IGCSE Economics Paper-1: Specimen Questions with Answers 48 - 49 of 64

Question 48

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Question

MCQ▾

Table below shows the output and cost of production of a firm.

Table below shows the output and cost of production of a firmTable below shows the output and cost of production of a firm

Days

Output

Cost (Rupees)

10

7

500

20

8

650

30

9

800

40

10

1150

From the table choose the correct option.

Choices

Choice (4)

a.

Output per worker-Increase, Cost- Increase

b.

Output per worker-Decrease, Cost- Increase

c.

Output per worker-No change, Cost- Increase

d.

Output per worker-Decrease, Cost-No change

Answer

c.

Explanation

  • From the following table it can be clearly seen that the output per worker is not changing it is constant, on the other hand, cost of production is increasing with the increase in the quantity. The increasing marginal cost shows that the cost of production is increasing with the number of units.

  • Marginal Cost .

  • For day 10 Marginal cost will be nil, on day 20 marginal cost will be on day 30 marginal cost will be , on day 40 marginal cost will be .

  • So, we can clearly see that the change in the cost of production is increasing at an increasing rate with the output level.

Question 49

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Question

MCQ▾

The faster-growing countries observe a trend in rise of inflation –known as structural inflation.

What are the environmental concerns that are associated with it?

Choices

Choice (4)

a.

Increase in household and industrial waste.

b.

Fast growth can create negative externalities.

c.

Increased consumption of goods that can damage social welfare

d.

All a. , b. and c. are correct

Answer

d.

Explanation

  • Externalities reduce social welfare and lead to market failure. Growth can lower the sustainable growth and damage the environment.

  • Economic growth can cause destruction of rain forest, over-exploitation of resources, loss of natural habitat due to the construction of new roads, hotels, retail malls, and industrial estates. Some of the threats include:

    • Depletion of resources

    • Expansion of waste and pollution

    • Over-population

    • Extinction of species

  • An increase in real GDP can also be accompanied by widening income and wealth inequality in society, which leads to increase in poverty.

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