AQA A-level Economics: Methodology, scarcity, resources and PPDs (7136) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions follow the AQA AS and A-level Economics specification (version 1.3, 29 June 2022), A-level sub-section Economic methodology and the economic problem (3.1.1 on the AQA website, 4.1.1 in the combined PDF). Prepare with the study guide and revision notes. The course hub is AQA A-level Economics and the printable checklist tracks your progress. All countries, firms and figures are invented.

Questions

1. For each statement about Country D, state whether it is positive, normative or both. (a) Average rents rose by 6% last year. (b) Rents are too high. (c) A cut in income tax will increase hours worked. (d) The government should fund more training because youth unemployment is 9%. [4]

2. Explain one way in which economics is similar to, and one way in which it differs from, the natural sciences in its methods. [4]

3. A laundry cleans 800 garments a day. Method P uses 8 workers and 1 machine. Method R uses 3 workers and 3 machines. A worker costs 80 a day and a machine 160 a day.

(a) Calculate the cost per garment of each method. [2] (b) The wage rises to 120. Calculate the new cost per garment of each method. [2] (c) State the other two basic economic decisions beside “how to produce”, and explain one of them. [2]

4. A small coastal fishery uses a boat, the stock of fish in the sea, a crew and an owner who takes the risk of starting the business. Classify each into a factor of production. [4]

5. A farmer has 15 hectares. A hectare earns net revenue of 1,200 from tomatoes, 950 from peppers and 800 from herbs.

(a) State the opportunity cost of one hectare of tomatoes. [1] (b) Calculate the total net revenue and the total opportunity cost if all 15 hectares grow tomatoes. [2] (c) Explain why herbs are not part of this opportunity cost. [1]

6. Country B produces manufactured goods (M) and food (F), in thousands of units. Its boundary passes through these points: (0, 130), (50, 120), (78, 104), (104, 78), (120, 50) and (130, 0), written (M, F).

(a) Calculate the opportunity cost of one extra unit of M when moving from (78, 104) to (104, 78), and from (104, 78) to (120, 50). [2] (b) Explain what happens to the opportunity cost as M rises, and why. [4]

7. Country B’s boundary satisfies M² + F² = 16,900. The economy is at M = 60, F = 78.

(a) Show that it is inside the boundary. [1] (b) Calculate the largest increase in M possible with F held at 78. [1] (c) Explain two possible reasons why resources might be unemployed. [2]

8. Improved irrigation raises Country B’s maximum food output from 130 to 156 while its maximum M stays at 130. The new boundary satisfies (M ÷ 130)² + (F ÷ 156)² = 1.

(a) Calculate the percentage rise in maximum food output. [1] (b) Describe how the boundary changes. [2] (c) At M = 104, calculate the extra F now possible compared with the old boundary. [2]

9. A minister says that the point (104, 78) is better than (78, 104) because it has more manufactured goods. (a) Explain why both points are productively efficient. [2] (b) Explain why the diagram cannot show which is allocatively efficient. [2]

10. Evaluate the view that disagreements between economists about policy arise mainly from differences in value judgements. [9]

11. Country C is considering draining a wetland to create farmland. Evaluate the decision, using the ideas of scarcity, opportunity cost and a production possibility diagram. [12]

Answers

1. (a) Positive: it can be checked against data [1]. (b) Normative: “too high” is a value judgement [1]. (c) Positive: testable, even if it proves false [1]. (d) Both: “should” is normative and the unemployment rate is a testable claim [1]. [4] Examiner insight: “Both” is only creditworthy if you name the testable element and the judgement element; giving the label alone is weak.

2. Similarity: both build simplified models with assumptions and test hypotheses against evidence [1]. Economists, for example, use ceteris paribus to isolate one cause, as a physicist holds other variables constant [1]. Difference: economics studies people, who respond to incentives and to the theories themselves [1], and controlled experiments are rarely possible, so cause and effect are harder to separate and conclusions are tendencies [1]. [4] Examiner insight: Each point needs development, not just a label such as “models” or “experiments”; a list of three one-word similarities earns little.

3. (a) P: 8 × 80 + 160 = 800, and 800 ÷ 800 = 1.00 [1]. R: 3 × 80 + 3 × 160 = 720, and 720 ÷ 800 = 0.90 [1]. (b) P: 8 × 120 + 160 = 1,120, giving 1.40 [1]. R: 3 × 120 + 480 = 840, giving 1.05 [1]. (c) What to produce, and for whom [1]. Either explained, for example “for whom” is how output is shared among households by income [1]. [6] Examiner insight: Show total cost before dividing, so that a slip in the final division can still be seen and credited.

4. The boat is capital [1]. The fish stock is land, the natural resource (or environment) [1]. The crew is labour [1]. The owner’s risk-taking is enterprise [1]. [4] Examiner insight: Capital is man-made production goods, not money; answers that call the owner’s funds “capital” lose the point.

