A level south west regional mock gce 2022 economics 3
A level south west regional mock gce 2022 economics 3
Contrary to Keynesian economics the economy does not change from price stability and unemployment
to full employment and inflation. It changes slowly from one to the other. The relation between price
changes and the volume of unemployment can be shown…The greater the unemployment the lower the
rate of inflation.
Coined from Basic Economics by G.L. Thirkcttle, 3rd Edition, Page 150.
a) Illustrate with a diagram the relationship between price changes and the volume of unemployment as implied
in the passage.
b) What name is given to the diagram drawn in a) above.
c) State the nature of the relationship implied by the underlined phrase.
d) State two types of:
i. Inflation
ii. Unemployment
e) When can inflation be:
i. Desirable
ii.Highly undesirable
2. Firms operating under conditions of monopolistic competition, oligopoly or monopoly are price makers. Unlike
price takers, changes in their output influences price. To sell more the price maker has to lower price…A number
of features about the relationship between output and revenue in the case of a price maker can be gleaned. A price
maker’s total revenue has a different shape from that of a perfectly competitive firm and a firm with market power
will usually seek to produce where demand is elastic.
Adapted from Stanlakc’s Introductory Economics by S.J Grant, 7th Edition, Page 354-355.
a) Define each of the following as used in the passage:
i. Price maker
ii. Price taker
b) Illustrate with a diagram the relationship between Average and Marginal revenues for:
i. A price maker
ii.A price taker
c) State the nature of price elasticity of demand for a monopolist when:
i. Total revenue is rising
ii.Total revenue is maximized
iii. Total revenue is falling
