9708A. 12 December

1. What is most likely to be found when comparing the long-run equilibrium outcome in monopolistic competition with that in perfect competition?
A a greater degree of excess capacity in monopolistic competition
B a higher level of profit in monopolistic competition
C a larger number of firms in monopolistic competition
D a more price-elastic demand curve in monopolistic competition

2. A government divides a nationalised rail service and sells it to five private companies. The largest of these companies dominates the four smaller companies.
How will these changes affect the market structure for rail services?
A It will change from monopoly to monopolistic competition.
B It will create an oligopoly with the possibility of price leadership.
C It will encourage freedom of entry due to lower capital costs.
D It will guarantee ticket prices based on average costs.

3. What is meant by ‘real wages’?
A the marginal physical product of labour
B the opportunity cost of labour
C the purchasing power of money wages
D wages net of tax

4. The graph shows the percentage growth in average earnings for the UK economy.

What is the most likely cause of the pattern shown in the graph?
A a decrease in the supply of labour
B a decrease in the interest rate
C an increase in productivity
D an increase in the size of the labour force

5. Which combination of policy changes is most likely to redistribute income from the richest households to the poorest households in an economy?

Indirect taxesMeans-tested benefitsBenefits for everyone


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