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1 A tailor has four customers for her range of suits. The table shows the yearly demand for the suits
she makes.

demand for suits

suit price
customer R customer S customer T customer U
($)

800 4 1 2 2
900 4 0 1 2
1000 3 0 1 1
1100 2 0 0 1

Which price should be charged to maximise the tailor’s yearly revenue?

A $800 B $900 C $1000 D $1100

2 In response to an increase in price from $5 per kilo to $6 per kilo, a farmer increased supply from
400 kilos to 500 kilos per week.

What is the price elasticity of supply?

A 0.8 B 0.9 C 1.2 D 1.25

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3 It is expected that consumers will use less paper money.

What is the most likely reason for this?

A Inflation reduces the value of paper money.

B More ways of making payments will be available.
C Other forms of money are more durable.
D Paper money will have less intrinsic value.

4 In low-income countries, fewer girls than boys become skilled design engineers.

What might explain this situation?

A Girls are only interested in low-wage jobs.

B Girls do not favour heavy manual work.
C Girls have fewer opportunities to complete higher education.
D It costs more for girls to be trained as design engineers.

5 The diagram shows the demand for and supply of labour in an industry. The original equilibrium
is X.

A trade union then negotiates a wage rate of W.

wage rate S
($)
W

O
R S T
quantity of labour

What identifies the change in employment?

A OR B OT C RS D RT

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6 A company mining cobalt, invests in machinery to replace some workers. Eventually

diseconomies of scale occur.

What could cause this situation?

A As more cobalt is mined average costs increase.

B Fewer workers are needed to produce the required output.
C Output per hour increases as more machinery is used.
D Overhead costs are spread as output increases.

7 Why are many hairdressers able to operate as small businesses?

A high level of competition

B high scope for economies of scale
C long period of training required
D low start-up and running costs

8 Dimitry owns a firm that produces and sells bottles of lemonade. He only sells one size of bottle.

How would Dimitry calculate the total revenue of the firm?

A multiply the quantity sold by the cost per bottle

B multiply the quantity sold by the price per bottle
C multiply the quantity sold by the profit per bottle
D multiply the quantity sold by the tax per bottle

9 Which market is likely to be the most competitive?

barriers number
to entry of sellers

A high few
B high many
C low few
D low many

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10 An economy has a high rate of inflation. In response to this, its government increases income tax.

What is the most likely reason for this increase?

A to discourage the consumption of harmful goods

B to raise money for government spending
C to redistribute income
D to reduce total demand

11 Interest rates are sometimes raised to control inflation.

Why might this policy be effective?

A Consumers may save more.
B Government spending may increase.
C Investment may be encouraged.
D The exchange rate may fall.

12 A government’s revenue grew 8% to $3.25 trillion. Its expenditure was reduced to $3.69 trillion.

What can be concluded from this?

government
state of budget
policy aim

A deficit increase deficit

B deficit reduce deficit
C surplus increase surplus
D surplus reduce surplus

13 A country’s inflation rate, measured by the Consumer Prices Index (CPI), was 3% in year 1.
Three years later it was 0.8%.

What can be concluded from this information?

A Prices are falling.

B The rate of price increases is falling.
C The real rate of interest is negative.
D There is increased purchasing power for those on fixed incomes.

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14 What will deflation most likely lead to?

A a fall in the real value of debts

B an increase in the exchange rate
C an increase in the rate of interest
D an increase in the real purchasing power of money

15 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.

16 The table compares the distribution of employment in selected industries in two years.

employment in millions
industry
year 1 year 2

agriculture 4 3
mining 2 2
manufacturing 6 6
retailing 4 4
transport 4 5
total 20 20

How did the distribution of employment change between year 1 and year 2?

primary sector secondary sector

A fell rose
B fell unchanged
C rose fell
D rose unchanged

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17 In a year, two changes occurred in a company.

Company directors’ salaries increased by 15%.

Office workers’ wages increased by 5%.

The rate of inflation was 3.4%.

What happened to real income?

company directors’ office workers’

real income real income

A fell fell
B fell rose
C rose fell
D rose rose

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