The Government ministers of Sandland

The Government ministers of Sandland
1 Read each question carefully. 2 Attempt all the questions. 3 All answers are to be written in this answer book. 4 Do not write in the margins. 5 Before leaving the examination room you must give this book to the Invigilator. If you do not, you may lose all the marks for this paper.
1. Study the picture below and answer the questions which follow. The Government ministers of Sandland are meeting to decide how to spend £100 million.
2. 1. (continued) (b) From the picture, identify one example of each of the following decisions: (i) What to produce;

(ii) How to produce it;

(iii) Who to produce it for. 3

(c)

(i) Identify which sector of the economy is shown in the picture.

Tick the correct box. Public Sector Private Sector (ii) Explain your answer to (c)(i) 1

1 (d) The Government of Sandland picks the first choice and spends the money on healthcare. (i) From the picture, identify the opportunity cost of spending the money on healthcare. 1 (ii) Explain your answer to (d)(i).

2. Study the graph below and answer the questions which follow.
Stewitt’s Scottish Flags Ltd
Costs and Revenue for Flags

700 600 Cost/revenue (£) 500 400 300 200 100 0 0 10 20 30 40 Output/sales (Number of Flags) 50 60 Total costs Total revenue

(a) At an output level of 60, identify: (i) Total Revenue: £ (ii) Total Cost: £ 1 1

(iii) if Stewitt’s Scottish Flags Ltd makes a profit or a loss.

Tick the correct box. Profit Loss

(iv) Explain your answer to (a)(iii).

1 (b) From the graph, calculate the selling price of one flag. Answer: £ Show your working here.

2. (continued) (c) (i) From the graph, identify the value of fixed costs for Stewitt’s Scottish Flags Ltd. Answer: £ (ii) Give one example of a possible fixed cost for Stewitt’s Scottish Flags Ltd.

3. (continued) (c) From the picture, identify 3 services offered by The SandCastle Bank. 1 2 3
3

4. Study the picture below and answer the questions which follow.

(a) Sandland Hospital has decided to appoint Dr Hewitt as their Senior Surgeon. (i) What type of resource is Dr Hewitt?

Tick the correct box. a natural resource a human resource a man-made resource 1

4. (a) (continued) (ii) From the picture, identify 3 reasons why Sandland Hospital selected Dr Hewitt.

3 3 (b) (i) How much money will Dr Hewitt receive in salary each year? Answer: £ (ii) How much money will Dr Hewitt earn in total each year? 1 1

Answer: £ (iii) Calculate Dr Hewitt’s “take home pay”.

Answer: £ (c) Only 5 people applied for the job of Senior Surgeon at Sandland Hospital. Suggest 2 economic reasons why so few people decided to apply for the job of Senior Surgeon. 1

4. (continued) (d) Suggest 3 non-financial rewards which Sandland Hospital might have offered Dr Hewitt to encourage him to take the job at the hospital. 1

5. Study the picture below and answer the questions which follow.
(a) The nursery belongs to which sector of the economy? Tick the correct box Primary Secondary Tertiary (b) (i) From the picture, identify whether Hartlands Children’s Nursery is capital intensive or labour intensive. 1

Tick the correct box. Capital intensive Labour intensive [0820/27/01] Page twelve 1

5. (b) (continued) (ii) Explain your answer to (b)(i).

Marks KU ES

1 (c) From the picture, identify: (i) an example of money being used as a measure of value; 1 (ii) an example of money being used as a store of value; 1 (iii) evidence of inflation. 1 (iv) Explain the effect inflation might have on the number of people bringing their children to the nursery.

2 (d) Hartlands Children’s Nursery is going to merge with Kardan Nursery to become one business. (i) Which type of integration is this? Tick the correct box. Horizontal Integration Vertical Integration (ii) Explain your answer to (d)(i) 1

5. (d) (continued) (iii) State one advantage and one disadvantage of this merger for those using the nursery:
advantage;

disadvantage.

6. Study the picture below and answer the questions which follow.

(a) Suggest 2 ways in which customers of Farrelly’s Fashion Fix benefit from the shop buying clothes from abroad. 1 2 (b) UK clothes shops increase the amount they spend on clothing from abroad. (i) Identify the effect of this action. 2

Tick the correct box. Imports will rise Exports will rise (ii) Explain your answer to (b)(i). 1
6. (continued) (c) Name the currency which the producer of the kimonos would expect to be paid in.
1 (d) Scottish firms import 10,000 shirts from a company in the USA. The American firm charges 20 Dollars per shirt. If the exchange rate is £1 = $2, what will be the total amount paid for the order in Sterling? Answer: £ Show your working here.

2 (e) Identify in what way each of the following events may affect the supply of Scottish sweaters to Farrelly’s Fashion Fix. Tick the correct box. The first one is done for you. Events The cost of transporting wool falls. The price of wool rises. Foot and mouth disease kills many sheep. The Government increases the rate of Corporation Tax. 3 Increase in Supply Fall in Supply

7. Study the picture below and answer the questions which follow.

(a) From the picture identify: a direct tax; an indirect tax. (b) Identify 2 ways the Government of Sandland intends to raise the money needed to pay for the building of the new hospitals. 1 2 (c) (i) What effect might the changes in taxation have on the standard of living of workers in Sandland? 2 2

Tick the correct box. Increase Decrease

1
7. (c) (continued) (ii) Explain your answer to (c)(i)

2 (d) Suggest one item of capital expenditure and one item of current expenditure in each of the following areas of Government spending. Capital Education Health 4 Current
1

1 (d) The Commonwealth Games are being held in Scotland next year and the market for Scottish flags is expected to increase. (i) Explain what is meant by the term “market”.

1 (ii) A shop is one example of a market. Give 2 other examples of a market. 1 2 2

3. Study the picture below and answer the questions which follow.
(a) The Government of Sandland has decided to use sand as a form of money. Other than not being accepted as money, give 2 reasons why sand would not be a good form of money. 1

2 2 (b) (i) In the UK, notes and coins are used to pay for goods and services.

Name 2 other ways to pay for goods and services. 1 2 (ii) Choose one of the methods of payment suggested in (b)(i). Explain why someone might prefer to use this form of money instead of notes and coins. 2
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