Economics short question

|Maestro|

Ok this thread is for postingeconomics short questions and only, o we can learn them all off for our leaving, I will post the first few (taken from last 4 years) in a while but feel free to add your own!

|Maestro|

2004
1. Outline FOUR factors that affect the supply of a good, other than the price of the good itself.
1. The cost of producing the product.
2. The state of the firm’s production technology.
3. The price of related / other goods.
4. Unplanned factors.
5. Government Policy such as: rates of taxation / availability of state subsidies.
6. Number of sellers in the industry.
7. Objectives of the firm.

2. Define the ‘Black Economy’ (also referred to as the ‘Underground Economy’) and state
ONE example to support your definition.

All economic activity which goes unrecorded / is not included in the National
Income accounts.
Example: Any appropriate example, such as:
1. Trading in goods/services in a black market.
2. People engaged in ‘nixers’.
3. Under-declaration of income.


3. Name the economist PRIMARILY associated with the following ideas:
(i) Iron Law of Wages Robert Thomas Malthus
(ii) Law of Comparative Advantage David Ricardo
(iii) Laissez Faire Adam Smith
(iv) Liquidity Preference Theory John Maynard Keynes


4. Identify FOUR features of an oligopolistic market:
1. Few Sellers in the industry*
2. Interdependence between firms*
3. Product Differentiation occurs / firm sells close substitutes*
4. Barriers to entry exist – such as Limit Pricing.
5. Collusion may occur.
6. Non-price competition is more common than price competition.
7. Pursuing objectives other than profit maximisation.
8. Existence of Price Rigidity / ‘Sticky Prices’.



5. State THREE limitations on the power of the banks to create credit.
1. Availability of creditworthy customers
Loans can only be given to those people who are in a position to repay them.
2. Availability of Cash Deposits
A bank can only give loans provided that they can attract cash deposits.
3. Customers' Demands for Cash [ Liquidity Ratios – PLR & SLR]
The bank must keep sufficient cash so as to be able to meet the demands of its customers for cash
4.[European] Central Bank guidelines
Commercial banks must note the guidelines of the Central Bank.
5. Demand for loans by customers.
A bank is limited in the amount of loans it creates by the demand for loans.
In a recessionary period the demand for loans will fall.


6. Define the Law of Diminishing Marginal Utility and state TWO assumptions underlying the law.
Definition: 9 marks graded
Assumptions: 8 marks: 2 x 4 marks each.
The law of diminishing marginal utility states that as a consumer consumes
additional units of a good their marginal utility for this good will eventually
decline.
Assumptions:
1. It applies only after a certain point called the origin.
2. It does not apply to addictive goods.
3. Sufficient time has not elapsed for circumstances to change i.e.
change in tastes / change in incomes/ change in the nature of the product/
no gap in time between the consumption of successive units.




7. Outline TWO private benefits and TWO social benefits of the possible decline in the consumption of
tobacco products, which is being promoted by government policies.
Private benefits:
1. Decreased spending on tobacco / consumer had a higher disposable income
2. Opportunity cost: the consumer can now use this income for something else.
3. Lower insurance premium due to the reduction in risk
4. Personal: easier for the person to socialise / lower cleaning bills/ more attractive
5. Healthier person: person may be ill less frequently / greater life expectancy.
Social benefits:
1. Healthier population as people have less respiratory illnesses.
2. Reduction in health costs – less people requiring medical care.
3. Environment benefits: less pollution / less litter.
4. Effect on economic activity: more people visiting restaurants / pubs – upturn in
economic activity.
5. More productive workforce: less illnesses /less time off – higher productivity.



8. “There is no opportunity cost to a firm in using an asset which it already owns”. True / False
(Place a circle around your choice and give a one sentence explanation of your answer).
Correct Answer: False: 1 mark
Explanation: 16 marks graded.
The asset could be sold and the money invested or
The asset could be rented out and an income earned



9. State FOUR reasons why different categories of workers are paid at different wage rates.
1. The Marginal Revenue Productivity of the worker.
2. Different skills attaching to different jobs / degree of specialisation involved.
3. Length of training period involved.
4. Educational qualifications.
5. Nature & Conditions of the job / degree of risk involved.
6. Negotiating strength of the workers trade union / Benchmarking mechanism.
7. Tradition attaching to certain jobs.
8. Possession of innate talents.
9. Gender Bias: discrimination in relation to payment to women in the workforce.
10. Monetary / non-monetary benefits attaching to the job.