Oct/Nov 2005

State one similarity between a customs union and a free trade area, and one difference between them.

6.4

Explain the effects of externalities on resource allocation.

7.4

Explain what is meant by the ‘equilibrium price’ of a good and the way it is determined in a free market.

Income elasticity of demand

Explain why unemployment is hard to measure accurately.

Price stability and inflation

What evidence is shown in the article that the UK mobile phone companies operate in an imperfect market structure?

7.6

Explain what efficient resource allocation means in a free market.

Law of diminishing returns

Explain how trade unions may be integrated into the economic analysis of wage determination.

Long-run costs and economies of scale

Using diagrams, distinguish between normal profit and abnormal profit.

7.5

To what extent do you agree that low interest rates and low inflation are the most important aims of government policy in maximising economic welfare?

Government macroeconomic policy objectives

After receiving approval from the Malaysian government, the Swedish firm IKEA, the world’s largest retailer of home furnishings, has put $106 million into Malaysia over the last three years. It now intends to launch another major store in the country, which will employ 450 people and is forecast to achieve sales of about $50 million in the first year.

Unemployment

‘Because there are so many problems in measuring living standards, we can never be certain that people in one country are better off than those in another country.’ Comment upon this statement.

Trade unions