Each and every parts withs its explanation....give sure answers.
SECTION A (100 marks) Answer six of the nine short response type questions in the spaces provided. 1. Define the term 'opportunity cost'. State one example of an opportunity cost facing the Irish Government. Definition: Example: (16 marks) 2. If the marginal cost (MC) is less than average cost (AC), then AC must be falling when output increases. (i) Is this statement true? Circle the correct answer. YES / NO (ii) Explain the reason for your answer: (16 marks) 3. Define the term 'structural unemployment' and outline one policy response that the Irish Government could take to reduce it. Definition: Government Policy: (16 marks) Page 2 of 8 SECTION A (continued) 4. Explain the meaning of the term 'complementary goods' (i.e. joint demand). State one example.5. State three assumptions/characteristics underlying the theory of monopoly. (i) (ii) (iii) (16 marks) 6. Outline two possible economic effects for the Irish Economy of the euro (() appreciating in value against the US dollar ($). (ii) (17 marks) 7. Outline two ways in which the return to the factor of production enterprise differs from the return to other factors of production. (i) (ii) (17 marks) OVER Page 3 of 8 SECTION A (continued) 8. Ireland recently emerged from the EU/IMF/ECB 'Troika Bailout Programme'. (December 15" 2013) Outline two possible economic implications for the Irish economy of having exited this programme. (ii) (17 marks) 9. Outline two possible social costs and two possible social benefits of an investment by 'EirGrid' in upgrading Ireland's electricity network by erecting high-voltage power lines (pylons) Social Costs:1. (a) No of Units Consumed 1 2 3 4 5 Total Utility in Units/Utils 20 45 60 70 75 Marginal Utility in Units/Utils 20 25 15 10 5 (i) State and explain the law illustrated in the above table. (ii) Outline two assumptions underlying this law. (25) (b) (i) State the 'Law of Supply', and illustrate with a labelled diagram. ( ii) Explain how technical progress affects the supply curve. (iii) Outline, with the aid of labelled diagrams, two other factors that would cause a shift in the supply curve. (30) (c) Macklemore announces a concert in Ireland at a venue with a maximum capacity of 80,000 people. The tickets are priced at (65 and the concert sells out in hours. (i) Draw one labelled diagram, showing a market demand curve and a market supply curve that would be consistent with the above information. Explain your answer. (ii) Explain, using the concept of Consumer Surplus, why it might make sense for the concert promoters to have different ticket prices (e.g. VIP section, seating section and standing section) for this concert. (20) [75 marks] 2. (a) (i) State and explain three assumptions underlying the theory of imperfect competition. (ii) Explain why a firm's demand curve under imperfect competition differs from a firm's demand curve under perfect competition. (25) (b) (i) Explain, with the aid of a diagram, the long run equilibrium of a firm in imperfect competition. (ii) With reference to your diagram in (b) (i) explain why the firm is not making socially efficient use of scarce resources. (30) (c) "A few large retailers (e.g. Tesco, SuperValu, Dunnes Stores, Aldi, Lidl) dominate the Irish grocery market at present." Suggest a market structure which most closely reflects this situation. Explain your answer. (20) [75 marks] Page 5 of 8 3. (a) (i) Define the categories of Price Elasticity of Demand (PED): elastic, inelastic and unit elastic. (ii) State three factors that affect PED and explain how each factor affects it. (30) (b) A consumer/motorist buys 20 litres of petrol when the price is (1.60 per litre. When the price increases to (1.70, as a result of an increase in carbon tax, the consumer buys 19 litres. Calculate the consumer's Price Elasticity of Demand (PED). (Show all your workings.) Is this demand for petrol price elastic or price inelastic? Outline the implication of your answer for government revenue. (20) (c) A firm is considering a change to its product's price. It conducts market research which reveals that the Price Elasticity of Demand (PED) for the product is -2.5. Use this information to answer the following question: (i) If the firm wishes to maximise total sales revenue, should it lower or raise the price of the product? Explain your answer. The market research also reveals Income Elasticity of Demand (YED) for the product is +4.5. Use this information to answer the following question: (ii) In the case of an economy which is expected to remain in recession for the next five years, what, if any, will be the likely impact on the demand for the product? Explain your answer. (25)4. (a) Explain, with the aid of an example, each of the following terms: Derived Demand Transfer Earnings . . Supply Price Economic Rent. (20) (b) (i) Outline two economic characteristics of 'land'. (ii) Discuss three economic factors which influence a firm's decision on where to locate its operations within Ireland. (25) (c) (i) State and explain three factors that caused the price of residential property to fall considerably in Ireland in the years following 2007. (ii) Mortgage arrears (i.e. the inability to meet mortgage loan obligations) is the biggest single personal debt issue for many households. Discuss one possible economic impact of mortgage arrears on each of following: the household . the banking sector the Irish Government. (30) [75 marks] Page 6 of 8 . (a) The following table shows the level of National Income (Y), Consumption (C), Investment (1), Government Spending (G), Exports (X) and Imports (M) for 2013 and 2014. Y C G X M 2013 E80,000 E10,000 640,000 E100,000 E120,000 2014 E90,000 656,000 E15,000 E34,000 E1 10,000 E? Use this data to calculate the following: (Show all your workings.) (i) The level of Consumption in 2013 (ii) The Marginal Propensity to Consume (MPC) (iii) The level of Imports in 2014 (iv) The Marginal Propensity to Import (MPM). (20) (b) "Ireland heads Forbes' list of the best countries for business." (Forbes Magazine Dec 4 2013) Discuss the economic benefits Multinational Companies (MNCs) can bring to a small economy such as Ireland. (20) (c) Economists use Gross Domestic Product (GDP) and Gross National Product (GNP) as measures of economic activity. (i) Define each of the underlined terms. (ii) Which of these terms do you consider to be a more useful measure of economic activity for Ireland? Explain your answer. (iii) Discuss three limitations of national income statistics. (35) [75 marks] 6. (a) (i) State and explain four current economic aims/objectives of the Irish Government. (ii) Outline two possible conflicts that could arise between some of these Government aims/objectives. (30) (b) Discuss arguments for and against the privatisation of state assets. (20)(c) In The Irish Times (November 2013) the economist Joseph Stiglitz predicted a "lost decade" for the Irish economy, due to the extended period of austerity. (Austerity refers to government measures introduced to reduce a Budget Deficit.) Outline four possible economic consequences for the Irish economy arising from the austerity measures introduced in recent Irish Government budgets. (25) [75 marks] Page 7 of 8 7. (a) (i) Distinguish between the terms 'economic development' and 'economic growth' with reference to Less Developed Countries (LDCs). (ii) Outline three characteristics of LDCs. (25) (b) (i) Describe three types of foreign aid available to LDCs. (ii) Discuss why foreign aid may not always result in economic growth in LDCs. (25) (c) "The World Trade Organisation (WTO) is the only international organisation dealing with the global rules of trade between nations." (i) Outline two economic benefits claimed for 'free trade'. (ii) Outline three reasons why countries might choose to impose barriers to free trade. (25) [75 marks] 8. (a) Explain the relationship between a government Budget Deficit and the National Debt. (20) (b) "The Irish Tax system has evolved over time to reflect changing economic and social conditions and will need to be equally responsive to new developments in the future." (Commission on Taxation Report, 2009) Discuss Adam Smiths' four Canons of Taxation in his book, An Inquiry into the Nature and Causes of the Wealth of Nations (1776). (ii) Outline two other principles which could be considered in a modern tax system. Justify your answers. (35) Outline possible economic consequences of the Irish Government shifting the burden of taxation from direct taxation to indirect taxation. 20) [75 marks]
