Cambridge Past Paper Questions
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A rise in the price of a good is accompanied by an increase in the quantity demanded. What could explain this?
What causes the demand curve for an inferior good to shift to the right?
In a town, bus fares fall by 50% and this leads to an increase in bus use by 30%. The effect on car use is very low with only a 1% reduction. What ...
In the diagram the rectangular hyperbola, DD, represents a firm's demand curve.
What is price elasticity of supply?
The demand for tablets increases, while the cost of producing them decreases. What will be the effect on the price of tablets and on the quantity s...
A specific tax is placed upon each bottle of perfume sold. In the diagram, SS is the supply curve before tax, SS₁ is the supply curve after tax.
In which market would equilibrium not be achieved at point E if price were above Op?
A company opened a garden to the public and charged for entry. The government then provided a grant to improve the garden on the condition that ent...
The diagram shows the percentages of those on low pay and those on extremely low pay in the UK from 1976 to 2012. A national minimum wage was intro...
A 10% tax is placed on a good. What type of product would be most likely to face the biggest impact on its equilibrium price as a result?
In 2009 the Australian government made a payment of $900 to those who earned less than $100000 per year. How would the effect of this transfer paym...
The diagram shows the market for wheat.
As part of a privatisation policy, a government deregulates bus services and sells off its public sector bus services to the private sector. What i...
A government decided to reduce income tax and increase sales tax. The initial equilibrium point is shown by X on the aggregate demand (AD) and aggr...
The table gives data for an economy. 2010 2011 2012 2013 2014 Gross Domestic Product (GDP) at current prices ($ billion) 200 220 240 300 320 GDP d...
What always happens when there is an increase in the Consumer Price Index?
What would identify a country with a fundamental balance of payments disequilibrium?
At present, one unit of a country's currency exchanges for US$1.20. The country aims to set its exchange rate at US$1.00. Which combination of gove...
The diagram shows the exchange rate for the UK£ in terms of the US$. The original equilibrium exchange rate is at X. What will be the new exchange ...
A country's terms of trade increased from a base year value of 100 to 120 in the following year. If export prices had increased by 50%, what was th...
In each country, P and Q, one person can either produce the quantity of X or the quantity of Y shown. In which case does country P have absolute ad...
A government removes the tariff on a product as shown in the diagram.
What would be increased by an expansionary fiscal policy?
Possible policies a government might use to reduce a deficit on the current account of the balance of payments include devaluation, government spen...
In March 2014, Sweden had a change in its Consumer Price Index of -0.6%. Which combination of policies might the government use to restore price st...
The diagram is from a chapter on ‘The Economic Problem' in an Economics textbook. It should contain the terms opportunity cost, scarcity and choice...
What is most important for the effective operation of the division of labour in a modern economy?
The diagram shows a production possibility curve for an economy that is producing at point P. [Diagram] Which quantity of X is given up to produce ...
Despite much opposition, the local government in a popular tourist resort built a leisure centre and swimming pool which is open to everyone. Many ...
On a demand and supply diagram, other things remaining the same, a fall in the price of a commodity will normally shift
In 2014, in an attempt to find new uses for seven sites previously used to bury rubbish, the Hong Kong government announced it would allow private ...
The price elasticity of demand for a firm's product is equal to one for all price changes. What would be the result of this?
Which change will lower the price elasticity of supply of a product?
The diagram shows the market for coffee. The initial equilibrium position is X. The price of tea, a substitute, falls and an indirect tax is impose...
The diagram shows the market for new houses. [Diagram] What would cause the change in the market equilibrium position from X to Y?
Jam and honey are substitutes. Honey and beeswax are in joint supply. Other things being equal, what will be the result of an increase in the price...
For price to act as a rationing mechanism for a final product, the effect of a rising price must be to
A well-known clothes retailer decides to have a summer sale in its shops. As a result the number of people who use the shops increases. [Diagram] W...
In 2014 some supermarkets reduced the price they were willing to pay farmers for milk to below what was then the market equilibrium price. They pas...
The initial market for a product is represented by the demand and supply curves D₁ and S₁ respectively. A subsidy is then introduced, represented b...
What is the most likely purpose of a government making transfer payments, such as social security benefits, to unemployed workers?
In the diagram, D is the demand curve of an agricultural commodity and S is the initial supply curve. The government promises to maintain farmers' ...
Which circumstance is not likely to represent a strong case for an industry to be nationalised?
How does a rise in the price of factors of production affect the aggregate supply (AS) curve?
In the diagram, AD₁ is an economy's initial aggregate demand curve. [Diagram] What could cause the curve to shift to AD2?
Relative weights are used in calculating the index of retail prices to reflect the different
The table contains some figures from the 2014 balance of payments account of the United States (US). [Table] What cannot be concluded about US trad...
A country has a fixed exchange rate. What is likely to result in a deterioration in its balance of payments?
At present, one unit of a country's currency exchanges for US$1.2. The country aims to set its exchange rate equal to US$1.0. Which combination of ...