Download 2A Task 1 Markets and prices Marking guide 2011

2A ECONOMICS
Assessment Task 1
Section A
1.
Multiple Choice
Question 1 refers to the diagram below.
Whips
70
• A
20
•B
60
90
Saddles
A firm can use its resources to make either whips or saddles. At combination A the firm is
making 70 whips and 60 saddles. If the firm were to change its production to combination B
then the opportunity cost would be
(a)
(b)
(c)
(d)
2.
30 saddles.
50 whips.
20 whips.
60 saddles.
Question 2 refers to the diagram below.
Capital
Goods
• Oobi
• Doobi
Consumer
Goods
Two countries, Oobi and Doobi, have identical production possibility curves. Each is
producing the combination indicated on the diagram. It is true to say that
(a)
(b)
(c)
(d)
country Oobi currently has a higher standard of living than country Doobi.
country Oobi will have a higher standard of living in the future than country Doobi.
country Doobi will have a higher standard of living in the future than country Oobi.
country Doobi currently has higher unemployment than country Oobi.
3.
Which of the following would be part of the study of microeconomics?
(a)
(b)
(c)
(d)
4.
Which of the following is classified as capital in Economics?
(a)
(b)
(c)
(d)
5.
the opportunity cost of studying for the Economics examination.
greater than the value of studying for the examination.
not comparable to the value of studying for the examination.
worth the lower marks in Economics.
Economics is a study of relative scarcity. Relative scarcity means that there is
(a)
(b)
(c)
(d)
9.
its price in dollars and cents.
the alternative forgone.
the price of the alternative forgone.
none of the above.
Carmen loves to play netball with her ABC team on the weekend. If she decided to miss netball
last weekend in order to study for her Economics examination, the pleasure she got from
playing netball was
(a)
(b)
(c)
(d)
8.
rent, profit, capital, and wages.
profit, wages, capital, and income.
income, wages, interest and rent.
rent, interest, profit and wages.
The real cost of a good is
(a)
(b)
(c)
(d)
7.
savings in a financial institution.
shares in a company.
government bonds.
buildings and equipment.
An Osborne Park furniture making firm uses all four factors of production. The payments for
the use of the factors of production are
(a)
(b)
(c)
(d)
6.
The economy as a whole.
Aggregate consumption behaviour.
How the government stabilises the economy.
Firms and households as economic units.
insufficient money to buy essential goods and services.
insufficient food to keep the population at a reasonable level of health.
insufficient resources to satisfy all wants in an economy.
insufficient capital goods to produce essential services.
Which one of the following is the distributive function of an economy?
(a)
(b)
(c)
(d)
What to produce.
How much to produce.
How to produce.
For whom to produce.
10.
Every economic system faces the need to economise. In this context, which of the
following is the best definition of “to economise”?
(a)
(b)
(c)
(d)
11.
A market is any situation where:
(a)
(b)
(c)
(d)
12.
(a)
(b)
(c)
(d)
producers respond to consumer demand.
consumers respond to government policies.
producers respond to government policies.
producers decide what consumers will consume.
excess demand exists.
the market price of the good has increased.
the price of a complementary good has increased.
the price of a substitute good has increased.
If in a competitive market the quantity demanded is less than the quantity supplied then
(a)
(b)
(c)
(d)
16.
(i) and (iv) only.
(i), (ii) and (iii).
(i), (ii) and (iv).
(i), (ii), (iii) and (iv).
If the demand curve for a normal good shifts to the right, this would indicate that
(a)
(b)
(c)
(d)
15.
Large number of buyers and sellers.
Homogeneous products.
Firms are price makers.
Easy entry conditions.
Consumer sovereignty means that
(a)
(b)
(c)
(d)
14.
buyers and sellers meet to exchange goods
consumers find goods and services to satisfy their needs
buyers and sellers interact and exchange goods and services
surplus production is displayed
Which of the following are characteristics of a competitive market?
(i)
(ii)
(iii)
(iv)
13.
To save money and thus reduce the national debt.
To dispense with the production of luxuries.
To balance the government budget by reducing spending.
To make the best use of scarce resources that have alternative uses.
the supply curve will shift to the right.
the demand curve will shift to the right.
market price will fall.
market price will rise.
