OCR Oxford Cambridge and RSA Wednesday 18 May 2022 GCSE (9—1) Economics J205/01 Introduction to Economics Time allowed: 1 hour 30 minutes — Afternoon

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Section A Answer all the questions in this section. Write your answer for each question in the box provided. 1 Which of the following refers to the role of the consumer? A Acts as the end-user of ... a good or service B Acts to protect buyers of goods and services C Can decide what goods and services to supply D Can introduce regulations about goods and services Your answer [1] 2 What is meant by unlimited wants? A Goods which do not have an opportunity cost B Resources which are essential for survival C The ability to buy whatever is required D The infinite desire for goods and services Your answer [1] 3 Prices change to show where resources are needed. This process is called A efficiency B rationing C signalling D transmission of preferences Your answer [1] 3 © OCR 2022 Turn over 4 Which of the following is the best explanation of equilibrium price and quantity? A Price is the interaction of demand and supply to set the quantity B Price is unlikely to change given existing demand and supply conditions C Quantity has the same percentage change as any price change D Quantity is fixed in relation to changes in demand and supply movements Your answer [1] 5 Age of driver Cost of insurance (£) 20 1302 30 756 40 662 50 534 The table shows the cost of insurance for a car, depending on the age of the driver. Which of the following statements is correct? A A 20-year-old driver pays twice as much as a 50-year-old driver B A 30-year-old driver pays £500 less than a 20-year-old driver C The smallest change in insurance payment is between the ages of 30 and 40 D The largest percentage change in insurance payment is between the ages of 40 and 50 Your answer [1] 6 As a result of its growth, a business can now afford to advertise on local radio. This is an example of which economy of scale? A Financial B Increased dimensions C Marketing D Purchasing Your answer [1] 4 © OCR 2022 7 A village is over 10 miles away from the nearest two towns. The village shop sells bread. For someone living in the village wanting to buy bread, the shop is a A competitor B monopolist C oligopolist D specialist Your answer [1] 8 P Q W P Q X P Q Y P Q Z Which of the diagrams shows a supply curve with a unitary elasticity of supply? A W B X C Y D Z Your answer [1] 9 Which of the following is the best explanation of the difference between price and worth? A Price is determined by the interaction of demand and supply whereas worth is how consumers indicate their choices B Price is how resources are efficiently distributed whereas worth is the opportunity cost of using the resources C Price is the cost of a product whereas worth is how that price is determined by the market D Price is the sum of money needed to pay for a product whereas worth is how much someone values the product Your answer [1] 5 © OCR 2022 Turn over 10 Medium of exchange refers to anything that sets the A cost of goods and services acceptable to all parties in a transaction B payment of goods and services acceptable to all parties in a transaction C price of goods and services acceptable to all parties in a transaction D the standard of value of goods and services acceptable to all parties involved in a transaction Your answer [1] 11 When is a cut in the rate of interest most likely to lead to an increase in investment? A When consumer confidence is low B When firms do not expect an increase in demand C When firms know that there is a lack of available credit D When there is an increase in exports Your answer [1] 12 Enterprise requires the individual concerned to organise the A factors of production to minimise the opportunity cost B market for the factors of production C production and to bear the risks of the project D risk involved in borrowing the necessary finance Your answer [1] 13 The market supply curve for goods and services normally slopes upwards. Which of the following best explains the reason for this? A Average costs of production fall as output increases B Higher prices attract new firms to the market C Opportunity costs of not producing rise as output increases D Production costs fall as output increases so profits rise Your answer [1] 6 © OCR 2022 14 The prices of branded goods, such as Heinz baked beans, are usually higher than a supermarket’s own label. This is likely to be due to A higher advertising costs B higher productivity C lower average costs D lower profit margins Your answer [1] 15 Excess demand is corrected in a market by changes in A price B quantity C resource allocation D taxes Your answer [1] 16 Firms need to survive in a market. Which of the following is an example of a suitable method to survive? A Encourage existing customers to return B Enter into competition with consumers C Provide an external economy of scale D Reduce total supply Your answer [1] 17 Which of the following services is only provided by the UK government? A Education B Health C Police D Prisons Your answer [1] 7 © OCR 2022 Turn over 18 Market demand is the total demand for goods and services as a result of A adding together all individual demand B adding together direct and indirect demand C changes in prices at each quantity D consumers’ willingness and ability to buy Your answer [1] 19 Total output Total revenue (£) 1 10 2 18 3 24 4 28 The table shows the total revenue of a firm. If output increases from 1 to 4, what is the change in the firm’s average revenue? A + £28 B + £18 C – £10 D – £3 Your answer [1] 20 A clothing manufacturer has decided to specialise in making trousers for women. Which of the following would be a direct benefit of this for the producer? A Creation of jobs for the local skilled workers B Increase of job satisfaction of the workers C Increase of productivity of the workers D Greater likelihood that workers will change jobs Your answer [1] 8 © OCR 2022 Section B Answer all the questions in this section. 21 Extract 1 Periff Construction Ltd Alex and Zayn are joint owners of Periff Construction Ltd which specialises in housebuilding and extensions. They are looking to expand their business and so need to buy more equipment. They hope to buy this at an auction, but have heard that other competitors will also be there, which could lead to higher prices. Alex and Zayn have looked at previous auctions and have seen that if prices rise, this leads to more supply in the future. Price (£) Quantity supplied at the first auction Quantity supplied at the next auction 1000 5 5 2000 5 6 3000 5 8 4000 5 12 5000 5 20 The extra equipment is needed as consumer income is rising. The government has also tried to help the construction industry by cutting income tax. Alex has explained to Zayn that to make the most of the tax cuts they will need to increase output and improve productivity. This is because the tax cuts are likely to increase the competition they face. (a) An auction is a form of market. Explain what is meant by a market. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] (b) Explain which sector of the economy Periff Construction Ltd operates in. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [2] 9 © OCR 2022 Turn over (c) Using a diagram, analyse how a rise in consumer income could affect the market price and quantity of Periff Construction Ltd’s products. ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... ................................................................................................................................................... .............................................................................................................................................. [6] 10 © OCR 2022 (d) (i) Using the information in Extract 1 on page 8 draw a supply curve showing the supply of equipment at the next auction. 0 0 5 10 Quantity Price (£) 15 20 1000 2000 3000 4000 5000 [2] (ii) Explain one way in which a business could increase prod [Show More]

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