AS Economics
Unit 1
Section A: Circle your chosen answer (20 Marks, 30 Minutes)
1) The following statements are given relating to the PPF and productivity
i. All points on the PPF represent productive efficiency
ii. Allocative efficiency is achieved when we cannot produce more of one good without producing less of another good
iii. All points which are allocatively efficient are productively efficient, but not all points which are productively efficient are allocatively efficient
Which of these following is correct?
a) All of the above statements are true
b) Only statement I and ii are true
c) Only statement ii and iii are true
d) Only statement I and iii are true
2) The diagram refers to a small Caribbean island producing agricultural goods and tourist services. Initially the economy has production possibilities shown by XY. The production possibility line then moves to XZ. This change is most likely to have been caused by:
a) An increase in the demand for agricultural goods
b) A rise in the cost of producing agricultural goods in terms of tourist services
c) A decrease in the demand for agricultural goods
d) Technological improvements in the agricultural industry
3) In a command (planned) economy:
a) The price mechanism acts as an incentive
b) Resources are allocated by market forces
c) Individual firms make decisions for themselves about what to produce and how to produce it
d) The public sector is large
4) You are provided with the following table:
Year | Price Index | Household Expenditure |
| 2005=100 | millions (pounds sterling) |
2005 | 100 | 50000 |
2006 | 102.5 | 62500 |
2007 | 103.8 | 67500 |
2008 | 105.8 | 75850 |
Which of the following is most correct?
a) Nominal 2008 expenditure is £75 850 million whereas real 2008 household expenditure (2007 base year) is £74 416 million
b) Nominal 2008 expenditure is...
