International A Level Unit 1, Jan 2021

Q1 Pick the case that counts as government failure, from options covering welfare-gaining intervention, costly red tape, housing speculation and free riding on public goods.

Q2 South Korea's state spends 30.3% of GDP, Denmark 52.1%; name the system where the state and prices jointly allocate resources (free market / command / mixed / irrational).

Q3 Which of copper, housing, designer clothing or tablet computers would most plausibly be traded on a forward market?

Q4 Total utility from successive glasses of milk is tabulated; find the quantity that maximises utility and the point where diminishing marginal utility begins.

Q5 From a diagram showing a planned price floor on Indian mobile data, state the outcome: excess supply, excess demand, supply contraction or demand extension.

Q6 A table sets out income elasticity estimates for petrol, public transport, furniture and cars; say which reading is correct.

Q10 Tea's cross elasticity with respect to coffee is +0.52; work out how much tea demand shifts when coffee prices climb 32%.

Q11 With a diagram, show how a 46% rise in palladium's price affects producer surplus in that market.

Q7 Sketch an externalities diagram showing why vaccinations are taken up at below the socially optimal level.

Q8 Using a table of greenhouse gases released in beef, lamb and poultry production, set out the meaning of external costs of production.

Q9 Account for the Oregon finding that insured people used hospitals far more than the uninsured, and why this illustrates moral hazard.

Q12(a) Give the meaning of a renewable resource, as the phrase is used in Extract B.

Q12(b) Using Extract B, set out what economists mean by a rational decision.

Q12(c) Drawing on Figure 1 and Extract A, analyse the drop in world oil prices during early 2020; include a supply and demand diagram.

Q12(d) Examine two consequences India's heavy indirect taxes on petrol and diesel might bring, using Extract A.

Q12(e) Discuss, with a suitable diagram and Extract B, the microeconomic impact of subsidising manufacturers of electric cars.

Q13 Evaluate why consumers act irrationally, given 30% of Australian electricity users won't switch because it takes effort and 22% because they are poorly informed.

Q14 Gold's world price climbed to $1 481 an ounce from $1 275, yet output barely moved from 888.8 tonnes to 889.5: evaluate why gold supply is price inelastic.