1. (a) The data below represents the market demand and the market supply schedules for the soft

drink 'Quencher'.

Price

Quantity Demanded

('000 units)

Quantity Supplied

('000 units)

2.00 40 5

2.25 30 10

2.50 20 20

2.75 10 30

3.00 5 40

(i) Using the above data, draw the diagram showing the market demand and market supply

curves for the soft drink 'Quencher'. Clearly mark the point of equilibrium and the

equilibrium price and quantity.

(ii) Explain what it means for the market 'to be in equilibrium'.

(iii) Assume costs of production fell, resulting in an extra 20,000 units supplied at each

of the above listed prices. With reference to your diagram in 1(a) (i) above and assuming

that demand remains unchanged, draw the new supply curve. Clearly indicate the new

point of equilibrium and the new equilibrium price and quantity.

(b) (i) Outline four factors which affect price elasticity of demand (PED).

(ii) The PED for the soft drink 'Quencher' has been calculated at -3.8

Using your knowledge of PED, explain the economic meaning of this figure.

(c) Many health advisors wish to reduce the consumption of soft drinks. Advise the Minister for

Health and Children on possible economic actions that the Government could take to reduce

the consumption of soft drinks.

2. (a) (i) State and explain three assumptions underlying the theory of monopoly.

(ii) Outline two possible advantages of monopoly as a market structure.

(b) Iarnrd Eireann (Irish Rail) is the state monopoly in the provision of rail transport in Ireland. It

operates a system of price discrimination in setting some of its prices.

(i) Explain the underlined term, giving one example as practiced by Iarnrd Eireann.

(ii) State and explain three conditions necessary for price discrimination to take place.

(c) Using suitably labelled diagram(s), compare the long run equilibrium position of the

monopoly firm with that of a perfectly competitive firm (assuming both operate under the same

cost conditions) under the following headings:

Price and Output;

Profits;

Efficiency.

3. (a) With reference to the factor of production labour, explain the following terms:

Derived Demand;

Marginal Revenue Productivity;

Wage Drift;

Cyclical Unemployment.

(b) (i) State and explain four factors which influence the efficiency of labour as a factor of

production.

Recently the Organisation for Economic Cooperation and Development (OECD)

recommended that lower wages are necessary to restore stability to the

Irish economy and that consideration should be given to reducing the National Minimum

Wage over time.

(ii) Outline one possible economic advantage and one possible economic disadvantage, to

the Irish economy, of reducing the National Minimum Wage.

(c) Ireland's 'Black Economy' (underground economy) activity results in a loss of up to 6.1bn to

the Exchequer annually, according to the economist Friedrich Schneider.

(i) State and explain three economic effects of this activity in Ireland.

(ii) Outline two economic measures the Irish Government could take to discourage this

activity.

4. (a) "Next year, almost half of income earners will pay no income tax and 4% of income earners

will pay almost half of the total tax yield".

(Minister for Finance, Budget Statement, 9th December 2009).

The above situation is occurring at a time when taxation revenues have fallen considerably

and there is a debate about the need to broaden the tax base.

(i) Explain briefly the underlined terms.

(ii) Discuss the characteristics of a good taxation system.

(b) The Irish government introduced a carbon tax in its latest Budget (9th December 2009).

(i) Is this tax an example of a progressive or a regressive tax? Explain your answer.

(ii) State and explain two possible economic advantages and two possible economic

disadvantages of the new carbon tax.

(c) At end of December 2008 the Irish National Debt amounted to approximately 50.4bn and at

the end of December 2009 it was approximately 75bn.

State and explain four problems associated with the Irish National Debt.

5. (a) Given that Gross National Product at Current Market Prices is 200m, price subsidies

5m, depreciation 12m and indirect taxes 30m.

Calculate the value of each of the following: Show all your workings.

(i) Gross National Product at Factor Cost;

(ii) Net National Product at Factor Cost/National Income.

(b) Explain the economic effect which each of the following could have on the level of GNP at

Market Prices:

(i) a reduction in the general level of VAT;

(ii) a reduction in the subsidies paid to farmers.

(c) (i) Outline the main uses of National Income Statistics.

(ii) State and explain four reasons why care should be taken when using National Income

Statistics as a measure of economic performance of a country.

6. (a) It has been suggested that the main commercial (retail) banks in Ireland should be

nationalised.

(i) Explain the underlined terms.

(ii) Outline two possible economic arguments for and two possible economic arguments

against the nationalisation of the banks.

(b) (i) State and explain what you consider to be the three most important economic aims of

the Irish Government.

(ii) Outline two examples of possible conflicts between government economic

aims/objectives.

(c) The economist Milton Friedman was regarded as one of the major thinkers of the

monetarist school of economic thought.

Outline four features of 'Monetarism'.