economics 404

3. (a) Explain the following terms in relation to the factor of production labour. (i) Participation rate (ii) Real wages (iii) Labour Productivity (iv) Derived demand [20] (b) (i) Discuss the factors that impact on the supply of labour. (ii) Outline two challenges currently facing the Irish labour market and state one appropriate government policy response for each challenge identified. [35] (c) Discuss reasons why different workers are paid different wage rates. [20 [75 marks] 4. (a) (i) Distinguish between the short-run and the long-run production periods. (ii) In the short-run firms may stay in the industry even if they are making a loss. Explain this statement. [15] (b) (i) Explain the terms marginal revenue and marginal cost. The table below shows costs and revenue data of a firm. Output Price (() Total Revenue (() Total Cost (() 20 20 42 2 20 40 60 3 20 60 77 20 80 97 20 100 130 Use the data in the table above to: (ii) Calculate the marginal revenue and marginal cost at each output level. Show your workings. (iii) Draw one graph showing the marginal revenue and marginal cost and identify the profit-maximising level of output for this firm. Explain your answer. [30] (c) "Overall Ireland's improving competitiveness performance over the period 2011 to 2014 has been central to the recovery in employment and economic growth. " (Source: The National Competitiveness Council, December 2015) (i) Outline the factors that influence the competitiveness of firms in Ireland. (ii) Discuss three policies that the Irish government could consider to improve the competitiveness of firms in Ireland. [30] [75 marks] Page 6 of 12SECTION B (300 marks) Answer four questions. Write the answers in your answer book(s). Do not write answers to Section B on this question paper. All questions carry equal marks (75 marks). Note the sub-divisions in the questions. 1. (a) (i) Outline four factors that determine the supply of a good or service. (ii) Explain the difference between a movement along a supply curve and a shift in a supply curve. Use appropriate diagrams to illustrate your answer. [35] (b) Read the following statements and indicate if they are TRUE or FALSE. Explain your answer in each case. (i) The cross price elasticity of demand for substitute goods has a negative value. ii) Price Elasticity of Demand (PED) tends to be more elastic in the long-run than in the short-run. (iii) When demand for a good is price inelastic, a reduction in price will increase total sales revenue. (iv) Income elasticity of demand (YED) for luxury goods is positive. [24] (c) Using the concepts of demand and supply explain, with the aid of a labelled diagram, how a shortage of tickets for a major concert may arise. The concert venue has a maximum capacity of 30,000 people. [16] 175 marks] 2. Cadbury, Mars and Nestle dominate the chocolate industry in the European Union. (a) (i) State a market structure which most closely reflects the situation above, giving a reason for your answer. (ii) Outline two other key characteristics of this market structure. (iii) Explain, with the aid of a labelled diagram, the likely shape of the demand curve in this market structure. [35] (b) (i) If a large US chocolate manufacturer entered the EU chocolate market, outline the possible economic impacts of greater competition in this market. (ii) Outline two factors which could make it difficult for this US chocolate manufacturer to enter the EU chocolate market. [25] (c) Explain why small firms succeed in some markets while other markets are dominated by large firms. [15] [75 marks]SECTION A (continued) 7. The primary aim of the ECBs monetary policy is to maintain price stability. (a) Define the term monetary policy. (b) Outline two benefits of price stability for the Irish economy. (i) (ii) (17 marks) 8. (a) Outline two possible economic effects of the Irish government introducing a levy on home insurance premiums to help address damage caused by the recent flooding crisis in Ireland. (i) (ii) (b) Suggest one alternative method for addressing the flooding crisis in Ireland. (17 marks) 9. "The national minimum wage is increased by 50 cent, bringing it to (9.15 in a bid to make work pay." (Source: Irish Independent, October 2015) Outline three possible economic impacts of this measure on the Irish economy. (i) (ii) (iii) (17 marks) Remember to return this question paper with the answer book(s) used to answer the questions in Section B Page 4 of 12SECTION A (continued) 4. Firms within the aircraft industry can benefit from economies of scale. Explain the term economies of scale and provide one example for a firm in the aircraft industry. Explanation Example (16 mark 5. (a) Outline two possible effects on the Irish economy of high levels of youth unemployment. (i) (ii) (b) State one economic policy the government could introduce to reduce youth unemployment. (16 marks) 6. The table below shows the annual average level of income in a country and the corresponding demand for Product A for two years. Year Income (() Product A (units) Year $7,000 100 Year 2 63,000 200 (i) Calculate the income elasticity of demand (YED) for Product A Show your workings. Workings: (ii) Using your knowledge of YED, explain the economic meaning of this figure you calculated in (i) above. Answer: (17 marks) Page 3 of 12SECTION A (100 marks) Answer six of the nine short response type questions in the spaces provided. 1. The diagram below shows a firm operating under conditions of perfect competition in the short run. Price (a) What is represented by the lines numbered 1 to 3? Use the answer box provided. Number Name 2 3 Quantity (b) (i) Show clearly on the diagram the total supernormal profit of the firm. (ii) Explain the term supernormal profit (16 marks) 2. Define the Law of Diminishing Marginal Returns and illustrate this with a suitable example. Definition Example (16 marks) 3. Outline two ways the Irish government could improve the mobility of labour in order to reduce unemployment. (i) (ii) (16 marks) Page 2 of 12