EcoHL P1 M02

EcoHL P1 M02 - c 1 hour IB DIPLOMA PROGRAMME PROGRAMME DU...

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ECONOMICS HIGHER LEVEL PAPER 1 Thursday 16 May 2002 (afternoon) 1 hour M02/330/H(1) c IB DIPLOMA PROGRAMME PROGRAMME DU DIPL&ME DU BI PROGRAMA DEL DIPLOMA DEL BI 222-031 23 pages INSTRUCTIONS TO CANDIDATES ! Do not open this examination paper until instructed to do so. ! Answer all the questions. ! For each question, choose the answer you consider to be the best and indicate your choice on the answer sheet provided.
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1. The diagram below shows the production possibility curve for an economy. Quantity of apples Quantity of pears A B C D 0 E Which one of the following movements does not involve an opportunity cost? A. A to B B. B to C C. C to D D. D to E 2. A mixed economy may be defined as one in which resource allocation is A. dependent on the decisions of producers and consumers. B. designed to meet the needs of all. C. a mix between the production of consumer and capital goods. D. carried out partly by the state and partly by market forces. & 2 & M02/330/H(1) 222-031
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3. The table below shows the demand and supply schedules for oranges. 100 220 1 140 200 2 180 180 3 220 160 4 Quantity supplied Quantity demanded Price (pesetas) As a result of a fall in production costs, supply rises by 60 at all prices. What would be the new equilibrium price? A. 4 pesetas B. 3 pesetas C. 2 pesetas D. 1 peseta 4. The diagram below shows the supply and demand curves for butter. & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & D S 0 P 1 P 2 Q 1 Q 2 Q 3 Quantity of butter Price of butter If a government wished to maintain a target price of OP by intervening in the market by 2 buying or selling stocks of butter, it would A. sell quantity Q Q . 13 B. 23 C. buy quantity Q Q . D. & 3 & M02/330/H(1) 222-031 Turn over
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5. Which one of the following statements about the price system is not true? A. Factor mobility is necessary for the reallocation of resources to occur. B. Low prices signal to producers the relative strength of consumer demand. C. The price system ensures that the needs of all members of society are met. D. High prices and profits tend to attract factors of production from less productive activities. 6. Which one of the following provides the best definition of a merit good? A merit good is a good which A. cannot be supplied by the free market. B. has to be provided by the government because of the free-rider problem. C. is provided free of charge by the government. D. is likely to be underprovided by the free market. & 4 & M02/330/H(1) 222-031
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7. The diagram below shows all the costs and benefits of producing good X. & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & & Cost and benefits ($) 0 VW X Y Output MPB MSB MPC MSC MPC = Marginal private cost MSC = Marginal social cost MPB = Marginal private benefit MSB = Marginal social benefit The optimal output of good X for society would be A. OV. B. OW. C. OX. D. OY. & 5 & M02/330/H(1) 222-031 Turn over
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8. The data below indicates an index of real GDP in 1999 for individual countries in transition (1989 = 100 ).
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EcoHL P1 M02 - c 1 hour IB DIPLOMA PROGRAMME PROGRAMME DU...

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