These are original Marlbridge practice questions, not past exam questions. All questions use Valdoria, a fictional country whose currency is the valda (VD); all people, places and numbers are fictional. The rubrics are a suggested Marlbridge rubric to help you check your work; they are not an official scoring guideline. No calculator is needed.
Question 1 (multiple choice · foundation)
Which of the following best describes the economic problem of scarcity?
- (A) A shop has sold all its bread by midday, and customers who arrive later cannot buy any.
- (B) The resources available to produce goods and services are limited compared with people’s wants.
- (C) A country is poor, so its people cannot afford the goods they need.
- (D) The government sets limits on how much of a good firms may produce.
Answer and explanation
Answer: (B). Scarcity is the gap between limited resources and unlimited wants. It affects every economy.
- (A) describes a shortage in one market at one time, not the general problem of scarcity.
- (C) suggests scarcity affects only poor countries. Rich countries face it too, because their wants are also larger than their resources.
- (D) describes a government rule (a quota). That is a policy choice, not the basic economic problem.
Question 2 (multiple choice · foundation)
A Valdorian bakery uses the items below. Which one is an example of capital?
- (A) The VD 50,000 the bakery keeps in its bank account
- (B) The wheat fields that the bakery’s flour comes from
- (C) The ovens the bakery uses to bake bread
- (D) The skill of the head baker
Answer and explanation
Answer: (C). Ovens are human-made and used to produce bread, so they are capital.
- (A) is money. Money can buy capital, but it produces nothing by itself, so it is not capital in economics.
- (B) is land: a natural resource.
- (D) is part of labour. A worker’s skills are human capital, which raises the quality of labour; they are not physical capital like an oven.
Question 3 (multiple choice · core)
Which statement about scarcity is correct?
- (A) A country with very high income no longer faces scarcity.
- (B) A meal given to students at no charge is a free good, so it uses no scarce resources.
- (C) Because resources are limited, using them to produce more of one good means giving up some of another good.
- (D) Scarcity exists only when the price of a good is rising.
Answer and explanation
Answer: (C). This is the trade-off that scarcity creates: resources used one way cannot be used another way at the same time.
- (A) is wrong because wants grow with income. Even a very rich country cannot produce everything its people want.
- (B) confuses a zero price with a free good. The meal still uses food, labour and kitchen equipment that could have been used elsewhere.
- (D) links scarcity to price changes. Scarcity exists whether prices are rising, falling or steady.
Question 4 (multiple choice · core)
Tomas leaves his job in Valdoria to start a company that makes solar lamps. He rents a workshop, hires four workers, buys tools, and uses his savings, knowing he will lose them if the company fails. Which economic resource is shown by his decision to combine the other resources and accept the risk of loss?
- (A) Land
- (B) Labour
- (C) Capital
- (D) Entrepreneurship
Answer and explanation
Answer: (D). Organising land, labour and capital, and bearing the risk of failure, is entrepreneurship.
- (A) Land is a natural resource. Nothing in the described role comes from nature.
- (B) The four workers supply labour. Tomas may also work in the workshop, but the question asks about organising and risk-taking, which is what makes entrepreneurship a separate resource.
- (C) His savings are money, which is not capital; the tools he buys are capital, but buying them is not the role the question describes.
Question 5 (calculation · core)
Tarn is a fictional village in Valdoria with 400 hectares of land that can be developed. Villagers want to use the land for three purposes:
| Use | Land needed (hectares) |
|---|---|
| Maize farming | 250 |
| New housing | 120 |
| Solar farm | 90 |
(a) Calculate the total land wanted and compare it with the land available. (b) The village decides to use land for maize farming and housing. How much land is left, and can the solar farm still be built? (c) Explain how your answers show scarcity and a trade-off.
Worked solution and suggested Marlbridge rubric
(a) Total wanted = 250 + 120 + 90 = 460 hectares. Only 400 hectares are available, so the village is 60 hectares short. It cannot meet all three wants.
(b) Maize + housing = 250 + 120 = 370 hectares. Land left = 400 − 370 = 30 hectares. The solar farm needs 90 hectares, so it cannot be built (it is 60 hectares short).
(c) The villagers’ wants (460 hectares) are greater than the land available (400 hectares): the resource is scarce. Using land for maize and housing means that land cannot be used for the solar farm. Giving up the solar farm to get maize and housing is the trade-off.
