The City School Comprehensive Paper Class 9

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1 The City School Comprehensive Paper Class 9 CANDIDATE NAME INDEX NUMBER Date: ECONOMICS 2281/11 Paper 1 Multiple Choice 45 minutes Additional Materials: Multiple Choice Answer Sheet Soft clean eraser Soft pencil (type B or HB is recommended) READ THESE INSTRUCTIONS FIRST Write in soft pencil. Do not use staples, paper clips, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you. DO NOT WRITE IN ANY BARCODES. 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 in soft pencil on the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully. 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 document consists of 08 printed pages. The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 1 of 9

2 1 A government taxes the production of cars. What is likely to decrease? A the cost of supplying cars B the price of cars C the revenue for the government D the supply of cars at every price 2 The diagram shows the market for rice. What would have caused the equilibrium price to rise from OP1 to OP2? A a government subsidy to rice farmers B a successful advertising campaign for rice C improved rice farming methods D poor weather conditions 3 In the diagram, D1D1 and S1S1 represent the demand for and the supply of labour. W indicates a legal minimum wage. An influx of immigrant labour causes the supply curve for labour to shift from S1S1 to S2S2. How many people will be employed if the minimum wage legislation is then abolished? A 4 million B 5 million C 6 million D 7 million The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 2 of 9

3 4 How does a firm guarantee that it makes the maximum profit? A by maximising the difference between its total revenue and total cost B by maximising the number of goods that it sells C by minimising the number of goods that it keeps in stock D by minimising the difference between average revenue and average cost 5 The diagram shows the demand and supply of places in independent (private) schools which charge fees. The equilibrium position is X. The costs of independent (private) schools rise. Also a report is issued which states that Government schools achieve very good examination results. What is likely to be the new equilibrium position? 6 Which characteristic does a firm in perfect competition have in common with a monopoly? A the ability to exclude rivals B the benefit of internal economies of scale C the problem of diseconomies of scale D the wish to maximise profits 7 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? The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 3 of 9

4 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 drought-affected countries? A It will fall and then rise. B It will rise and continue to rise. C It will rise and remain at this higher level. D It will rise and then fall. 9 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? 10 Mr Jones runs a small shop selling household appliances. His total revenue has declined due to the opening of a large supermarket which sells a similar range of goods. How could Mr Jones compete with the supermarket? A develop financial economies of scale B engage in a price-cutting war C introduce a massive advertising campaign D provide personal after-sales service 11 The table shows how a firm s total cost rises with changes in output. What is the average fixed cost of producing 5000 units? A $4 B $5 C $6 D $10 The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 4 of 9

5 12 General Motors, a large multi-national company based in the United States, sold some of its European car assembly plants to other car manufacturers during the world recession (economic downturn) in Which economic reason would have been most likely to influence this decision? A to benefit from horizontal integration of manufacturing B to diversify and expand its product range C to encourage vertical integration of sales and production D to reduce its excess capacity in car production 13 A firm is producing an output which enables it to make more than normal profit. What must be true at that output? A Average revenue must be greater than total revenue. B Average revenue must equal average cost. C Total revenue must be greater than total cost. D Variable cost must equal price. 14 Which statement about total fixed cost is correct? A It falls as output increases. B It is calculated by adding total cost and total variable cost. C It is calculated by dividing total cost by output. D It must be paid even if output is zero. 15 The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. New, more efficient boats with lower running costs are then used. Which point represents the new equilibrium? The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 5 of 9

6 16 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 a movement of the demand curve to the right B a movement of the supply curve to the right C a shortage of bread D a surplus of bread 17 The diagram shows a market for wheat that is in equilibrium. Which area represents the total revenue for wheat farmers? A OTXY B OVXZ C OVXY D OWXY 18 The diagram shows the supply curve for a good. What is the price elasticity of supply when the price rises from $2 to $4? A 0.2 B 0.5 C 1 D 2 The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 6 of 9

7 19 The diagrams show possible demand curves for four commodities. Which diagram shows a completely inelastic demand curve? 20 In August 2008, Infosys, an Indian information technology company, bought Axon, a UK information technology company. Which type of integration is this? A conglomerate B horizontal C vertical backwards D vertical forwards 21 What is correct about a monopoly? A It may benefit from economies of scale. B It must be privately not state owned. C Its costs are always higher than those of a firm in perfect competition. D It sells only one product. 23 Barilla, an Italian company, is the world s largest pasta maker. It also produces bread. In 2006 its bread production contributed $1.5 billion (bn) to its total revenue of $5.1 bn. Overall profit was $0.6bn. What was the total cost to Barilla of producing pasta and bread in 2006? A $2.1bn B $3.0bn C $3.6bn D $4.5bn 24 A firm which sells its product for $6 has the following total costs. Which statement is correct? A Average cost is lowest when 10 units are produced. B The firm breaks even when 20 units are sold. C The firm has no fixed costs. D Total variable costs fall continuously over these outputs. 25 What is likely to be found when there are many small firms in an industry? A There are few barriers to entry. The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 7 of 9

8 B There is high expenditure on research and development. C There is little competition. D Very large capital costs are needed to establish a firm. 26 Which costs will be reduced if a factory decreases the amount of pollution it causes to theenvironment? A average costs B external costs C fixed costs D variable costs 27 The diagram shows a change in demand for coffee. What might cause the demand for coffee to change from D1 to D2? A a good coffee harvest B a rise in the price of alternative drinks C a rise in the wages of coffee workers D a successful advertising campaign for tea 28 A product has a totally inelastic price elasticity of demand. What will happen to total revenue if the price of the product falls by 25%? A It will fall by 25%. B It will fall to zero. C It will remain unchanged. D It will rise by 25%. 29 How does a firm guarantee that it makes the maximum profit? The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 8 of 9

9 A by maximising the difference between its total revenue and total cost B by maximising the number of goods that it sells C by minimising the amount of goods that it keeps in stock D by minimising the difference between average revenue and average cost 30 Which is a diseconomy of scale? A Bulk buying reduces costs. B Communications deteriorate. C Employees are more motivated. D Technological improvements take place. The City School / Comprehensive Paper / Economics / Paper 1 / Class 9 Page 9 of 9