Oct/Nov 2006

Discuss the desirability of the Government’s intervention in the market for onions.

Demand and supply curves

Explain how production possibility curves can be applied when judging a country’s economic performance.

Production possibility curves

Explain the distinction between absolute and comparative advantage.

International trade and free trade

Explain how cost-push inflation is different from demand-pull inflation.

Balance of payments

Identify three factors that VW says are causing the fall in expected profits.

7.5

Explain what the term ‘economic efficiency’ means.

Behavioural economics

My higher income will make me happier in the short term. In the long term I will grow used to it and my happiness will fall back to its earlier level. Therefore, there is no point in earning a higher income.

Utility and rational consumer behaviour

In 2004 the Chinese government approved a deal with BAT (formerly British American Tobacco) to enable them to become the first foreign manufacturer of cigarettes in China for at least 50 years. BAT said that it would invest $1.5 million in China and that it would take about two years before the factories were running efficiently. It is estimated that China has 300 million smokers and is the world’s most important cigarette market.

7.6

Explain what indicators would indicate that a country is developed rather than developing.

11.4

Explain the factors that determine the demand for money.

Oligopoly

Government economic policy ought to be directed at citizens' needs – employment, health, education and a good environment. It should not focus on the balance of payments or gross domestic product. Discuss whether there is any truth in this statement.

Efficiency