May/June 2006

Discuss whether Australia and Thailand should have removed all tariffs at once.

International trade and free trade

Explain, with examples, what the size of a good’s cross-elasticity of demand shows about its substitutes and complements.

Price elasticity of demand

Explain, using examples, how a demerit good differs from a merit good.

Government intervention in markets

Explain, with the aid of diagrams, how a government would keep a fixed exchange rate in place.

6.4

Explain what is meant by ‘GDP per capita’.

Trade unions

‘Governments, unlike the private sector, can put in place some of the conditions needed for the efficient allocation of resources. It is, therefore, best if there is as much government involvement in the economy as possible.’ Discuss whether you agree with this opinion.

Law of diminishing returns

Explain what is meant by the Law of Diminishing Marginal Utility and judge whether the statement above applies it correctly.

Utility and rational consumer behaviour

Large organisations do not face competition. Therefore, there is no choice. Small competitive businesses are a better way of meeting consumers’ needs. Do you agree with this argument?

7.6

Explain what benefits may result from encouraging investment in rural areas.

Trade unions

Explain how changes in interest rates might influence investment.

Monetary policy

Explain whether a relationship exists between the marginal revenue product of labour and the wage rate in a particular occupation.

Long-run costs and economies of scale