# 9708 S12 Qp 31

Pages: 30 (2116 words) Published: January 26, 2013
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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education

9708/31

ECONOMICS
Paper 3 Multiple Choice (Supplement)

May/June 2012
1 hour

*8211770087*

Soft clean eraser
Soft pencil (type B or HB is recommended)

Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid. Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided unless this has been done for you.

There are thirty questions on this paper. Answer all questions. For each question there are four possible answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet. Read the instructions on the Answer Sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer. Any rough working should be done in this booklet.

This document consists of 11 printed pages and 1 blank page. IB12 06_9708_31/FP

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2
1

Which condition must be met for economic efficiency to be achieved? A
B

Marginal social costs are at a minimum in the production of all goods.

C

Marginal social benefits are at a maximum in the production of all goods.

D
2

Marginal social costs are zero in the production of all goods.

Marginal social costs equal marginal social benefits in the production of all goods.

The table shows the total utility that an individual obtains from consuming different quantities of a good.
quantity of good
(units)

total utility
(units)

1

20

2

36

3

50

4

62

5

72

6

80

The individual’s marginal utility of money is \$1 = 3 units of utility. What is the maximum quantity of the good that the individual will buy when its price is \$4? A

2 units

B

3 units

C

4 units

9708/31/M/J/12

D

5 units

3
3

The curve JK in the diagram is a consumer’s initial budget line.

G
J
good Y

O

H

K

good X

Which combination could cause the budget line to shift to GH? consumer’s
money income
A

decrease

decrease

B

decrease

increase

C

increase

decrease

D
4

price of
good Y

increase

increase

The diagram shows a perfectly competitive firm’s average product of labour (APL) and marginal product of labour (MPL) curves.

wage
(\$),
labour
product
(units)

W
APL
MPL
O

N1

N2

N3

N4

workers employed

The market price of the firm’s product is \$1.
How many workers will the firm employ at a wage of OW?
A

ON1

B

ON2

C

ON3

9708/31/M/J/12

D

ON4

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4
5

The diagram shows the total product of labour curve for a firm whose only variable factor input is labour.

TPL

total product
of labour

O

number employed

What explains the shape of the curve?
A
B

increasing marginal disutility of work

C

technical diseconomies of scale

D
6

diminishing marginal disutility of work

the law of variable proportions

Which is a financial economy of scale?
A
B

lower costs of marketing

C

lower risk due to diversification

D
7

lower costs in raising capital

lower variable costs of production

There is an increase in the supply of female labour.
What will be the likely effect on male and female wages?
male wages

female wages

A

decrease

decrease

B

decrease

increase

C

increase

decrease

D

increase

increase

9708/31/M/J/12

5
8

An economist calculates that a firm has incurred the following costs over the course of a year. \$(000)
wages and salaries

150

opportunity cost of owner’s time

35

materials

80

rent

30

marketing fees

20

interest on bank...