The discovery, by Woodside, of a new gas field off the WA coast would result in
(a)
(b)
(c)
(d)
an expansion of supply creating a higher price for gas.
a contraction of supply creating a lower price for gas.
an increase in supply creating a lower price for gas.
a decrease in supply creating a higher price for gas.
17.
The following diagram illustrates the market for child care services. A shift in demand from
DD to D1D1 is best explained by
P
D1
D
S
D
D1
Q
(a)
(b)
(c)
(d)
an increase in child care subsidies offered by the government.
a reduction in available staff and facilities for child care.
an increase in the price of child care.
a decrease in the number of young families.
Questions 18 & 19 relate to the following table that shows market conditions for ‘oobi doobi beanies’.
Price ($)
16
20
24
28
32
18.
$1 000 000.
$30 400.
$24 000.
$4 800.
If the government were to set a minimum/floor price of $28 then
(a)
(b)
(c)
(d)
20.
Quantity Supplied
300
600
1000
1500
2100
Total revenue to the seller at equilibrium is
(a)
(b)
(c)
(d)
19.
Quantity Demanded
1900
1400
1000
700
500
a surplus of 800 units would develop.
a shortage of 800 units would develop.
1500 units would be sold.
more consumers would be able to enjoy the product than at a price of $24.
A shift to the left of the entire supply curve for computer games could be caused by
(a)
(b)
(c)
(d)
a rise in the price of computer games.
a rise in the cost of producing computer games.
a fall in the price of computer games.
a decrease in demand for computer games.
21. If both the supply and demand curves shift to the right, it can be concluded that there must be
(a)
(b)
(c)
(d)
an increase in the equilibrium price.
an increase in the equilibrium quantity sold.
a decrease in the equilibrium price.
both B and C.
2A ECONOMICS
Assessment Task 1 Marking Guide
Section A
Multiple Choice
1.
B
2.
B
3.
D
4.
D
8.
C
9.
D
10.
D
11.
C
15. C
16.
C
17.
D
18.
C
Section B
1.
(a)
/ 21
5.
D
6.
B
7.
A
12. A/C
13.
A
14.
D
19. A
20.
B
21.
B
Data Interpretation/Short Answer
The following table represents the production possibilities of a hypothetical firm.
Possibility
Ice-cream
Yoghurt
A
62
0
B
58
1
C
50
2
D
38
3
E
22
4
F
0
5
Construct a Production Possibility Frontier from the data above.
(2 marks)
60
50
40
30
20
10
1
2
3
 Title
 Labelled Axis
 Accurate construction of the curve
4
5
½ mark
½ mark
1 mark
(b)
The opportunity cost of the first yoghurt is 4 ice-cream
The opportunity cost of changing production from possibility D to C is 1 yoghurt
1 mark each
(2marks)
(c)
Comment on the level of efficiency if the firm’s production combination is 2 yoghurt and 30
ice-cream?
(3 marks)
 Firm is producing at a point inside the curve ie inefficient.
 Foregoing possible production by not producing on the PPF – that is the firm
could be producing 20 more ice-cream.
 Unemployed or underutilised resources.
Allocate 1 to 3 marks
(d)
Refer to the table and/or the graph to explain the concept of increasing costs.
(3 marks)
 The firm’s resources are not equally adapted to producing both
types of goods.
 The first resources moved from ice-cream to yoghurt are those that
are least efficient in the production of ice-cream and most efficient
in the production of yoghurt. The opportunity cost is low – 4 ice-creams.
 As the firm moves more resources from ice-cream to yoghurt the
opportunity cost rises – that is the cost becomes greater as resources
more suited to ice-cream production are diverted to yoghurt production.
To divert resources from ice-cream to produce 4 yoghurt foregoes 16 ice-cream.
To produce the 5th unit of yoghurt ‘costs’ 22 ice-cream.
Allocate 1 to 3 marks
2.
Explain, with the use of a model, (i) the law of demand and (ii) reasons for the slope of a
demand curve.
(4 marks)
 Quantity demanded and price are inversely related ie consumers demand less at
higher prices. (Refer to model)
1 mark
P
D
P1
P2
D
Q1 Q2
Q
1 mark
 Income effect: price rises, purchasing power falls – demand less.
1 mark
 Substitution effect: price rises, buy cheaper subs – demand less.
1 mark