Rustomjee Cambridge International School & Junior College
Second Term Examination(2012-13)SUBJECT: Economics GRADE: 9
Question No.
Marks Obtained
---Section A
I) Choose the correct alternative (5 marks)
1 Many countries have been extending the role of market forces in their economies.
What is intended to result from this action? A greater economic efficiency
B greater equality of income C less specialisation
D more government control
2. The diagram shows the supply and demand curves for a good. The market is in equilibrium at point X. What would be the new equilibrium situation if this good were successfully advertised and the cost of raw materials for the good rose?
3.The table shows Rover car sales in the UK in 1999 and 2000. In 1999 the sales followed the usual seasonal pattern.
Name: ______________________________________Roll No._______
In which month of 2000 did an aggressive price cutting policy disturb the usual pattern?
A January B March C April D May 4. A product has totally inelastic price elasticity of demand.
What will happen to total revenue if the price of the product rises by 10%? A. It will fall by 10%.
B. It will fall to zero.
C. It will remain unchanged. D. It will rise by 10%.
5. Changes in the market for gasoline (petrol) in Zimbabwe in 2000 resulted in fuel shortages and long queues. Which combination of changes would have been certain to cause this situation?
6. In the 1970s and 1980s coffee was a high proportion of Brazil’s exports. Brazil is now also a major exporter of sugar, orange juice, tobacco and beef. What is this change an example of?
B economies of scale
C expansion of the secondary sector D specialisation
7. Which of the following factors is likely to cause wages in an occupation to be low?
A extra responsibility B rising unemployment C the need for special skills D unpleasant working conditions
8. On completing your studies, you decide you want to work in an organisation which is big enough to give you a chance of promotion, but where shift work will not normally be required. Which of the following would be the best one to choose? A a government office
B a hairdressing salon
C a hospital emergency department D a local electrician’s
9. Nazmin Uddin works in a local office as a secretary three days a week. She lives with her parents in a small apartment. Meer Ali owns a successful fitness centre that employs about twenty people and lives in a large house.
Which is likely to be true?
A Nazmin spends a smaller proportion of her income than Meer. B Nazmin saves most of her income.
C Nazmin would find it easier than Meer to borrow money. D Nazmin has a lower disposable income than Meer.
10. In a country, male workers on average earn more than female workers, although male and female workers receive equal pay for equal work. What could explain this?
A Female workers are more experienced.
C Male workers are more likely to be in trade unions. D Male workers have fewer qualifications.
II) Answer the following
1. Private home ownership is increasing in China. For years the urban Chinese relied on overcrowded housing rented from the state and often waited a long time to have their own apartment. Now, with the increase in the market economy, the government is encouraging city dwellers to buy their own homes by giving cheap loans and tax-relief. Home buying will help China’s economy. New home-owners need to spend money on furniture, appliances and decorating. GDP grew by 8% in 1999, of which the housing industry contributed about a fifth. The housing changes will affect social and political issues as well as the economy. In the old system people had to live close to their work, and it was difficult to change jobs because no other housing was available. Single people had no hope of being allocated an apartment. Now anyone with money can buy a home and choose where they wish to live.
(a) Explain what is meant by the market economy. [4] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________
(b) Explain the meaning of complements and substitutes, giving an example of each from the passage. [4] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________
__________________________________________________________________ __________________________________________________________________ (c) Identify four factors that might influence a worker’s choice of occupation. [4] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (d) How far do you think the change in the provision of housing is likely to affect a worker’s choice of occupation? [3] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (e) Discuss whether the change in the provision of housing is likely to benefit everybody. [5] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________
2(a) What is meant by a retail price index? [3] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________
__________________________________________________________________ __________________________________________________________________ (b) Explain how a retail price index is calculated. [7] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ (c) Discuss the possible causes of inflation. [10] __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________ __________________________________________________________________
A) For each question there are four possible answers A, B, C and D. Choose the one you consider correct. (5)
1) A country imports oil which is used in the production and distribution of goods. The country has also experienced a rise in incomes which has resulted in a large increase in the demand for goods, some of which it imports. What is likely to happen to the country’s balance of trade in goods and to the price of oil?
2) What would cause disposable incomes to become less equal?
a) increased employment c) increased welfare benefits b) more progressive taxes d)more regressive taxes
3) Which occupation would suit a person who wanted to work in the public sector? a) a journalist for an independent newspaper
b) a nurse in a government hospital
c) a sales manager for a multi-national food business d) a teacher in a private fee-paying school
4) In 2005, world oil prices increased significantly. What effect would an increase in oil prices have on a firm that transports products for other firms?
a) average fixed costs would increase b) profits would increase
c) total fixed costs would increase d) variable costs would increase
5) Which statement is correct?
a) Average revenue is total revenue divided by output.
balance of trade in goods price of oil
A worsens worsens
B improves falls
C worsens rises
b) Fixed cost is total cost plus variable cost.
c) Total cost is variable cost multiplied by fixed cost. d) Total revenue is fixed revenue minus variable revenue. 6) The table shows earnings and total income tax paid per annum.
Which type of tax system does this illustrate?
a) Indirect c) progressive b) Proportional d) regressive
7) Which policy would best enable a government to encourage greater specialisation in
the use of its country’s resources?
a) encouraging diversification in industry b) protecting small businesses
c) reducing tariffs on imports
d) subsidising job creation in rural areas
8) What is not an aim of government economic policy?
a) economic growth c) full employment b) interest rates d) stable prices
9) What directly sets a fixed limit on the quantity of goods which can be imported? a) administrative regulations c) foreign exchange controls
b) Quotas d) tariffs 10) The introduction of a tariff on imported goods is likely to
a) ensure that the domestic industry becomes more efficient. b) increase the demand for domestically produced goods. c) reduce the price of domestically produced goods. d) reduce the price of imported goods into a country.
earnings $ total income tax paid $
5000 1000
8000 2000
B) Three government policy aims are the redistribution of income, economic growth and price stability.
(a) Explain what these aims mean. [6] (b) What might a government do to try to redistribute income? [6] (c) How might a government affect economic growth in a country? [8]
C) Answer this question.
Airline Industry Losses
At an international conference, at which 95 % of the world’s airlines were
represented, it was said that the global airline industry would have a $6 billion loss for the year 2005. Only parts of the industry were said to be profitable. Although there had been a growth in travel and revenue in Asia and Europe, increased costs in North America and high fuel prices were estimated to outweigh that. It was stated that losses from 2001 to 2004 had already exceeded $36 billion. Globally, non-fuel costs were forecast to fall by 4.5 % in 2005. This was particularly the case in Asia where labour costs were low. European airlines were recording profits due to increased traffic and some industry mergers. However, the biggest obstacle to growth in the industry was North America, where airlines recorded large losses. In North America labour costs and airport
taxes were high. In addition, competition from the smaller low-cost airlines
charging cheap fares was causing a fall in the profits of the larger companies. The airline industry also criticised the high taxes, averaging 26%, which are imposed on ticket sales in North America. To try to improve profits the industry launched some major projects to cut costs, which included the complete
replacement of paper tickets with electronic tickets by 2007.
1) Calculate the estimated average yearly loss between 2001 and 2005. Show your working. [2] 2) Identify four causes of the airline industry’s losses in North America. [2] 3) Discuss whether (i) fuel and (ii) labour would be classified as a fixed or a variable cost for the airline industry. [4] 4) How might the replacement of paper tickets affect the demand for each of the factors of production by the airlines? [4] 5) A company is making losses. Discuss what policies it might adopt.
D) How might a reduction in taxation help any two macro-economic aims of a government? [5]
