Econs P1 Mistake log

When the price of meat increased from $5 to $6 per kg, Joe decreased his purchase of meat from 40 kg to 20 kg a month. 

What was Joe's price elasticity of demand for meat? 

2.5

The table shows the amounts demanded and supplied of tomatoes at different prices. The initial equilibrium is at a price of $40.

The following year, more efficient harvesting means that the supply increases by 50% at each price. 

What will happen to the suppliers' total revenue? 

It will fall by $40.

A country wishes to increase the supply of nurses. 

What would be the most effective way of achieving this?

improving the working conditions of nurses 

Under which circumstances are households more likely to save?

C

How might a trade union increase its bargaining power? 

by restricting the entry of workers to the industry

A government collects the following revenue in a year.

What is the amount of indirect tax revenue?

$100m

In one particular year, South Sudan's population growth was 1.3% while its GDP growth was 2%. 

What is the most likely consequence of this? 

the standard of living will increase 

The diagram shows the supply and demand curves for a good. The initial market equilibrium is given at point E1. There is a change in the market that leads to a new equilibrium at E2. 

What is the cause of the change in the market equilibrium?

an increase in the price of a substitute good 

Which government policy would encourage greater international trade? 

the abolition of domestic subsidies for declining industries 

The wages of school teachers are rising. 

What is least likely to be the cause of this? 

decreased membership of teaching trade unions 

The US currently trades in oil with the UK. The discovery of new oil and gas deposits in the US will mean that its oil imports decrease and its oil exports increase. 

From the initial equilibrium point of X, which letter indicates the new equilibrium point for the US exchange rate? 

B

The diagram shows the market for a product.

Which distance shows a market disequilibrium caused by excess supply? 

U to V

What is least likely to increase the geographical mobility of labour? 

strengthened family ties and relationships

A country's Consumer Prices Index (CPI) falls from 120 to 110 in a year. 

What will be a likely effect of this fall? 

the real value of debt will rise 

The diagram shows a production possibility curve (PPC). 

Which position is most likely to lead to the greatest outward shift of the PPC?

D

What is a likely benefit of increased national specialisation? 

It reduces the cost of living. 

What would increase the strength of a trade union?

a growth in the membership

What is a principle of taxation?

fairness between taxpayers

 A government uses the labour force survey method to calculate unemployment. 

What is required under this method for a person to be classified as unemployed? 

B

A Consumer Prices Index (CPI) consists of four items. The table shows the percentage price change 

for each item over a period of a year and the weight of each item. 

Which price change will affect the level of the CPI most? 

A

What might an economist consider to be meant by the term dumping? 

foreign firms exporting products at a price below the cost of production

In the diagram, D is the demand curve for the Chinese yuan and S is the supply curve of 

the Chinese yuan. 

The Chinese central bank wishes to set the price of the yuan at P1. 

Which action would it have to take? 

buy XZ yuan

What can be concluded from the diagram? 

People are living longer over the period.

The table shows the weights attached to various categories of goods in a Consumer Prices 

(CPI) in two years.

What can be concluded from the table when comparing year 1 and year 2?

The proportion of income spent on clothing has increased. 

The table shows the distribution of the working population in millions (m) in various sectors of an 

economy over two years.

What can be concluded from the information?

Fewer people were employed in the secondary sector in year 1 than year 2. 

A country has large reserves of oil. It decides to produce a wide range of goods rather than specialise 

in oil production. 

What is not an acceptable reason in support of this decision?

Producing a wide range of goods increases the benefits from free trade. 

The table shows the average revenue of a firm at various levels of output.

What happens to total revenue as output rises?

 Total revenue rises and then falls.

The US puts a 25% tariff on Chinese steel to protect jobs in the US steel industry. 

Under which condition would this policy be most effective? 

The price elasticity of demand for Chinese steel is -2.5. 

A government wishes to reduce the surplus on the current account of its balance of payments. 

Which policy is likely to achieve this?

increasing existing import quotas 

Which government intervention would increase the geographic mobility of labour?

providing relocation expenses for workers

 Which action by employers is most likely to reduce long-term economic growth? 

replacing skilled workers with semi-skilled workers 

The price elasticity of demand for smartphones is believed to be -2.0. A manufacturer decides to cut prices by 10%. 

What will be the effect of this change in price? 

revenue will increase 

 A car-wash firm has 3 workers. Before specialisation, each worker washed 5 cars per day. After 

specialisation, 30 cars per day are washed. 

What is the percentage increase in productivity?

100%

Which statement about the factors of production is correct? 

Land is a natural resource and includes trees and fish

It is expected that consumers will use less paper money. 

What is the most likely reason for this?

More ways of making payments will be available.

The diagram shows the demand for and supply of labour in an industry. The original equilibrium 

is X. 

A trade union then negotiates a wage rate of W. 

What identifies the change in employment?

RT

What is a disadvantage of increasing international specialisation? 

Domestic firms may be uncompetitive leading to structural unemployment.

A government's revenue grew 8% to $3.25 trillion. Its expenditure was reduced to $3.69 trillion. 

What can be concluded from this? 

B

A US car dealer agrees an import price of US$25000 for a Japanese car at the current rate of 

exchange. 

The US dollar then strengthens by 10% against the Japanese yen. 

What will be the new import price paid for the Japanese car? 

US$22500 

B

C

C

C

A

A

B

C

A

B

C

D

B