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100+ Free CAPE Economics Unit 1 Practice Questions

Pass your CAPE Economics Unit 1 — Microeconomics (Paper 01 Multiple Choice) exam on the first try — instant access, no signup required.

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Key Facts: CAPE Economics Unit 1 Exam

45 items

Paper 01 has 45 compulsory multiple-choice items covering all three Modules

CXC CAPE Economics Syllabus

15 per Module

Paper 01 draws 15 multiple-choice items from each of the three Modules

CXC CAPE Economics Syllabus

1 hour 30 minutes

Time allowed for the Paper 01 multiple-choice paper

CXC CAPE Economics Syllabus

30 per cent

Share of the Unit grade contributed by Paper 01

CXC CAPE Economics Syllabus

2 marks each

Each Paper 01 item is allocated 2 marks for a raw total of 90

CXC CAPE Economics Syllabus

Grades I to VI

CXC reports CAPE results on a six-point grade scheme, not a fixed percentage

Caribbean Examinations Council

BBD$69.50

CXC CAPE Unit (subject) fee on the published scale of examination fees (mid-2025)

CXC Scale of Examination Fees

100

Free original practice questions in this bank

OpenExamPrep

CAPE Economics Unit 1 (Microeconomics) is set by CXC and covers three Modules: Methodology — Demand and Supply; Market Structure, Market Failure and Intervention; and Distribution Theory. Paper 01 is a compulsory multiple-choice paper of 45 items (15 per Module), lasting 1 hour 30 minutes, with each item worth 2 marks (90 raw marks) and a 30% weighting. Paper 02 essays are 50% and SBA/Paper 032 is 20%. Results use Grades I to VI rather than a fixed pass mark. This 100-question bank provides original Paper 01-style practice across all three Modules.

Sample CAPE Economics Unit 1 Practice Questions

Try these sample questions to test your CAPE Economics Unit 1 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1The central problem of economics arises primarily because:
A.Resources are scarce relative to unlimited wants
B.All goods are free goods
C.Governments always allocate resources inefficiently
D.Money supply grows faster than output
Explanation: Economics studies how societies allocate scarce resources among competing wants. Scarcity means resources are limited while wants are effectively unlimited, so choices and opportunity costs are unavoidable.
2Which of the following is an example of a free good?
A.Bottled drinking water sold in a shop
B.Sunshine in an uncongested outdoor space
C.Public healthcare funded by taxes
D.A road built by the government
Explanation: A free good is available in sufficient quantity that its market price is zero and consuming more does not require forgoing other scarce resources. Uncongested sunshine fits that definition; the other options use scarce resources and have opportunity costs.
3Opportunity cost is best defined as:
A.The total money spent on a purchase
B.The sum of all alternatives that could have been chosen
C.The next-best alternative forgone when a choice is made
D.The accounting profit earned by a firm
Explanation: Opportunity cost measures the value of the next-best forgone option. It focuses on the best alternative given up, not every possible alternative or merely the cash outlay.
4A student spends three hours revising Economics instead of working a paid shift. The opportunity cost of revising is:
A.The tuition fee already paid for the course
B.The cost of the textbooks purchased earlier
C.The grade eventually obtained in Economics
D.The wages that could have been earned in those three hours
Explanation: The next-best alternative given up is the paid work, so the opportunity cost is the forgone wages (and related benefits). Sunk costs such as tuition or textbooks already paid are irrelevant to the marginal decision.
5On a production possibilities frontier (PPF), a point inside the curve indicates:
A.Inefficient use of resources or unemployment of some resources
B.An unattainable combination given current resources and technology
C.Maximum efficient production of both goods
D.Technological progress that has shifted the frontier outward
Explanation: Points inside the PPF are attainable but inefficient: more of one or both goods could be produced by using idle or misallocated resources. Unattainable combinations lie outside the frontier.
6A bowed-out (concave to the origin) PPF usually reflects:
A.Constant opportunity cost between the two goods
B.Increasing opportunity cost as resources are reallocated between goods
C.Decreasing opportunity cost as more of one good is produced
D.That both goods are free goods
Explanation: A concave PPF arises when resources are not equally suited to producing both goods, so shifting resources toward one good raises the opportunity cost of that good. Constant opportunity cost yields a straight-line PPF.
7Which change would shift a country's PPF outward?
A.A rise in unemployment with technology unchanged
B.A reallocation of existing resources from one good to another
C.An improvement in technology that raises productivity
D.A movement from an interior point onto the frontier
Explanation: Outward shifts of the PPF require growth in resources or technology. Moving between points on or inside a given frontier is reallocation or efficiency improvement, not an outward shift of capacity.
8Which statement is a positive economic statement?
A.Governments should raise the minimum wage to reduce poverty
B.It is unfair that top executives earn more than nurses
C.Society ought to tax luxury goods more heavily
D.An increase in the minimum wage will reduce employment of low-skilled workers by 2%
Explanation: Positive statements are testable claims about what is or will be. The employment effect claim can be checked against data. The other options express value judgments and are normative.
9In a pure market (price) system, resources are allocated mainly by:
A.The interaction of demand and supply through prices
B.Central planners setting output quotas
C.Tradition and custom alone
D.Random rationing without prices
Explanation: In a market economy, relative prices signal scarcity and coordinate decisions of buyers and sellers. Planned systems rely on quotas; tradition-based systems rely on custom.
10A movement along the demand curve for a product is caused by:
A.A change in consumer incomes
B.A change in the product's own price
C.A change in the price of a substitute
D.A change in tastes and preferences
Explanation: A change in own price causes a movement along a given demand curve (change in quantity demanded). Changes in income, related prices or tastes shift the demand curve.

