1. Which of the following BEST defines the concept ‘scarcity’? (A) Goods and services to consumers ere insbort supply. (B) There ere not enough resources available at present. (©) The excess of bumen wants over the ‘economy’s resources (D) “The-wants of society are greater than the supply of goods. 2, Which of the following statements BEST defines a ‘production possibility frontier’? @ @) © @) ‘The limit of the combinations of. goods and services that can be produced The combinations of goods and services that may be produced in @ country ‘The mixture of goods and services ‘thot are desired by a country An illustration of an economy producing goods and services for its citizens onk 2 4 3. Hem 3 refers to the production possibility frontier for a country that produces only cookies and milk. man | a a Cookies ‘Which of the following is MOST likely to account for the chenge from Curve Ito II? (A), Asuccessfil anti-cookie campaign +B) A decresse in the population of cows (©) Anincrease in he population of cows (D) A rise in input prices for cookie production ‘item 4 refers to the market for ferry services. D Number of trips OF is the equilibrium ticket price for areturn trip. If government imposes a price ceiling to allow the lower income groups to utilise more of the ferry services, itsbould be placed 1A) __ither above orbelow OF (®B) - ‘tthe equilibrium price OF (©) above the equilibrium price OF ~ (D) _ below the equilibrium price OFWhich of the following is ‘MAJOR Teme 8-9 refer to the production possibility assumption of marginal ntlity theory? frontierbelow. (A) Utility canbe ranked Goo ¥ +B). Usility canbe measured, M (©) Marginal utility increases as consuroption increases. (©) + Total utility.dectines as consumption increases. Item 6 refers to the following diagram which shows the price of cellular phones and the quantity demanded, Good X 8. Which of the following statements about the points is tue? A Mis inefficiens. (B) _ Ristechnically.inefficient (c) Nis allocatively inefficient. + «@) — Qisproductively inefficient Ree aaa _ 9. Which of the following will account for change from poirit Q to point O? Ata price of $50 for a cellular phone, the (A) Anunchanging state of technology quantity demandedis 100. The shaded area ~(B) Making full use of available resources in the diagram represents (©) Rise in the prices of the factors of ‘production (A) economicrent (D) Adverse weather éonditions ceusing {B) _ marketsumplus damage to resources (C) © excess demand -(D) consumer surplus ‘The use of land to build hospitals reduces the amount available for factory construction. ‘This BEST illustrates the concept of (A) choice ®) scarcity (©) rationing : (@) shortage10. iL 12. <4. ‘Which of the following is NOT a positive economic statement? (A) An increase in the price of gasoline will affect bus operators. (B) —Areduction in income tax will result in an increase in consumer spending, (©) ‘Thegovernment should increase the + minimum rate, . @) — Areductionin interest wage rate will affect investment in a country. “Marginal cost’ is BEST described as a situation in which producing one more unit of output results in the addition to (A) total fixed costs @) _- total variable costs » (©) average total costs @) average variuble costs Which of the following BEST explains the term, ‘indifference curve"? (A) Goods for which the budget tine is the same (B) Goods for which consumption is indifferent (© Goods which give the consumer maximum satisfaction 4) Thecombinationof two goods which gives the consumer the same level of satisfaction 13 Price 14. 15. Which of the following is an example of a price ceiling? 7 (A) Rentconwols (B) —_Farmprice supports (© Minimum wege laws @) A tax onthe market Htems 14 - 15 refer to the following diagram. Quantity ‘Which of the following indicates the point of optimum production? (A) T ®) u ~Q oO Ww Assuming that a firm is earning normal profits, st which point woyld marginal revenue eal marginal cost? “a tf ®) oO ww =@ WwW22. Which of the followiig isNOT a cause of 25, market failure? (A) _Toxation (B) © Monopoly (D) Extemalities, (©) __ Imperfect knowledge 423. Which ef the following contributions is an example of privatisation? (A) Deregulation and franchising 26 (B) Franchising and redistribution (C) Contracting out and regulation (D) Deregulation and nationalisation tem 24 below refers to the graph showing the demand and supply fora factor of production, faa ; (A) @) © ~ @) 27. 