Total marks: 60 · Duration: 75 minutes
Instructions to candidates
- Answer ALL questions in this paper.
- Each question is worth 3 marks.
- Write your answers on the Multiple Choice Answer Sheet provided.
- Use an HB pencil to shade your answers. Do NOT use ink.
- If you need to change an answer, erase it completely before shading your new choice.
- Non-programmable calculators may be used.
- All working should be done on the sheet provided, but only answers shaded on the Answer Sheet will be marked.
Paper
Section A — Multiple Choice (60 marks)
1. Which of the following BEST describes the economic problem?
A) The unequal distribution of income in society B) Unlimited wants and limited resources C) The government's inability to balance its budget D) Rising unemployment in developing countries
2. A farmer in Jamaica can produce either 100 kg of yam or 80 kg of cassava on one hectare of land. What is the opportunity cost of producing 100 kg of yam?
A) 1 hectare of land B) 180 kg of crops C) 80 kg of cassava D) 100 kg of yam
3. Which factor of production is MOST likely to be rewarded with rent?
A) Capital B) Labour C) Enterprise D) Land
4. The diagram below shows a production possibility curve for an economy producing food and clothing.
Clothing
| A
| /
| B/
| / C
|/__________
Food
Which point represents productive inefficiency?
A) Point A B) Point C C) Point B D) All points are efficient
5. In a market economy, the question "What to produce?" is determined primarily by:
A) Government planning committees B) Traditional customs C) Trade union negotiations D) Consumer demand and profitability
6. A movement along a demand curve is caused by:
A) A change in consumer income B) A change in the price of substitute goods C) A change in the price of the good itself D) A change in consumer tastes
7. The table below shows the demand and supply schedule for bread in a Caribbean market.
| Price per loaf ($) | Quantity Demanded | Quantity Supplied |
|---|---|---|
| 2.00 | 500 | 100 |
| 3.00 | 400 | 200 |
| 4.00 | 300 | 300 |
| 5.00 | 200 | 400 |
At what price is the market in equilibrium?
A) $3.00 B) $2.00 C) $4.00 D) $5.00
8. If the government imposes a maximum price BELOW the equilibrium price, this will most likely result in:
A) A surplus B) A shortage C) A decrease in demand D) An increase in supply
9. Which of the following would cause a rightward shift in the supply curve for sugar?
A) Improved technology in sugar production B) An increase in the price of sugar C) An increase in the wages of sugar workers D) A decrease in the demand for sugar
10. Price elasticity of demand measures:
A) The responsiveness of quantity demanded to a change in price B) The change in consumer income over time C) The change in production costs D) The responsiveness of supply to a change in demand
11. A good has a price elasticity of demand of 0.5. This means demand is:
A) Unitary elastic B) Elastic C) Inelastic D) Perfectly elastic
12. Which type of business organization has LIMITED liability?
A) Private limited company B) Sole trader C) Partnership D) All of the above
13. The term "division of labour" refers to:
A) Dividing profits among shareholders B) Splitting tasks among different workers C) Government regulation of the labour market D) Workers forming trade unions
14. Which of the following is an example of a variable cost?
A) Raw materials B) Insurance premiums C) Managerial salaries D) Rent of factory premises
15. An industry is experiencing economies of scale when:
A) Total output is increasing B) Average cost falls as output increases C) Profits are rising D) The number of firms in the industry is growing
16. The money supply in an economy consists of:
A) Currency and demand deposits held by the public B) All financial assets including shares and bonds C) Government reserves held at the central bank D) Only notes and coins in circulation
17. Which function of money is MOST directly related to comparing the values of different goods?
A) Store of value B) Medium of exchange C) Unit of account D) Standard for deferred payment
18. The main difference between a commercial bank and a credit union is that a credit union:
A) Cannot make loans B) Operates only in rural areas C) Cannot accept deposits D) Is owned by its members
19. The national income of a country can be measured by calculating the:
A) Government's total tax revenue B) Total population divided by GDP C) Total exports minus imports D) Total value of goods and services produced
20. Inflation is BEST defined as:
A) An increase in the price of a single commodity B) A decrease in the standard of living C) The rate of economic growth D) A sustained increase in the general price level