Questions and Answers of Cambridge International AS And A Level Economics

a. Using a production possibility curve, explain how opportunity cost can be used to show the trade-offs involved.b. Discuss some of the problems when a planned economy makes the transition to a
a. Using examples, explain the characteristics of public goods and merit goods.b. Discuss why in many countries certain types of education and health care are provided as private goods and not as
a. Explain what you understand by ‘information failure’.b. Explain why it is necessary to know what this means when classifying goods as merit or demerit goods.
a. Explain how an equilibrium price for a product is established in the market and how it may change.b. Discuss whether a firm’s revenue would increase in response to price and income changes if
Market research has produced the following estimates of cross elasticity of demand.Branded cola and branded iced tea ............................... +1.5Branded cola and own label cola
Air Passenger Duty (APD) is a flat rate indirect tax on passengers who fly from UK airports. It is collected by the airlines who add the tax onto ticket prices. In 2009, the tax was £5 for economy
Explain why a plastic bag in many Indian cities is seen as a demerit good.India leads with bans on plastic bags. On June 20 2014, the Times of India reported that Agra was the latest city to ban the
Using a diagram, explain the effects on the market of an indirect tax on the use of plastic bags.India leads with bans on plastic bags. On June 20 2014, the Times of India reported that Agra was the
Comment on the case for introducing an indirect tax on plastic bags compared with that of banning their use in many Indian cities.India leads with bans on plastic bags. On June 20 2014, the Times of
Explain how an economy may face a deficit in its trade in goods yet have a surplus on its current account of the balance of payments.
Discuss whether a satisfactory balance of payments, a strong exchange rate and a low rate of inflation are likely to be achieved at the same time.
Between January 2002 and July 2008 the world price of rice, a staple food for many people in developing countries, rose by slightly over 300%. As shown in Figure 4.26 the price of rice changed very
Explain the causes of an increase in a current account surplus on a country’s balance of payments.
Discuss whether a reduction in the rate of interest will reduce a current account surplus on a country’s balance of payments.
a. Analyse the factors that might lead to contestability in a market.b. Discuss the extent to which a rise in contestability in a market is beneficial for consumers as well as firms.The supermarket
Many central banks use ‘inflation targeting’. Their principal aim is to achieve a particular annual rate of inflation within an acceptable range. For example, they might aim for a 2% rate of
a. Using examples, explain what is meant by a negative externality.b. Discuss the extent to which an indirect tax alone can rectify the problem of market failure due to negative externalities.
a. Using examples, explain why cost–benefit analysis is central to the decision making process in the allocation of public goods.b. Discuss some of the limitations of cost–benefit analysis in the
a. What evidence is there to indicate that the UK supermarket business is an oligopoly? What further evidence might you need to be more certain that this is the case?b. Comment on the suggestion that
As economies grow and develop, the market has less of a role and government a greater role in securing an efficient allocation of resources. Discuss the extent to which you agree with this view.
a. Analyse the likely benefits that a car manufacturing firm might gain through expanding its scale of operations. b. Discuss whether gaining these benefits will mean that the firm is maximising
In 2013 the Intergovernmental Panel on Climate Change published clear evidence that the growth in air transport was one of the main contributors to climate change.a. Using a diagram, explain the
The differences in wage rates paid in different occupations are caused entirely by the differences in the elasticity of supply of labour. The way, therefore, to overcome the differences in wage rates
a. Why may a country experience a rise in unemployment? b. Discuss whether an increase in unemployment is always harmful.
A country experiences an increase in its GDP. Discuss whether this means that its citizens will enjoy an increase in their standard of living.
In 2009, there was an economic recession in many countries. One aspect of the recession was that unemployment rose. Governments paid large subsidies to a number of industries to try to stop the rise
The main way a developing country could become a developed country is for government policy to concentrate on the protection of domestic industry and investment in infrastructure. Do you agree that
a. Explain how the impact of the Keynesian multiplier process will change if a free-market closed economy becomes a mixed economy with foreign trade. b. Analyse how a change in the equilibrium
a. Explain how economic growth can occur without the price level increasing.b. Discuss what policy measures a government might use to increase the country’s economic growth rate.