7 ‘Quantity A shift of the demand curve from DD to D,D, will result in a decrease in economic rent ‘an increase in economic rent an increase in transfer earnings a decrease in transfer earnings ‘The MRP curves slope downward because (A) afirmwill pay more to attract factors from other uses {B) less of a factor is demanded at @ lower price (C) more of a factor is demanded at @ : lower price (D) the marginal physical product is constantly falling ‘Which of the following statements outlines an important characteristic of private good? A @) © It is provided by the private sector Itis consumed by everyone in equal quantity and quality. Its consumption has external effects on the consumption or production of , others, ~(D) Its consumption by one person diminishes the quantity available to others, A situation in which people enjoy the benefits ‘of public goods without paying for them, is. known as the (A) non-rival problem _(B)_ fiee-rider problem (©) non-excludable problem (D) _ Grop-in-the-bucket problemTtem28 refers tothe diagram below showing a situation in which # monopolistically competitive firm is in the long-run ‘equilibrium. 28. Using the marginalist approach to determine equilibrium price and quantity, what is the area between Q, and Q, called? (A) Excess capacity (B) — Shut-down point (© ~ Equilibriumpoint (©) — Mininmumefficiency scale 29, What type of market structure would have a Herfindahl-Hirschman Index of 10 000? ~ (A) Puremonopoly (B) Pureoligopoly (©) . Perfect competition (D) | Monopolistic competition 30, Ifa Giri cannot prevent a consumer from enjoying the benefits of'a good itproduced at Jow cost, the good is, (A) " excludable + (B) __ non-excludable (C) _tivalin consumption (PD) nonrival in consumption 31. Which of the following BEST describes the “merginalist principle"? (A) Average cost equals “average revenue. (B) | Marginal cost equals ‘average revenue. (©), Average cost equals marginal revenue. (PD) Marginal cost equels merginal revenue. tem 32 refers to the diagram below which + shows a firm operating. in a perfectly competitive market 1 1 | { @ 32. Which segment of the curves shown represents the short run supply curve? Awd @®) AtoF (C). Btod ©) CtoE .33. 34, 35. ‘When the government of a country pays a part ofstudents? university fee itis, A B) © ) using taxes to discourage external cost exercising its power to implement regulations subsidising an.external benefit ‘internalizing external cost ‘The concept of ‘adverse selection’ implies that (4) ®) Oo (@) persons who buy insurance are those swith the highest risk those who sell insurance policies are better informed than those who, buy them those who refuse insurance policies are often the same ones who really need them persons who have insurance may tend to be more careful and thus avoid Fisks Item 35 refers to the following diagram depicting a labour market. ‘Quantity labour ‘Which of the followirig economic concepts does the shaded area in the triangle represent? (A) Poverty (B) Economic rent (©) @) ‘Transfer earnings Consumer surplus 36, 37k ‘Under the CSME agreement, a plumber froin Grenada now works as an electrician in ‘Trinidad. What types of labour mobility has occured? 1. Vertical TL Horizontal IH. — Geographical TV. Occupational (A) Tand Monly ®) Wand TiTonly. (©. DandlVonly @) ‘Wand IV enly ‘An outward shift in the demand corye for any product causes an « @) © ©) outward shift in the derived demand curve for all factors utilized in the ‘production of the commodity inward shiftin the derived demand curve for all factors utilized in the production of the commodity ‘outward shift in the derived demand ‘curve for one factor utilized in the production ofthe commodity inward shift in the derived demand for one factor utilized in the production of the commodity40. 41. ‘Which ofthe following of the labour force? (A) Construction workers (B) Soldiers (C) . Nurses (PD) Discouraged workers Miss Bent feels unwell and visits her local doctor who, after an examination, discovers an incurable iliness. The doctor does not tell her of his diagnosis and instead prescribes costly medicine, ‘What economic concept does the above statement describe? ‘ (A) Inefficiency ®) Moral hazard (C) Adverse selection (D) — Assymetric information Items 40 - 42 refer fo the information below. Jack’s Inc. paid wages in the amount of $20 000, rent $2 000 end interest $1 500. The ‘business realized a profit of $5 000. For the factor of production, labour, how much did Jack's Inc. pay? ($1500 @®) $2000 © $5000 (@) — $2000 For the factor of production, capital, how much did Jack’s Inc. pay? (A) $1500 B) $2000 (© $5000 @) — $20000 43. 44, 45, Forthe factor of production, entreprensurship, much did Jack's Ine, pay? (A) $1500 ®) $2000 (©) $5000 (D) —$20000 ‘The concept of social welfare’ is difficult to define because itis (A) an abstract concept and is difficult to quantify (8) a technical concept and should be equated with individual preferences (©) anormative contept and involves value judgements (D) a social concept and should be equated with society’s preferences ‘The concept of “esymmetric information” indicates that informations (A) available freely (B) evenly distributed (©) notavailatle freely (D) unevenly distributed Which of the following results from government provision of education? (A) Amore socielly efficient allocation of resources (B) less socially efficient allocation of resources (©) A decrease in marginal social benefits (D) An increase in marginal private Denefits IF YOUFINISHBEF ORE TIMEIS CALLED, CHECK YOUR WORK ON THIS TEST.