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ST. JOHN’S
INTERNATIONAL SECONDARY SCHOOL

TERM EXAMINATION 1, 2023

UPPER SECONDARY: YEAR 10

ECONOMICS
27 MAY 2023

Duration: 1 Hour 30 Minutes

NAME

CLASS

INSTRUCTIONS TO CANDIDATES

1) Do not open your exam paper until instructed.

2) Answer ALL questions in this paper.
3) Use a black or dark blue pen.
4) You may use a pencil for any diagrams or graphs.
5) Do not use correction fluid or tape, erasable pen, glue and highlighters.
6) At the end of the examination, fasten all your work securely together.
7) The number of marks given in brackets [ ] at the end of each question or part question.
8) The total number of marks for this paper is 100.

For Examiner’s Use

/100
Total Marks / Percentage
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SECTION A [30 MARKS]

1 Which form of air is an economic good?

A. Air at ground level

B. Air from an air conditioning system
C. Air above an ocean
D. Air in a tropical rainforest

2 Which item used in the production of textiles by a firm would an economist classify
as land?

A. Sewing machines
B. The factory
C. Untrained workers
D. Water taken from a river

3 What might be the opportunity cost of using a bus to transport students to school?

A. Transport a group of retired people on a day out

B. Increasing the earnings of the bus company
C. Paying the wages to the driver
D. Paying for the cost of petrol used

4 What combination of economic concepts is illustrated by a production possibility

curve?

A. Price and quantity

B. Two types of goods
C. Demand and supply
D. Scarcity and opportunity cost
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5 Households’ decision to buy less rice reduced the profit of rice farmers. Which
branch of economics covers these two changes?

Household’s decision Rice farmers’ profits

A. Microeconomics Microeconomics
B. Microeconomics Macroeconomics
C. Macroeconomics Macroeconomics
D. Macroeconomics Microeconomics

6 What are the three questions faced by all economies?

A. What to produce, when to produce it, and who receives it

B. What to produce, how to produce it, and who receives it
C. Where to produce, how to produce, and when to produce
D. Where to produce, when to produce, and why to produce

7 What happens to people’s willingness and ability to buy a product when its price
falls?

Willingness Ability
A. increases increases
B. increases decreases
C. decreases decreases
D. decreases increases

8 An increase in demand is represented by:

A. A movement down the demand curve

B. A movement up the demand curve
C. A shift to the left of the demand curve
D. A shift to the right of the demand curve
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9 The diagram shows the demand for chocolate.

What could cause the movement from point X to point Y?

A. A change in tastes
B. A fall in the price of chocolate
C. An increase in income
D. A successful advertising campaign for chocolate

10 The price of a product rises. What will happen to the demand for its complement?

A. It will contract
B. It will extend
C. It will decrease
D. It will increase

11 What is the relationship between demand and price and the relationship between
supply and price?

Demand and price Supply and price

A. directly related directly related
B. directly related inversely related
C. inversely related inversely related
D. inversely related directly related
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12 What does a market supply curve show?

A. The relationship between the total quantity supplied and the price of the product
B. The proportion of total output produced by different firms in the industry
C. Proportion of total output sold
D. The relationship between the total quantity supplied and demand for the product

13 How would an increase in supply be illustrated?

A. A movement up the supply curve

B. A movement down the supply curve
C. A shift to the left of the supply curve
D. A shift to the right of the supply curve

14 What would cause an increase in the supply of milk?

A. The introduction of a subsidy to cattle farmers

B. An increase in the price of cattle feed
C. An increase in wages paid to farm workers
D. The outbreak of a disease affecting cows

15 Equilibrium price is the price at which:

A. The amount consumers demand is equal to the amount sellers supply

B. Everything that is produced is sold
C. The number of buyers equals the number of sellers
D. Supply exceeds demand
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16 A market is experiencing a shortage. What will happen to price and sales as the
market moves back to equilibrium?

Price Sales
A. Decrease Fall
B. Decrease Rise
C. Increase Fall
D. Increase Rise

17 If there is excess demand in a market, what is the relationship between price and
equilibrium price, and sales and equilibrium sales?

Price Sales
A. above equilibrium above equilibrium
B. above equilibrium below equilibrium
C. below equilibrium below equilibrium
D. below equilibrium above equilibrium

18 A market is operating with a disequilibrium price. What must this mean?

A. Demand and supply are not equal

B. Shortages do not exist
C. The price mechanism is not working
D. There is no opportunity cost involved
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19 The diagram shows a change in the market for coffee. What could explain this
change?

A. A rise in the price of coffee

B. A rise in the price of tea
C. A successful advertising campaign for tea
D. A health report indicating that drinking coffee can cause headaches

20 The diagram shows the demand for and supply of a product. The initial equilibrium
is at point E. The cost of raw materials used to produce the product falls. Which
point represents the new equilibrium?

A. Point a
B. Point b
C. Point c
D. Point d
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21 Which diagram best illustrates the effect of an increase in income on the market for
an inferior good?

22 What effect would a decrease in supply of a product have on its price and demand?

Price Demand
A. Decreases Contracts
B. Decreases Extends
C. Increases Contracts
D. Increases Extends
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23 What is price elasticity of demand?

