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 11 printed pages and 1 blank page.
© UCLES 2005
1 What will happen if a firm is subsidised by an amount equivalent to the external benefits that it
confers on the rest of society?
A Resource allocation will be improved.
B The firm will produce less.
C There will be a misallocation of resources.
D There will be no effect upon production.
2 The table shows the total utility that an individual derives from consuming different quantities of a
quantity of good
The individual's marginal utility of money is $1 = 2 units of utility.
What is the maximum quantity of the good that the individual will buy when its price is $6?
A 2 units
B 3 units
C 4 units
D 5 units