Check. Whichever two uses the village chooses, the third is 60 hectares short: maize + solar leaves 60 hectares for housing, which needs 120; housing + solar leaves 190 for maize, which needs 250. The shortfall is always the 60 found in (a).
| Point | What earns it |
|---|---|
| 1 | Total of 460 hectares compared with 400, showing a 60-hectare gap |
| 1 | 30 hectares left and the conclusion that the solar farm cannot be built |
| 1 | Identifies wants greater than available land as scarcity |
| 1 | Explains that choosing maize and housing means giving up the solar farm (the trade-off) |
Accept values carried forward from an arithmetic slip in (a).
Question 6 (constructed response · core)
Ferrovald is a fictional ferry company that carries passengers across a Valdorian lake.
(a) Classify each of these as land, labour, capital or entrepreneurship, or say that it is not an economic resource:
- The lake the ferries cross
- The ferries
- The ticket sellers and the ship’s crew
- The founder, who designed the timetable, raised the money and would lose her savings if the company failed
- A VD 200,000 bank loan
- The ticket office building at the harbour
(b) A classmate says: “Ferrovald’s capital is its VD 200,000 loan.” Explain why this is wrong in economics.
Worked solution and suggested Marlbridge rubric
(a)
- Land. The lake is a natural resource.
- Capital. Ferries are human-made and used to produce a service (transport).
- Labour. Human effort used in production.
- Entrepreneurship. She organises the other resources and bears the risk of loss.
- Not an economic resource in itself. It is money (financial capital).
- Capital. A human-made building used in production.
(b) In economics, capital means human-made goods, such as ferries and buildings, used to produce other goods and services. The loan is money. Money cannot carry passengers or produce anything by itself. Ferrovald can use the loan to buy capital, for example a new ferry, but the money is not the capital.
| Point | What earns it |
|---|---|
| 1 | Items 1 and 3 correct (land, labour) |
| 1 | Items 2 and 6 correct (both capital) |
| 1 | Item 4 correct (entrepreneurship) and item 5 identified as money, not a resource |
| 1 | Defines capital as human-made goods used in production |
| 1 | States that money only buys capital and does not produce anything itself |
Items may be scored in pairs as shown; an answer with one item of a pair wrong does not earn that point.
Question 7 (constructed response · stretch)
Valdoria’s government discovers a large new natural-gas field, which greatly increases the country’s resources. A newspaper writes: “With this discovery, Valdoria has solved the problem of scarcity.”
(a) Identify which economic resource the gas field is. (b) Explain whether the newspaper is right. (c) In the same week, a Valdorian shop sells out of electric fans during a heatwave. Explain the difference between this situation and scarcity.
Model answer and suggested Marlbridge rubric
(a) Land. Natural gas in the ground is a natural resource.
(b) The newspaper is wrong. The discovery increases Valdoria’s resources, so it can produce more goods and services. But resources are still limited, and wants are unlimited: people will want more housing, health care, transport and so on. The government and households must still choose how to use the gas and the income from it. For example, gas exported cannot also be burned in Valdorian power stations. Scarcity is reduced in degree but never removed.
(c) The sold-out fans are a shortage: in one market, at the current price, buyers want more fans than the shop has. It is temporary and could end when new stock arrives or the price changes. Scarcity is the permanent, economy-wide fact that resources are limited compared with wants. Fans were scarce before the heatwave and will still be scarce afterwards, because producing them uses resources.
| Point | What earns it |
|---|---|
| 1 | Land |
| 1 | States that scarcity is not solved because wants remain greater than resources, even after the discovery |
| 1 | Explains that choices about using the gas (or its income) are still needed |
| 1 | Identifies the fan situation as a shortage in one market at the current price |
| 1 | Contrasts it with scarcity as permanent and economy-wide |
In (b), an answer that only says “wants are unlimited”, with no link to the discovery or to the choices still needed, earns the scarcity point (row 2) but not the choices point (row 3).
How did you do?
- Q1, Q3 or Q7(b) wrong: re-read “What scarcity means” and the Check in Worked example 2 in the study guide.
- Q2, Q4, Q6 or Q7(a) wrong: revisit “Economic resources: the four factors of production” and Worked example 1.
- Q5 wrong: work through Worked example 2 again, step by step.
- Q7(c) wrong: revisit “Scarcity and shortage are different”.
Then tick off the topic checklist.