Section A box Answer all questions in this section. Only one answer per question is allowed. For each question completely fill in the circle alongside the appropriate answer. CORRECT METHOD WRONG METHODS If you want to change your answer you must cross out your original answer as shown. If you wish to return to an answer previously crossed out, ring the answer you now wish to select as shown. 0 1 Which one of the following is a function of prices in a market economy? [1 mark] A Allocating resources to the production of public goods B Ensuring that the distribution of goods and services is fair C Incentivising firms to produce the goods consumers want D Providing a measurement of positive and negative externalities 0 2 Which one of the following is a normative statement? The price of petrol [1 mark] A fell in real terms last year. B is affected by supply. C is now too high. D will rise next year. 3 *03* Turn over ► IB/M/Jun24/7135/1 Do not write outside the box 0 3 Figure 1 shows the demand curve for Economics textbooks. Figure 1 Which one of the following could have caused the movement along the demand curve from L to M? [1 mark] A A fall in the number of people studying Economics B A fall in the price of Economics textbooks C An increase in consumer incomes D An increase in the price of paper 0 4 Partial market failure occurs when [1 mark] A prices fall causing firms to make losses. B there are no positive externalities in consumption. C there is a missing market for the product. D there is immobility of factors of production. 4 *04* IB/M/Jun24//7135/1 Do not write outside the box 0 5 The price of carrots falls from 60p to 54p per kilo. As a result of this fall in price, the quantity supplied falls by a quarter. What is the price elasticity of supply? [1 mark] A 0.25 B 0.4 C 2.5 D 4 0 6 In a perfectly competitive market, a firm is most likely to [1 mark] A charge the same price as other firms. B earn large profits in the long run. C produce the same output as its competitors. D spend large amounts of money on advertising