Economics SL P1

Economics SL P1 - c IB DIPLOMA PROGRAMME PROGRAMME DU...

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ECONOMICS STANDARD LEVEL PAPER 1 Thursday 20 May 2004 (afternoon) 1 hour M04/330/S(1) c IB DIPLOMA PROGRAMME PROGRAMME DU DIPLÔME DU BI PROGRAMA DEL DIPLOMA DEL BI 224-043 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.
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1. Which of the following represents a positive economic statement? A. The recent increase in interest rates will help to reduce inflation. B. Unemployment is a more serious economic problem than inflation. C. Government expenditure on health and education should be raised. D. The proportion of tax revenues raised from indirect as opposed to direct taxes is too high. 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 - - - - - AB 0 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/S(1) 224-043
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4. Which of the following is considered to be an essential characteristic of the price mechanism? A. Resources are allocated in response to price changes. B. Buyers and sellers set prices according to their preferences. C. A socially optimum pattern of resource allocation is achieved. D. Goods and services produced always reflect consumer sovereignty. 5. The diagram below represents the market for oil. Price of oil 0 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 – 3 – M04/330/S(1) 224-043 Turn over D A B C S + Externalities S + Externalities D S S
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6. The diagram below represents the market for rail travel in country X. Price ($) 0 D S S D Quantity per period The shift of the demand curve from D to D could be explained by the government’s decision 1 to A. expand its road building programme. B. abolish motorway/freeway tolls. C. reduce rail subsidies. D. impose a tax on car parking at work-places. – 4 – M04/330/S(1) 224-043 1 D 1 D
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7. The diagram below represents the market for an agricultural product in which a floor price of is set. 2 0P Price ($1) 0 Q Quantity per period 1 Q 2 Q If the government buys up all the surplus stocks at the floor price, what would the farmers’ total income be?
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This note was uploaded on 09/30/2011 for the course CHEM 102 taught by Professor Tina during the Spring '11 term at Global.

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Economics SL P1 - c IB DIPLOMA PROGRAMME PROGRAMME DU...

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