About the CAPE Economics Unit 1 Exam

CAPE Economics Unit 1 is the microeconomics Unit of the Caribbean Advanced Proficiency Examination in Economics administered by the Caribbean Examinations Council. It comprises three Modules: Module 1 Methodology — Demand and Supply; Module 2 Market Structure, Market Failure and Intervention; and Module 3 Distribution Theory. External assessment is Paper 01 (45 multiple-choice items in 1 hour 30 minutes, 30%) and Paper 02 (three compulsory questions in 2 hours 30 minutes, 50%), with a School-Based Assessment or Paper 032 alternative contributing 20%. Paper 01 emphasises interpretation of economic data and quantitative problem-solving; silent non-programmable calculators are allowed. Results are reported on Grades I to VI.

Assessment

Paper 01: 45 compulsory multiple-choice items, 15 from each Module, each worth 2 marks (90 raw marks, 30%). Paper 02: three compulsory essay/structured questions, one per Module (50%, 2 hours 30 minutes). Paper 031 School-Based Assessment project, or Paper 032 alternative for private candidates (20%).

Time Limit

Paper 01 lasts 1 hour 30 minutes; Paper 02 lasts 2 hours 30 minutes.

Passing Score

No fixed numeric pass mark. CAPE results are reported as Grades I to VI (Grade I highest), combining external papers (80%) and SBA/Paper 032 (20%). Paper 01 alone contributes 30% of the Unit grade.

Exam Fee

CXC CAPE Unit fee BBD$69.50 plus CAPE candidate entry BBD$48.50 (CXC scale of fees as of mid-2025); Local Registrars may add territory fees. Confirm the current total with your school or Local Registrar. (Caribbean Examinations Council (CXC))

CAPE Economics Unit 1 Exam Content Outline

33%

Module 1: Methodology — Demand and Supply

Paper 01 draws 15 items here. Topics include scarcity, free and economic goods, opportunity cost and the central economic problem; the production possibilities frontier (attainable, unattainable, efficient and inefficient regions; growth and technological change); positive versus normative economics; market, planned and mixed allocation mechanisms; determinants of demand and supply and shifts versus movements; price, income and cross elasticities with calculation and interpretation; market equilibrium, surplus and shortage; and the effects of price ceilings, price floors, taxes and subsidies.

