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Economics A Level MCQ 18-20.pdf - Cambridge International...

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This document consists of10printed pages and2blank pages. IB18 03_9708_32/2RP © UCLES 2018[Turn over *0538215574* Cambridge International Examinations Cambridge International Advanced Subsidiary and Advanced Level ECONOMICS 9708/32 Paper 3Multiple ChoiceFebruary/March 2018 1 hour 15 minutes Additional Materials:Multiple Choice Answer Sheet Soft clean eraser Soft pencil (type B or HB is recommended) READ THESE INSTRUCTIONS FIRST Write in soft pencil. Do not use staples, paper clips, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you. DONOTWRITE IN ANY BARCODES. There arethirtyquestions on this paper. Answerallquestions. For each question there are four possible answersA,B,CandD. Choose theoneyou consider correct and record your choice insoft pencilon the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully. Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet.
2 © UCLES 20189708/32/F/M/181In cost-benefit analysis the term net social benefit refers to Aprivate benefit plus social benefit. Bsocial benefit minus private benefit. Csocial benefit minus private cost. Dsocial benefit minus social cost. 2A government school is built by private builders in a residential neighbourhood. The builders ignore the effects of noise and disturbance. Why does a free market fail to take into account these external costs of building the school? AEducation is a public good which benefits society. BFew people who live near the school object to the building. CThe government believes schools should be built privately. DThese costs are not paid for by the builders. 3In all market structures, what must firms equate to ensure allocative efficiency? Aaverage cost and average revenue Baverage cost and marginal revenue Cmarginal cost and average revenue Dmarginal cost and marginal revenue
3 © UCLES 20189708/32/F/M/18[Turn over 4In the diagram a consumer’s budget line shifts from JK to GH. O KH J G quantity ofgood Y quantity of good X Which statement must be correct? AThere has been an increase in the consumer’s money income. BThere has been a decrease in the consumer’s real income. CGood Y has become relatively more expensive. DThe price of good X has increased. 5The table shows substitution and income effects for a normal good and for an inferior good as the price of the good changes. Which combination is correct? type of goodprice change demand change fromsubstitution effectdemand change from income effect Ainferiorfallnegativepositive Binferiorrisenegativenegative Cnormalfallpositivepositive Dnormalrisepositivenegative 6A government imposes a $10 tax on each unit produced of a product.
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