Grade 10 Economics Exam
Paper 1
November 2011
Time: 60 Minutes
Marks: 30
INSTRUCTIONS
1
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 with a cross (X) on the
attached Answer Sheet.
2
Each correct answer will score one mark. A mark will not be deducted for a wrong
answer. Any rough working should be done in this booklet.
THIS QUESTION PAPER CONSISTS OF 11 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 (Paper 1): November 2011
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5.
The diagram shows a demand curve for journeys on a toll road.
If there is a reduction in the toll from $5 to $3, what is the resulting increase in the
daily consumer surplus?
A. $1000
6.
C. $3000
D. $4000
What does not happen when price acts as a means to allocate resources?
A.
B.
C.
D.
7.
B. $2000
Price determines the supply of public goods.
Price operates in the markets for both goods and factors of production.
Price recognises consumers’ ability to pay rather than consumers’ needs.
Price signals to producers which goods are most profitable.
Rising demand for oil from China and other countries is leading to concerns that
there may be a world shortage of oil.
How should a change in the price of oil prevent such a shortage developing?
A. Price should fall to reduce demand and encourage a search for more oil.
B. Price should fall to reduce supply and encourage a reduction in fuel use.
C. Price should rise to reduce demand and encourage a search for alternative
fuels.
D. Price should rise to reduce supply and encourage a switch to alternative fuels.
8.
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.
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.
Grade 10 Economics (Paper 1): November 2011
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9.
The diagram shows a country’s domestic supply of, and demand for, a commodity
that it both consumes and exports.
The world price changes from WP1 to WP2.
What are the resulting changes in domestic consumption and exports?
10.
The demand for a commodity has unitary price elasticity.
Which diagram shows the relationship between total expenditure on the commodity
and its price?
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11.
The table gives information about the market for two models of car.
If the prices of the cars remain unchanged, but the price of petrol increases by
100 %, what will be the effect on the number of cars sold per week?
A.
B.
C.
D.
12.
increase by 5000
no change
decrease by 5000
decrease by 15 000
The table shows a consumer’s expenditure on a range of goods at different levels of
income.
For which good does the consumer have an income elasticity of demand greater
than zero, but less than one?
13.
What will make it more likely that road tolls will reduce traffic congestion?
A.
B.
C.
D.
Cross-elasticity of demand between private and public transport is zero.
Demand for car use is income-elastic.
Demand for car use is price-elastic.
Supply of public transport is price-inelastic.
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14.
The diagram shows the demand curve for a product.
Which statement is correct?
A.
B.
C.
D.
15.
Demand is less elastic at higher prices than at lower prices.
Consumer expenditure on the product always rises when price falls.
Price elasticity of demand is different at every price.
Price elasticity of demand equals one at every price.
In the diagram OS1 and OS2 are two straight-line supply curves.
As price increases, the elasticity of supply
A.
B.
C.
D.
decreases along both OS1 and OS2.
increases less rapidly along OS1 than along OS2.
increases more rapidly along OS1 than along OS2.
is constant along both OS1 and OS2.
Grade 10 Economics (Paper 1): November 2011
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16.
The government imposes a maximum price of P2 on a product.
What will be the position after this action?
A.
B.
C.
D.
17.
an equilibrium with price P1 and quantity Q1
an equilibrium with price P2 and a quantity between Q2 and Q3
an oversupply in the market by Q2Q3
a shortage in the market of Q2Q3
The diagram shows the demand and supply curves of a good.
The government sets a maximum price of OJ for the good.
How will this affect the consumers and producers of the good?
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18.
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.
19.
f only
f + g + h only
f + g + i only
f+g+h+i+j+k
The Government of a country decides to increase the proportion of its tax revenue it
obtains from direct taxes and to reduce the proportion it obtains from indirect taxes.
What is likely to be the impact on the distribution of income and on work incentives?
Grade 10 Economics (Paper 1): November 2011
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20.
The supply of an imported good is shown by curve S.
What will be the new supply curve if an ad valorem (percentage) tariff is imposed on
the good?
21.
James grows fruit trees in his garden. They attract butterflies and bees.
What is not an externality of this?
A. Neighbours may be stung by the bees that pollinate the trees.
B. Neighbours may buy fruit more cheaply from James than the local supermarket.
C. Neighbours may enjoy better air quality as the trees naturally improve the
atmosphere.
D. Neighbours may like to watch the activity of the wildlife at no cost.
22.
Which good is excludable but non-rival?
A.
B.
C.
D.
23.
What is the most likely reason economists will give to explain why large hospital
projects are often funded by governments?
A.
B.
C.
D.
24.
air defence
public libraries
street lighting
television broadcasts
Governments usually control the construction industry.
Hospitals benefit many people who do not use them.
Hospitals are non-excludable.
Hospitals are an essential service.
How would net external benefit be calculated?
A.
B.
C.
D.
external benefit minus external cost
external benefit plus private benefit
private benefit plus social benefit
social benefit minus private cost
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25.
The table shows the expected costs and benefits from four government projects.
The government can afford only one project.
Which project should the government choose?
26.
What must fall when the rate of unemployment rises?
A.
B.
C.
D.
27.
What will cause an immediate rise in the size of a country’s labour force?
A.
B.
C.
D.
28.
an increase in the birth rate
an increase in the age of retirement
an increase in the school-leaving age
an increase in the number of redundancies
Which one of the following is NOT a type of unemployment?
A.
B.
C.
D.
29.
the effectiveness of the use of resources
the level of labour productivity
the number of workers in employment
the size of the labour force
Fictional unemployment
Supply-side unemployment
Demand-deficient unemployment
Search unemployment
People who are … are unemployed according to the official definition of
unemployment.
A.
B.
C.
D.
not working
non-active
actively looking for jobs
both A and C
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30.
The diagram shows changes in the numbers employed in four different industries in
a city between 2002 and 2007.
What can be concluded from the diagram?
A.
B.
C.
D.
Finance was always the largest employer.
Leisure had the fastest growth rate in employment.
Manufacturing was the only industry to show signs of decline.
Total employment in the four industries decreased over the period.
Grade 10 Economics (Paper 1): November 2011
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Grade 10 Economics Exam
November 2011
Paper 1
ANSWER SHEET
NAME: _______________________________
TEACHER: OFH / SH / MJW
1.
A
B
C
D
16.
A
B
C
D
2.
A
B
C
D
17.
A
B
C
D
3.
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B
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D
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D
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29.
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15.
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30.
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D
[30 x 1 = 30]
Grade 10 Economics (Paper 1): November 2011
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