33%

Module 2: Market Structure, Market Failure and Intervention

Paper 01 draws 15 items here. Topics include characteristics and outcomes of perfect competition, monopoly, monopolistic competition and oligopoly; barriers to entry and price discrimination; concentration ratios and related measures of market power; sources of market failure including negative and positive externalities, public goods, merit and demerit goods, and asymmetric information; and intervention through taxes, subsidies, regulation, competition policy, price controls, and private responses such as corporate social responsibility.

34%

Module 3: Distribution Theory

Paper 01 draws 15 items here. Topics include the marginal productivity theory of factor pricing; wage determination under competitive and imperfect labour markets including monopsony, trade unions and minimum wages; economic rent, interest and profit; absolute and relative poverty; income inequality measured by the Lorenz curve and Gini coefficient; and government redistribution through progressive taxation, transfers and provision of merit goods, including the equity–efficiency trade-off.

How to Pass the CAPE Economics Unit 1 Exam

What You Need to Know

  • Passing score: No fixed numeric pass mark. CAPE results are reported as Grades I to VI (Grade I highest), combining external papers (80%) and SBA/Paper 032 (20%). Paper 01 alone contributes 30% of the Unit grade.
  • Assessment: Paper 01: 45 compulsory multiple-choice items, 15 from each Module, each worth 2 marks (90 raw marks, 30%). Paper 02: three compulsory essay/structured questions, one per Module (50%, 2 hours 30 minutes). Paper 031 School-Based Assessment project, or Paper 032 alternative for private candidates (20%).
  • Time limit: Paper 01 lasts 1 hour 30 minutes; Paper 02 lasts 2 hours 30 minutes.
  • Exam fee: CXC CAPE Unit fee BBD$69.50 plus CAPE candidate entry BBD$48.50 (CXC scale of fees as of mid-2025); Local Registrars may add territory fees. Confirm the current total with your school or Local Registrar.

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

CAPE Economics Unit 1 Study Tips from Top Performers

1Revise all three Modules evenly, because Paper 01 takes exactly 15 items from each Module.
2Practise elasticity and equilibrium calculations with a silent non-programmable calculator, as Paper 01 emphasises quantitative problem-solving.
3Distinguish carefully between a movement along a demand or supply curve and a shift of the curve — a frequent multiple-choice trap.
4Learn the defining features of each market structure (number of firms, product type, barriers, price-taking versus price-making) so you can classify scenarios quickly.
5For Module 3, be able to interpret a Lorenz curve and Gini coefficient and to distinguish absolute from relative poverty.
6Work through past Paper 01 papers under timed conditions, aiming for about two minutes per item, and review every wrong answer against the syllabus.

Frequently Asked Questions

Is CAPE Economics Unit 1 Paper 1 multiple choice?

Yes. Paper 01 comprises 45 compulsory multiple-choice items covering all three Modules, with 15 items from each Module. Each item is worth 2 marks and the paper contributes 30% of the Unit grade.

How long is CAPE Economics Unit 1 Paper 1?

Paper 01 lasts 1 hour 30 minutes (90 minutes) for the 45 multiple-choice items.

What are the three Modules in CAPE Economics Unit 1?

Module 1 is Methodology — Demand and Supply; Module 2 is Market Structure, Market Failure and Intervention; and Module 3 is Distribution Theory. Unit 1 is the microeconomics Unit.

How is CAPE Economics Unit 1 assessed overall?

External assessment is Paper 01 multiple choice (30%) and Paper 02 three compulsory questions (50%), with School-Based Assessment or Paper 032 for private candidates contributing 20%.

What grade do I need to pass CAPE Economics Unit 1?

CXC reports results on a six-point grade scheme from Grade I to Grade VI rather than a fixed percentage pass mark. There is no published numeric cut score.

Are these official CXC questions?

No. These are original OpenExamPrep practice questions modelled on the syllabus and Paper 01 style. Official past papers and the syllabus are available from CXC.