A-Level Economics

Question 1

In Singapore's A-Level Economics, what is the concept of 'scarcity'?

Accepted Answer

The fundamental economic problem that human wants are unlimited but resources are limited

Answer

Scarcity is the central economic problem — unlimited human wants versus limited productive resources. This creates the need for choice and opportunity cost, which is the foundation of economics.

Question 2

What determines the price elasticity of demand for a good?

Accepted Answer

Availability of substitutes, proportion of income spent, necessity vs luxury, and time period

Answer

Price elasticity of demand depends on multiple factors: availability of close substitutes (more substitutes = more elastic), proportion of income, whether the good is a necessity or luxury, and the time period considered.

Question 3

What is a 'market failure' in the context of Singapore economics?

Accepted Answer

When the free market fails to allocate resources efficiently, leading to a welfare loss

Answer

Market failure occurs when the price mechanism fails to achieve allocative efficiency. Examples include externalities, public goods, merit/demerit goods, and imperfect information.

Question 4

How does Singapore's government use the Certificate of Entitlement (COE) system to manage car ownership?

Accepted Answer

By limiting the number of new vehicles through a quota system where COEs are bidded for

Answer

The COE system is a quota mechanism where the government controls the number of new vehicles by issuing a fixed number of COEs that must be bidded for. This manages road congestion in land-scarce Singapore.

Question 5

What is 'comparative advantage' in international trade?

Accepted Answer

A country's ability to produce a good at a lower opportunity cost than another country

Answer

Comparative advantage means a country can produce a good at a lower opportunity cost relative to another country. Even if one country is better at producing everything (absolute advantage), trade based on comparative advantage benefits both.

GCE A-Level Practice Test

GCE A-Level Practice Test

A-Level Economics