5. (a) Peppers: 950, the next best use [1]. (b) Revenue 15 × 1,200 = 18,000 [1]. Opportunity cost 15 × 950 = 14,250 [1]. (c) Opportunity cost is only the next best alternative given up, not the sum of all alternatives [1]. [4] Examiner insight: Adding 950 and 800 is the most common error; state “next best” explicitly.

6. (a) First move: M rises by 26 and F falls by 26, so 26 ÷ 26 = 1 unit of F [1]. Second move: M rises by 16 and F falls by 28, so 28 ÷ 16 = 1.75 [1]. (b) The opportunity cost rises as M rises [1]. Earlier, the move from (0, 130) to (50, 120) cost only 0.2 units of F per unit of M [1]. This is because resources are not equally suited to both uses [1]. The first resources moved are best at making M, and later ones that are better at food must be moved, so more F is lost per extra M [1]. [6] Examiner insight: Cite numbers from the table, and give a reason as well as the trend; the reason is that resources suit the two goods unequally.

7. (a) 60² + 78² = 3,600 + 6,084 = 9,684, which is below 16,900 [1]. (b) At F = 78, the boundary has M = 104, so the increase is 104 − 60 = 44 [1]. (c) One reason, such as a fall in demand during a recession leaving workers and machines idle [1]. A second reason, such as a mismatch of workers’ skills with the jobs available, or resources used inefficiently [1]. [4] Examiner insight: Reasons must explain why resources are idle; “the economy is poor” gives no development.

8. (a) (156 − 130) ÷ 130 × 100 = 20% [1]. (b) The food intercept rises from 130 to 156 [1]. The manufacturing intercept stays at 130, so the boundary shifts outward unevenly, mainly along the food axis [1]. (c) New F at M = 104 is 156 × √(1 − 0.64) = 156 × 0.6 = 93.6 [1]. The old boundary gave 78, so the gain is 15.6 [1]. [5] Examiner insight: Describing the shift requires naming what changed on each axis; “it shifts out” alone is incomplete.

9. (a) Both points are on the boundary, so all resources are used fully [1]. More of one good is possible only by producing less of the other [1]. (b) Allocative efficiency depends on what society values and where benefit equals cost [1]. The boundary shows only what is possible, not preferences, so choosing between points involves value judgements [1]. [4] Examiner insight: Do not say that boundary points are “equally good”; say they are equally efficient in production.

10. Disagreements can arise because economists use different models or read ambiguous evidence differently [1]. For example, whether a tax cut raises hours worked is testable but data are hard to separate from other influences [1]. Experiments are rarely possible, so evidence is open to interpretation [1]. Value judgements matter too: economists give different weight to equality and efficiency [1]. Two economists can agree on the same predicted outcome and still disagree over whether it is desirable [1]. Values also influence which objectives and questions are studied [1]. The two interact, since a preference may be presented as a positive finding [1]. Evaluation: where evidence is strong, disagreement is more likely to be about values, and where evidence is weak, positive disputes matter more [1]. Judgement: values are often decisive on policy choices, but positive disagreements are not trivial [1]. [9] Examiner insight: Evaluation earns credit for weighing the two explanations and reaching a justified conclusion, not for adding a third list of points.

11. Scarcity: land and the environment are limited, wants are unlimited, so choice is needed [1]. The wetland is a scarce environmental resource, providing flood protection and habitat, and draining may be hard to reverse [1]. Draining has an opportunity cost: the wetland services forgone [1]. Not draining also has one: the farm output forgone [1]. On a PPD with food on one axis and environmental services on the other, moving along the boundary shows the trade-off [1]. Opportunity cost likely rises, since the last hectares drained may be the most valuable ecologically [1]. Short-run output gains may reduce long-run capacity if the service is lost, so the boundary could shift inward later [1]. If workers are idle, the farm uses unemployed resources, reducing labour’s opportunity cost [1]. Positive consequences (output, jobs, flood risk) can be estimated [1]. Moral and political judgements, such as duties to future generations and property rights, differ between people [1]. Evaluation: the answer depends on how reversible the damage is, how well the wetland services can be valued and whether already cleared land could be used [1]. Judgement: drain only if the measured gain clearly exceeds the full opportunity cost, including the environment [1]. [12] Examiner insight: Use the three named ideas as a chain, linking each to the wetland; listing definitions without applying them to the context earns little.

Where marks are usually lost

• Calling a mixed statement purely positive or purely normative.
• Defining opportunity cost as a sum of all rejected options, or as only money.
• Forgetting working in cost per unit; give total cost first.
• Dividing the wrong way round when finding opportunity cost.
• Stating that cost rises without explaining that resources are not equally suited to both uses.
• Describing a shift of the boundary without naming each intercept.
• Treating all boundary points as allocatively efficient.
• Writing evaluation as a second list rather than weighing and concluding.
• Making general points about the environment without tying them to the case.

Next steps

• Recap with the revision notes or reread the study guide.
• Go to the AQA A-level Economics hub and the checklist.
• Take all the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

AQA AS and A-level Economics specification, version 1.3 (29 June 2022), published by AQA: the A-level sub-section Economic methodology and the economic problem, 3.1.1 on the AQA website (4.1.1 in the combined PDF).