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 12 printed pages.
1 An economy is operating at a point inside its production possibility curve.
Why is this described as inefficient?
Individuals are enjoying too much leisure.
B Labour and capital are combined in the wrong proportions.
C More of one good can be produced without decreasing production of another.
D There are shortages of some goods and an excess supply of others.
2 A utility-maximising consumer spends his disposable income on food and clothing. When his
weekly income is $40 he buys 5 units of food at a unit price of $5. His marginal utility from food
consumption is 10 utility units.
If the price of a clothing unit is $0.50, the consumer's marginal utility from clothing is
A equal to that derived from food.
C 1 utility unit.
D 10 utility units.
In the diagram a consumer's budget line shifts from JK to GH.
Which of the following must be correct?
A There has been a change in the consumer's money income.
B There has been a change in the consum