Madhrasathul Ahmadhiyya, Male FIRST TERM TEST 2002

Grade 10 ECONOMICS Paper 2 Duration: 2 hours Information and instructions:

Write your name, index number, class and register number on ALL answer sheets. Answer ANY FOUR questions including question number one. Question number one is COMPULSORY. Read the instructions carefully. Write your answers on separate answer sheet[s] provided. Use black or blue ballpoint pen to answer.

1. Study the graph below, which is based on statistics from H. M Treasury and answer the questions, which follow.

i)

Explain the difference between a service industry and a manufacturing industry, giving examples to illustrate your answer. ii) Describe what happened to the share of services in total output since 1950. iii) The change in manufacturing share of output shown in the graph does not necessarily mean that less manufactured goods are being produced. Explain why this is so. iv) What would be the possible effects on an economy of a growth in the tertiary sector and a decline in the primary and secondary sectors?

[4] [2] [2] [12]

Madhrasathul Ahmadhiyya

First Term Test 2002

Economics Grade 10

paper 2

Page 1 of 2

2. Here are two statements from a UK newspaper published in July 1999. UK small firms were deliberately restricting their growth in order to avoid becoming caught by too many regulations Vodafone, the global mobile phone leader, has agreed to payUS$1.36billion for CommNet Cellular a US based company with 300 000 customers in nine western states. i) Identify three measures that might be used to classify a firm as large or small. ii) Discuss why some firms remain small. iii) What advantages do other firms gain by growing in size? 3. Azerbaijan was one the worlds first great oil suppliers, producing 51 % of the worlds oil at the beginning of the 20th century. In recent years, oil production has been falling, and many of its oil fields have become exhausted. The most important task, therefore, is to develop other sectors so the economy becomes more diversified. (a) Would oil supply be in the primary, secondary or tertiary service sector? (b) Give one other example of an industry in the same sector as oil production. (c) Draw a demand and supply diagram to show what has happened to oil supply in Azerbaijan in recent years. (d) What may happen in the market for a substitute product if the supply of a necessity such as oil becomes exhausted? (e) Explain with examples what is meant by specialization and diversification. [4] (f) How far is it advantages for a country to specialize in the production of one commodity 4. (a)Contrast a market economy with a command economy. (b)How does a mixed economy try to obtain the advantages of both a market and a command economy? Does a mixed economy have any advantages? Explain your answer. [6] 5. In a European country, despite protests, the government has decided to allow a proposal to build a major road through an area of outstanding natural beauty. Developers say the proposal will create many badly needed new jobs and bring vital industry to the area. (a) Which groups of people would be likely to gain from such a decision? (b) Why is government usually involved in decisions about major road developments? (c) Use the above statement to explain the concept of social cost. (d) Do you support the continued building of road network if they create social costs? Give reasons for your answer. 6. Some governments impose tariffs and quotas on imports. (a) Distinguish between tariffs and quotas. (b) What effect might a tariff on imports have in the country that imposes the tariff? (c) Discuss what might happen if free trade between countries were established and tariffs and quotas were abolished. 7. (a) Explain labour costs are a fixed or a variable cost. (b) The average hourly wage rate in Portugal is less than in Germany but the goods produced are not necessarily cheaper. What might explain this? Discuss the various factors affecting the wage rate. [3] [7] [3] [7] [3] [7] [10] [4] [6] [10] [1] [1] [4] [4] [6] [6] [8]

[3] [7] [10]

Madhrasathul Ahmadhiyya

First Term Test 2002

Economics Grade 10

paper 2

Page 2 of 2