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r . Which of the following BEST defines the .concept 'scarcity'?(A) Goods and services to consumers arein short supply.

There are not enough resourcesavailable at present. ..The excess of'human wants over the

(B)(C)

economy's resources. ,CD) The -wants of society are greater

than the supply of goods.

2. Which of the following statements BESTdefines a 'production possibility frontier '?

The limit of the combinations of.goods and services that can beproduced .

The combinations of goods andservices that may be produced Ina country

11)emixture of goods and servicesthat are desired by a countryA n illustration of an economyproducing goods andservices forits citizens

, (A)

(B)

(C)(D)

,. ,- /_-.. Item 3 refers to the production possibility. f ron t ie r for a country that produces onlycookies and milk.

Milk }.

Cookies3... Which of the following is MOST likely to

accountfor the change from Curve I to II?(A) .A successful anti-cookie campaign.(B) . . A decrease in the population of cows(C) An increase in tbepopulationofcows- C D ) A.rise' in input prices for cookieproduction,i tem 4 refers to the market for ferry services.

Ticket -, sprice

~SF

,/,. ../ Do L - - - - - - - - - - - - - - - - - - - - - ~Number of trips

4. OF is the equilibrium ticket price for a return. trip. Ifgovernment imposes a price ceilingto allow the lower income groups to utilisemore of the ferry services, itshould be placed(A)(B) .e e )

,,< (0)

either above or below OF.~ the equilibrium price OFabove the equilibrium price OFbelow the equilibrium price OF

~-~------ .---- ..--.-.-.--.----- ..-.--.~ ._. _ _ .....

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,Which of the following is a 'MAJORassumption ofmarginal utility theory?(A)

'" (B)(C)Utility can be ranked.. Utility can be measured.M.argina1 ut ilrty increases as.consumption increases.. Total utility. declines as consumpti onincreases.

(D)

Item 6 refers to the following diagram whichshows the price of cellular phones and the.quantity demanded.

Priceofce llllar

p h o n e

O~----~--------------QQIOO

Quantity demanded

6. At a price of $50 for a cellular phone, thequantity demanded is 100. The shaded areain the diagram represents(A) economic rent(8) market surplus(C) excess demandCD) consumer surplus

7. The use ofland to build hospitals reduces theamount available for factory construction.TIlls BEST illustrates the concept of(A) choice(B) scarcity(C) rationingCD ) shortage

~-----~-,. -- _._--_._._-, .... _ . _ - _ .. _ _ ._ _ ._._---

. ItemsUefer to the production possibilityfrontier below.CoodY

8.

o~Q

p

Good XWhich ofthe following statements about thepoints is true? .(A) 1''.'1s inefficient.(B) Ris technically.inefficient.(C) Nis allocatively inefficient..; (D) Q is productively inefficient.

9. 'YVil ich of the following will account for achange from point Q to point 07

Anunchanging state oftechnology _Making fulluse of available reSOlITCeSRise in the prices of the factors ofproductionAdverseweather conditions causingdamage to resources

-----_. _ _ ._---- -----.-. -- _ .

(A)~"(B)'-(C)~)

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10. Which of the following is NOT a positiveeconomic statement?(A)

(B)An increase in the price of gasolinewill affect bus operators. 0A reduction in income tax will resultin an Incre ase in consumerspending. .'The government should increase the, minimum rate.A reduction ininterest wage rate willaffect investment in a country,

11. 'Marginal cost' is BEST described as asituation inwhich producing one more unit of

o output results in the addition to '.(A)(B)

oJ' (C)C D )

(C)

total fixed costso total variable costs.average total costsaverage variable costs

12, Which of the following BEST explains theterm, "indifference curve'?(A)(B)(q

,.,.(D)

Goods for which the budget line isthe sameGoods for which consumption isindifferentGoods which give the consumerrnaximum satisfaction 0Th7 combination of two goods whichgives the consumer the same levelof satisfaction

'-4-13. 0 Which of the following is an example ofprice ceiling?

!'(A)(B)(C)(D)

Rent controlsFarm price supportsMinimum wage lawsA tax on the market

Hem s 14 - 15 refer to the following diagram'Prtce

Me AC

o~--------------------~~Quantity0 0 1 4 . ? 0 Which of the following indicates the point o

optanurnproduction?(A)(B)

" (C)- (D)

IIIIIIN

15. Assumingfuat a firm is earning n o rma l profitsat which point would marginal revenue equamarginal cost?

(A) I(B) II(C) III

; c . : . (D) N

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Item 28 refers to the diagram below showinga situation in which a monopolisticallycompetitive firm is in the long-runequi l ib r ium.