A. A measure of the extent to which price changes when the quantity demanded
changes
B. A measure of the extent to which the quantity demanded changes when price
changes
C. A measure of the extent to which total revenue changes when price changes
D. A measure of the extent to which price changes when total revenue changes

24 The table shows the demand and supply for spices in a market in Africa.

When the price rises from US$20 to US$30 per kg, what is the price elasticity of
demand (PED) for spices?

A. 0.25
B. 0.5
C. 1.0
D. 2.0
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25 The table shows the demand schedule for a good at different prices.

The current market price for the good is $10.

Following a 20% increase in price, what will be the change in the quantity
demanded?

A. -60
B. -40
C. +120
D. +200

26 What characteristic is likely to make the demand for a product elastic?

A. It is a necessity
B. It is an addictive item
C. It is an item to attend emergencies
D. It has close substitutes

27 What is the formula for PES?

!"#$%& ($ )*#$+(+, -*../(&0

A. !"#$%& ($ .1(2&
3&12&$+#$%& 2"#$%& ($ )*#$+(+, -*../(&0
B. 3&12&$+#%& 2"#$%& ($ .1(2&
!"#$%& ($ )*#$+(+, -*../(&0
C. !"#$%& ($ )*#$+(+, 0&4#$0&0
3&12&$+#%& 2"#$%& ($ )*#$+(+, -*../(&0
D. 3&12&$+#%& 2"#$%& ($ )*#$+(+, 0&4#$0&0
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28 The table shows the quantity that producers are willing to supply at different price
levels.

If the price increases from $120 to $180, what would be the price elasticity of
supply?

A. 0.16
B. 4
C. 6
D. 60

29 Lithium is an essential metal for the production of electric cars. Following a 10%
increase in the price of lithium, supplies increase by 15%. This led to a 5% increase
in the price of electric cars.
What is the price elasticity of supply (PES) for lithium?

A. 0.33
B. 0.66
C. 1.50
D. 2.0

30 In what circumstance would supply of a product be elastic?

A. It is costly to produce
B. It takes time to produce
C. It can be stored
D. It uses resources which are in short supply
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SECTION B [30 MARKS]

Question 1

Source material: Transport and cotton production

There is not much traffic on the motorway between Islamabad and Lahore. This first
motorway built in Pakistan was opened in 1997. It cost $1.2 billion to construct. One reason
for the lack of traffic on the motorway is the existence of a rival road, the Grand Trunk Road,
which is shorter and toll-free.
Improvements in road infrastructure can bring a number of benefits to an economy. These
include reducing costs of production faced by a number of industries including construction
materials, cotton and paper products.
Some economists, however, argue that less tax revenue should be spent by the government
on roads and more on education. Higher spending on education can increase labour
productivity which, in turn, can reduce unemployment and increase productive potential.
Labour productivity, for example, is higher in the USA in the cotton industry than in the
other major cotton producers. The pie chart shows the share of the global output of cotton
(96.5 million bales) in the five largest producers in 2016.

One of the reasons for the greater productivity in the USA is that workers work with more
advanced farm machinery.
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India is seeking to raise its labour productivity by a range of ways. These include reducing
congestion on its roads. Between 2000 and 2015, the number of cars on India’s roads tripled.
The higher volume of traffic is causing considerable pollution. In 2016 India’s capital city,
Delhi, was named by the World Health Organisation (WHO) as the world’s most polluted
city. The government has introduced new regulation including stricter emissions standards
for new vehicles and has stopped subsidising diesel fuel in an attempt to reduce pollution. It
is also increasing its investment to modernise and expand the country’s train service.

Referring to the source material in your responses, complete all parts of Question 1.

(a) Identify two examples of capital goods according to the source material. [2]

(b) Explain a possible opportunity cost of the Pakistan government building more [2]
roads.

(c) Explain two causes of a shift of a supply curve to the right. [4]

(d) Analyse, using a production possibility curve diagram, the effect of the change in [6]
labour productivity on the economy.

(e) Discuss whether or not train travel is a close substitute to road travel in a city. [8]

(f) Discuss whether or not the demand for bicycles will rise in the future. [8]
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SECTION C [40 MARKS]

Question 2

In February 2017, Europe experienced a shortage of fresh vegetables due to bad weather. For
a period of time, the markets for a number of vegetables, including broccoli and lettuces,
were not in equilibrium. The price of food tends to fluctuate more than the price of
manufactured goods and services.

(a) Define equilibrium. [2]

(b) Explain the relationship between demand and a change in price. [4]

(c) Analyse the effect of a rise in the price of tea on the demand for milk, and the [6]
demand for coffee.

(d) Illustrate, with a demand and supply diagram, to show the effect on the market [8]
for newspaper if:
(a) A major news story breaking
(b) A subsidy given to the newspaper producers
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Question 3

A rise in the price of cigarettes from $6 to $9 is found to cause demand to contract from
200,000 to 140,000 a day in an island country.

(a) Calculate the price elasticity of demand of cigarettes on the island. [2]

(b) Explain one reason for the degree of elasticity you have found. [4]

(c) Analyse why the supply of agricultural products tends to be more inelastic than [6]
the supply of manufactured products.

(d) Analyse, using a demand and supply diagram, how bad weather is likely to affect [8]
the market for broccoli.

END OF PAPER