range. The
government imposes a tax of 10 %.
What will be the government’s weekly tax revenue?
A.
B.
C.
D.
$15
$85
$100
$150
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28.
Wet weather in 2009 led to a fall in the sales of summer clothes. To support
businesses the government reduced the sales tax (VAT).
How would these events be shown on a demand and supply diagram for summer
clothes?
29.
In 2008, the government of Argentina imposed a tax on exports of wheat and soya
beans.
What was the most likely aim of this tax?
A.
B.
C.
D.
30.
to increase agricultural output
to increase exports
to reduce a budget surplus
to reduce the rise in domestic food prices
A government gives farmers a subsidy of $5 per kilo to supply food on the open
market where X is the equilibrium position.
The effect is illustrated in the diagram below.
What will be the new equilibrium price and quantity supplied as a result of the
subsidy?
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31.
The introduction of a congestion charge significantly reduces the volume of traffic
on inner-city roads, leading to shorter journey times.
What will be the net impact on the economic welfare of those motorists who
continue to make their journeys by car and those who switch to travelling by bus?
32.
Which area in the diagram represents the amount of consumer surplus that would
occur in a market if a government enforced an effective maximum price?
A.
B.
C.
D.
33.
f only
f + g + h only
f + g + i only
f+g+h+i+j+k
The diagram shows the demand for and the supply of bread.
A maximum price P1 is fixed by the government.
What is likely to be the immediate result of this?
A.
B.
C.
D.
a movement of the demand curve to the right
a movement of the supply curve to the right
a shortage of bread
a surplus of bread
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34.
The Chinese government is increasing the role of market forces in its economy.
However, in 2008 it imposed temporary maximum price controls on energy and
transport.
Why might a government, committed to reducing central planning, introduce price
controls?
A.
B.
C.
D.
to increase allocative efficiency
to increase the incentive for producers to raise supply
to reduce consumer demand
to reduce expectations of inflation
The diagram below shows the market for bus rides. Use this diagram to answer Questions
35 and 36.
S
Price
R3,50
R2,00
D
0
35.
120
150
Quantity of bus rides/week
If the price of bus rides is currently R3.50 per ride, then
A.
B.
C.
D.
36.
100
there will be a surplus of 30.
there will be a shortage of 50.
there will be a surplus of 50.
there will be a shortage of 30.
What is likely to happen in the market for bus rides (assuming there is no
intervention by government)?
A. There is likely to be an increase in the price of bus rides.
B. There is likely to be an increase in the quantity of bus rides supplied as the price
falls.
C. There is likely to be a decrease in the quantity of bus rides demanded as the
price rises.
D. There is likely to be a decrease in the quantity of bus rides supplied as the price
falls.
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37.
What must a government do to stabilise the price of an agricultural commodity?
38.
Which of the following would be classed as an expansionary fiscal policy?
A.
B.
C.
D.
39.
If government spending is higher than current government revenue, this is known
as
A.
B.
C.
D.
40.
A reduction in the number of goods exempted from VAT
An increase in government taxation
An increase in government expenditure
An increase in the VAT rate
the budget deficit.
the public debt.
money financing.
good fiscal management.
The diagram shows a government’s revenue and expenditure for three years.
What can be concluded from the diagram?
A.
B.
C.
D.
A budget deficit was replaced by a budget surplus.
A government borrowing requirement emerged.
The economy moved from a recession into a boom period.
The yield from taxation continuously increased.
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41.
The South African income tax system is
A.
B.
C.
D.
42.
regressive.
a flat-rate tax.
proportional.
progressive.
A tax such as VAT would generally be viewed as
A. progressive, because the consumption expenditure of the rich is greater than
that of the poor.
B. regressive, because low-income households spend a greater proportion of their
income on goods that attract VAT.
C. proportional, because the VAT rate is constant across goods that attract VAT.
D. regressive, because the VAT burden increases as household income rises.
43.
Which statement is most likely to be correct?
A.
B.
C.
D.
44.
When is a direct tax described as progressive?
A.
B.
C.
D.
45.
A direct tax benefits the government.
An indirect tax benefits small shopkeepers.
A progressive tax benefits successful entrepreneurs.
A regressive tax benefits lower income earners.
when the government changes the basic rate of tax in each budget
when the government taxes companies rather than individuals
when the tax takes a larger proportion of earnings as earnings increase
when the tax takes a smaller proportion of earnings as earnings increase
The diagram illustrates the working of a negative income tax system (NIT), where
households with incomes above Yt pay tax and those with incomes below Yt receive
a tax credit.
What would be the effects of decreasing the effective tax rate, thereby causing the
NIT schedule to shift from NIT1 to NIT2?
Grade 10 Economics: September 2012
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Grade 10 Economics: September 2012
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Grade 10 Economics Exam
September 2012
ANSWER SHEET
NAME: _______________________________
TEACHER: OFH / SH / MJW / WHS
1.
A
B
C
D
24.
A
B
C
D
2.
A
B
C
D
25.
A
B
C
D
3.
A
B
C
D
26.
A
B
C
D
4.
A
B
C
D
27.
A
B
C
D
5.
A
B
C
D
28.
A
B
C
D
6.
A
B
C
D
29.
A
B
C
D
7.
A
B
C
D
30.
A
B
C
D
8.
A
B
C
D
31.
A
B
C
D
9.
A
B
C
D
32.
A
B
C
D
10.
A
B
C
D
33.
A
B
C
D
11.
A
B
C
D
34.
A
B
C
D
12.
A
B
C
D
35.
A
B
C
D
13.
A
B
C
D
36.
A
B
C
D
14.
A
B
C
D
37.
A
B
C
D
15.
A
B
C
D
38.
A
B
C
D
16.
A
B
C
D
39.
A
B
C
D
17.
A
B
C
D
40.
A
B
C
D
18.
A
B
C
D
41.
A
B
C
D
19.
A
B
C
D
42.
A
B
C
D
20.
A
B
C
D
43.
A
B
C
D
21.
A
B
C
D
44.
A
B
C
D
22.
A
B
C
D
45.
A
B
C
D
23.
A
B
C
D
[45 x 2 = 90]
Grade 10 Economics: September 2012
15