AC

Q28. Using the rnarginalist approach to determine

equilibrium price an d quantity, what is thea rea between Q, and Q2 called?(A)(B)(C), 2 - (D)

Excess capacityShut-down pointEquilibrium pointMinimum efficiency scale

,29. 'What type of'rnarket structure would have a 'He r fi n d ah l - H i rs c h m a n Index, o f 10 O OO ?,

Y (A)(B)(C)(D)

Pure monopolyPure oligopolyPerfect competitionMonopolistic competition

- 7 _'

30. If a firm cannot prevent a consumer f romenj oying the benefits of a good it produced atlow cost, the good is(A)

,:., (B)(C)CD)

excludable .non-excludablerival inconsumptionnonrival in consumption

31. Which of the following B;EST describes the'marginalist principle"?(A) Aver~ge cost equals average

revenue.(B) Marginal cost equ a Is average

revenue.(C) , Average cost equals marginal

revenue.(D) Mar gin al cost equals marginal

revenue.Item 32 refers tothe diagram below whichshows a firm operating. in a perfectlycompetitive market.

p

D

Q

32. Which segment of the curves shownrepresents the short run suppl~ curve~(A) A ron(B) A to F(C) , B to Dn C to E

--------,;'------------------

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33. When the government of a country. pays apart of students' university fee it is(A) using taxes to discourage external

costexercising its power to implementregulationssubsidising an.external benefit.internalizing external cost .

(B)(C)(D)

.The concept of 'adverse selection' implies that(A) persons who buy insurance ~e those

with the highest risk(B) those who sell insurance policies are

better informed than those whobuytbem

(C) those who refuse insurance policiesare often the same ones who really

.' need themCD) persons who have insurance may

tend to be more careful and thusavoid risks

Item 35 refers to the following diagramdepicting a labour market.

Wage

O~----------~------~9Quantity labour

35. Which of the following economic conceptsdoes the shaded area in fhe trianglerepresent?(A) Poverty(B) Economic rent(C) Transfer earnings(D) Consumer surplus

" 8 -36.

37.y

.Under the CSlv1E agreement, a plumber froGrenada Il;OW works as an electricianTrinidad. What types of labour mobility boccurred? . ;1.II.Ill.IV.

VerticalHorizontalGeograpbicalOccupational

(A) I and In only(B) II and TIl only(C) . II and IV only(D) III and IV only

.A n outward shift in the demand curve for aproduct causes an(A) outward shift in the derived deman

curve for all factors utilized in tproduction of the commodity

. (B) inward shift 'in the derived demancurve for all factors utilized in tproduction of the commodityoutward shift in the derived demancurve for one factor utilized in tproduction of the commodityinward shift in the derived demanfor one factor utilized in thproduction of the commodity

(C)

(D)

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38. Which of the following groups isNOT apsrtof the labour force?' .(A)(B)(C)(D)

Construction workersSoldiers .NursesDiscouraged workers

39. . .Miss Bent feels unwell and visits her localdoctor who. after an examination, discovers'an incurable illness. The doctor does not tellher of his diagnosis and instead prescribescostly medicine.What economic concept does the abovestatement describe?(A) Inefficiency(B) Moral hazard(C) Adverse selection(D) Assyrnetric information

Items 40 - 42 refer ro the information below.Jack's Inc. paid wages in the amount of$20000, rent $2 000 and interest $1 500. Thebusiness realized a profit of$5 000.

40. For the factor of production, labour, howmuch did Jack's Inc. pay?(A)(B)(C)(D)

:1 1 1500$ 2 000$ 5"000$20000

41. . For the factor of production, capital, howmuch did Jack's. Inc. pay?

(A) $ 1500~)' $ '2000(C ) $ 5000(D) $20000

-:- 5' -(~2_

43.

For the factor of production, entrepreneurship,how much did lack's Inc. pay?(A)(B)(C)C D )

s 1500$ 2000$ 5000$20000

The concept of 'social welfare'. is difficult tdefine because it is

(A)(B)(C)(D)

an abstract concept and is difficulto quantifya technical concept and should bequated with individual preferences

:'I normative concept and involves"Valueudgementsa s oc ial concept and should beequated with society's preferences

44. The concept of "asymmetric information"indicates that information is

(A)(B)(C)(D)

available freelyevenly distributednot available freelyunevenly distributed

Which of the following results fromgovernment provision of education?(A)(B)(C)(D)

Amore socially efficient allocationof resourcesA less socially efficient allocation ofresourcesA decrease inmarginal social benefitsAn increase in marginal privatebenefits

IF YOU FINISH BEFORE TIME IS CALLED, CHECK YOUR vVORJ.{ONTIDS TEST.

45.