DELHI PUBLIC SCHOOL

NACHARAM
CAMBRIDGE ASSESSMENT INTERNATIONAL EDUCATION – IN174
AY 2023-24
REVISION WORKSHEET

SUBJECT: Economics Subject Facilitator: Rajeswari B

GRADE: AS LEVEL Date: Student name:

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1. The diagram shows an economy’s production possibility curve.

1000
consumer
goods

0
50
capital goods

It has been employing its resources in the ratio of 80% consumer goods production and 20%
capital goods production.

What will be the result if it decides to double its output of capital goods?

A a gain of 20 capital goods

B a gain of 40 capital goods
C a loss of 200 consumer goods
D a loss of 600 consumer goods

2 Which comment relating to the introduction of charges for previously free medical treatment is
normative?

A Fewer people will be able to afford treatment.

B It will be unfair on lower income groups.
C Richer citizens will pay the higher charges.
D Workers’ health and productivity will fall.

3 Which characteristic of money is the most important if it is to function as a medium of exchange?

A acceptable
B divisible
C durable
D portable

4 What is not a characteristic of a planned economy?

A Consumers have limited influence on what is produced.

B Profit is the motive for increasing output.
C Resources are owned by the government.
D There is limited competition in the market.
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5 Good X is a substitute for good Y and a complement to good Z.

What would happen after a fall in the price of good X?

A Only the demand for X will rise.

B Demand for X, Y and Z will rise.
C Demand for Y will fall and for Z will rise.
D Demand for Y will rise and for Z will fall.

6 The table shows how an individual’s weekly consumption of biscuits and coffee varies with
income.

income ($) biscuits (packs) coffee (cups)

100 0 5
150 5 10

Which statement about the income elasticity of demand over the range of income shown is true?

A For biscuits it is greater than 1.

B For biscuits it is zero.
C For coffee it is less than 1.
D For coffee it is unitary.

7 The diagram shows four supply curves.

W X
price
Y

O quantity

Which statement about the price elasticity of these supply curves is correct?

A W has elasticity of 0 that will rise as price rises.

B X has elasticity greater than 1 that will be constant as price rises.
C Y has elasticity greater than 1 that will fall as price rises.
D Z has elasticity of 0 that is constant as quantity rises.

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8 The diagram shows the market for a good with an initial equilibrium price of $10. The demand for
the good increases by 40 units at every price causing the equilibrium price to rise to $12.

24
price
$ 20
S1

12
10
D2

D1

0 80 100 120 140

quantity

What is the value of the producer surplus after the price increase?

A $500 B $720 C $1000 D $1440

9 The equation for the quantity demanded (QD) for a product is QD = 400 – 20P where P = price in
dollars. The quantity supplied (QS) is given by QS = 100 + 40P.

What change will occur if the price rises from $5 to $6?

A the market will move from equilibrium to shortage

B the market will move from equilibrium to surplus

C the market will move from shortage to surplus
D the market will move from surplus to shortage

10 A farmer divides his land between growing two crops – wheat and oats. To increase production of
one he must reduce production of the other.

What would cause the farmer to increase his supply of wheat?

A A subsidy is given for the production of oats.

B A unit tax is imposed on the production of wheat.
C There is an increase in wages for all farm workers.
D There is improved efficiency in the harvesting of wheat.
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11 What would cause the demand curve for vegetables to shift from D1 to D2 as shown?

S
price

P2
P1

D1 D2
O Q1 Q2
quantity

A a change in supply from Q1 to Q2

B a poor harvest due to unfavourable weather
C a price change from P1 to P2
D an increase in real incomes

12 The demand curve for new cars in a country shifted to the left.

Which change could have caused such a shift?

A an increase in real disposable income

B an increase in the cost of borrowing
C an increase in the price of new cars
D an increase in the price of train travel

13 What is correct about market supply?

A Market supply can increase only when all individual firms increase their output.
B Market supply is effective when consumers have sufficient income to buy the good.
C Market supply is the result of aggregating the supply of all individual firms.
D Market supply of an inferior good falls as price increases.

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14. The diagram shows the impact of a unit tax imposed by a government on a good. The original
supply curve is S1 and the supply curve after the unit tax is S2.

price
S2
$
S1
80
70
60
50

D
0 100 120
quantity

What would be the amount of tax paid by the consumer?

A $500 B $1000 C $1500 D $2400

15. The diagram shows the demand and supply curves for healthcare in a private market.

supply
price

demand
O Q
quantity

What would happen if the government provides the same amount of healthcare free of charge?

A Healthcare will become a public good.

B Healthcare will no longer have external benefits.
C There will be over-consumption of healthcare.
D There will need to be rationing.

2 (a) Explain, with the help of examples, how imperfect information among consumers affects their
consumption of merit goods and demerit goods. [8 marks]
(b) Discuss why in most mixed economies, resources are mainly allocated using market forces and the
price mechanism. [12 marks]