EcoHL P1 M04

EcoHL P1 M04 - ECONOMICS HIGHER LEVEL PAPER 1 Thursday 20...

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Unformatted text preview: ECONOMICS HIGHER LEVEL PAPER 1 Thursday 20 May 2004 (afternoon) 1 hour M04/330/H(1) c IB DIPLOMA PROGRAMME PROGRAMME DU DIPLME DU BI PROGRAMA DEL DIPLOMA DEL BI 224-034 20 pages INSTRUCTIONS TO CANDIDATES y Do not open this examination paper until instructed to do so. y Answer all the questions. y For each question, choose the answer you consider to be the best and indicate your choice on the answer sheet provided. 1. In the study of economics, the term utility refers to A. the alternate use of resources by entrepreneurs. B. single use goods. C. rational economic behaviour by consumers and producers. D. the satisfaction derived from consuming a good. 2. An economic good is one that A. has an unlimited supply. B. involves an opportunity cost when consumed. C. is taxed at a higher rate because of negative externalities. D. is not found in a planned economy. 3. The following graph shows the production possibility curve of a given country. Quantity of food- - - - - A B Quantity of machinery The move from point A to point B would represent A. increasing opportunity costs in terms of food. B. decreasing opportunity costs in terms of machinery. C. constant opportunity costs in terms of food. D. no opportunity cost. 2 M04/330/H(1) 224-034 4. Which of the following is a characteristic only found in a planned economy? A. Limited private ownership of resources. B. Government involved in the allocation of resources. C. Taxation used to redistribute income from the wealthy to the needy. D. Government intervention when market failure occurs. 5. The diagram below represents the market for coal. Price of coal 0 Quantity of coal 1 Q 2 Q Which of the following will cause the supply of coal to increase from ? 1 2 S to S A. A decrease in the price of coal. B. More efficient methods of mining coal. C. An expansion in the demand for coal. D. A rise in the price of substitutes for coal. 6. Which of the following would best be described as a merit good? A. Street lighting B. Motor cars C. Welfare provision D. Alcoholic drinks 3 M04/330/H(1) 224-034 Turn over 1 S 2 S 1 D 1 D 1 P 2 P 1 S 2 S 7. The diagram below represents the market for oil. Price of oil Quantity of oil 1 Q 2 Q A way to internalize the externalities associated with the production of oil would be to A. impose an environmental tax on the price of oil equivalent to AC. B. extend property rights to those affected by pollution from oil consumption equal to BC. C. increase quotas on the production of oil from to . 1 0Q 2 0Q D. issue pollution permits up to, but not beyond, a level equal to . 2 0Q 8. The table below shows the costs and benefits from producing different quantities of a chemical. 130 190 180 800 150 170 160 700 160 160 130 600 165 130 100 500 Marginal social benefits ($000) Marginal social cost ($000) Marginal private cost ($000) Output of chemicals (tons per week) In order to achieve the best outcome from societys point of view, A. output of the chemical should be completely banned.output of the chemical should be completely banned....
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EcoHL P1 M04 - ECONOMICS HIGHER LEVEL PAPER 1 Thursday 20...

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