UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education Advanced Level
Paper 3 Multiple Choice (Extension)
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
Soft pencil (type B or HB is recommended)
READ THESE INSTRUCTIONS FIRST
Write in soft pencil.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Write your name, Centre number and candidate number on the answer sheet in the spaces provided
unless this has been done for you.
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C, and D.
Choose the one you consider correct and record your choice in soft pencil on the separate answer sheet.
Read the instructions on the answer sheet very carefully.
Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.
This document consists of 10 printed pages and 2 blank pages.
© UCLES 2004
1 What does not pose a threat to the achievement of allocative efficiency?
imperfect information on the part of consumers
the existence of externalities
the presence of monopolistic elements
2 What is not held constant when calculating the income effect of a change in the price of a good?
the consumer’s money income
the consumer’s preferences
the consumer’s real income
the prices of other goods
3 A firm is operating in an imperfectly competitive market.
Why does the marginal revenue product of a factor of production employed by the firm fall as
more of the factor is employed?
Its marginal physical product alone falls.
Its marginal revenue alone falls.
Its marginal physical product and its marginal revenue both fall.
D The supply price of the factor rises.
4 To increase its labour force from 50 to 51 workers, a firm has to increase the daily wage rate from
$600 to $610.
What is the marg