9708A. 22 February

1. A firm currently employs 30 workers at a daily wage of $50 each.
The marginal cost of employing one extra worker is $112 per day.
By how much will the firm have to increase the daily wage in order to increase its labour force
from 30 to 31 workers?
A $2 B $4 C $62 D $112

2. In the diagram, HN is the initial supply of labour curve faced by a firm, and RM is its initial
marginal cost of labour curve.

What will be the firm’s new labour supply curve if the workers join a trade union and achieve a
union negotiated wage, OW?

3. Output per worker in an industry increases more slowly than the industry’s total output.
What could explain this?
A a decrease in labour productivity
B an increase in employment
C an increase in overtime working
D an increase in the hourly wage rate

4. On a diagram showing a production possibility curve, what definitely represents long-run
economic growth?
A a change in the slope of the curve
B a movement from a point below the frontier to a point on the curve
C a movement from one point to another along a given curve
D an outward shift of the curve

5. When is economic growth most likely to promote economic development?
A when it achieves maximum rates of extraction of raw materials
B when it concentrates on increasing production
C when it discovers valuable new resources in remote natural environments
D when it provides the funds to finance cleaner production processes


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