Variant 1 May/June 2010

1. One of the functions of money is to act as a measure of value.
What does this mean?

2. What is a direct tax?

3. Barilla, an Italian company, is the world’s largest pasta maker. It also produces bread.
In 2006 its bread production contributed $1.5 billion (bn) to its total revenue of $5.1 bn.
Overall profit was $0.6bn.
What was the total cost to Barilla of producing pasta and bread in 2006?

4. Why is the Human Development Index (HDI) a better indicator of comparative living standards than Gross Domestic Product (GDP) per head?

5. What is an example of occupational mobility of labour?

6. Gross Domestic Product (GDP) per capita is commonly used as an indicator of the comparative level of development in different countries.
What does not lead to difficulties when using this as a comparison between countries?

7. What is correct about a monopoly?

8. Between 2002 and 2007, approximately 18 million Latin American households moved out of
poverty.
Which change in the region is most likely to have caused this fall in poverty?

9. What is a function of a trade union?

10. The government of a country with a rapidly increasing population decides to switch resources from investment to increased subsidies to farmers.
What is the opportunity cost of this decision?

11. A person is most likely to save more when there is an increase in a country’s

12. The directors of a firm have to discuss the following topics.
Which topic is least likely to be directly affected by the government’s influence on the firm?

13. The diagram shows a market for wheat that is in equilibrium.

Which area represents the total revenue for wheat farmers?

14. In August 2008, Infosys, an Indian information technology company, bought Axon, a UK information technology company.
Which type of integration is this?

15. South African companies are planning to undertake major investment in Zimbabwe in order to mine platinum.
If this investment occurs, what would happen in the short term to the supply of platinum, the price of platinum and the profits of the companies?

16. A government achieves a high rate of economic growth.
How may this conflict with other government aims?

17. The diagram shows the demand for and the supply of bread.

A maximum price P₁ is fixed by the government.
What is likely to be the immediate result of this?

18. What name is given to the type of unemployment that occurs while people search for new jobs?

19. What is a function of a commercial bank?

20. What is likely to happen in a developing country as it becomes more developed?

21. Which statement about the factors of production is correct?

22. Which terms summarise the nature of the economic problem?

23. Which economic change would increase the problem of scarcity?

24. Which policy would best enable a government to encourage greater specialisation in the use of
its country’s resources?

25. A firm which sells its product for $6 has the following total costs.

Which statement is correct?

26. There was an increase in the value of the United States (US) dollar against the South African Rand.
What is a result of this?

27. India has a more evenly distributed income than China but a greater proportion of its population living on less than $1 a day.
What can be concluded from this statement?

28. The retail price index of a country rose during a year from 200 to 240.
What was the annual rate of inflation?

29. The diagram shows the supply curve for a good.

What is the price elasticity of supply when the price rises from $2 to $4?

30. The diagram shows the market for fresh fish in the Caribbean with equilibrium point X. New, more efficient boats with lower running costs are then used.
Which point represents the new equilibrium?