1 (a) Which one of the following is the term for the next best alternative given up
when a choice is made?
(1)
A Business competition
B Capital investment
C Opportunity cost
D Spare capacity

(b) Which one of the following options shows the effects on the market for
motorcycle helmets after a fall in the price of motorcycles?
(1)
B
A

D
C

(c) What is meant by the term external costs?
(2)
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(d) State one example of an external benefit.
(1)
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The problem of scarcity is that there are unlimited wants and finite resources.
(e) Define the term wants.
(1)

Private facilities in which swimmers can change clothes are available at the swimming pool in Ciney, Belgium. The quantity demanded for these facilities during each of the first three months of 2019 is shown in Figure 1.

Figure 1
(f) Calculate the excess demand for private changing facilities for the first three
months of 2019 if the quantity supplied during each month was \(3,000(9,000\) in total). You are advised to show your working.
(2)
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(g) Using the diagram below, draw the likely effects on the market for bread after a decrease in the population. Label the new curve, the new equilibrium price and the new equilibrium quantity.
(3)

Figure 2

The music entertainment industry is dominated by a few main firms. These are BMG, EMI Group, Sony, Universal Music Group and Warner.
(h) Explain one possible barrier to entry a new firm might face when trying to enter this industry.
(3)
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Coffee is a popular drink in many countries around the world. Beans are picked by
hand from coffee plants once the fruit is ready to harvest. It is then put through a
process which includes sorting the type of bean and transforming it from its natural
state. It can be sold as a bean, ground to make coffee or even as the instant product.
Machines are used for most of the process but cannot identify which beans are ready
to pick.
(i) With reference to the data above and your knowledge of economics, analyse why
all four factors of production might be used to produce coffee.
(6)
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What is meant by the term external costs? (2)

Answer:

Knowledge points:

Solution:

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