AQA A-level Economics: Production, productivity, specialisation and returns (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) for AQA A-level Economics (7136): Production and productivity (3.1.4.1), Specialisation, division of labour and exchange (3.1.4.2) and The law of diminishing returns and returns to scale (3.1.4.3). The PDF prints these as 4.1.4.1 to 4.1.4.3. Every firm, place and figure is invented. Work through the study guide and revision notes first, then see the course hub, the printable checklist and the free diagnostics.

Questions

1. Define labour productivity. [2]

2. Lantern Print Studio makes posters.

Year	Posters	Workers	Hours each
1	3,600	15	32
2	5,148	13	33

(a) Calculate output per worker-hour in each year. [3] (b) Calculate the percentage change in output per worker-hour. [2]

3. Explain, using a dental surgery as an example, how production converts inputs into final output. [3]

4. A firm assembles bicycles. Explain two benefits to the firm of using division of labour. [4]

5. Country C has 9 goods and no money.

(a) Calculate the number of exchange rates needed if all goods are swapped by barter. [2] (b) Explain how introducing money as a medium of exchange would help workers to specialise. [3]

6. Distinguish between the short run and the long run, using an example of a firm. [3]

7. A salad farm has a fixed amount of growing space. The table shows its total output of crates a day as it hires workers.

Workers	1	2	3	4	5	6	7	8
Total product	6	20	40	64	82	92	95	93

(a) Calculate the marginal product of the fifth worker and the average product at five workers. [2] (b) Identify the worker from whom diminishing marginal returns start, and justify your choice. [2] (c) Explain why average product is still rising at the fifth worker. [2]

8. The salad farm in question 7 pays each worker £120 a day.

(a) Calculate the extra cost per crate of the fourth worker and of the fifth worker. [2] (b) Explain the link between diminishing returns and the change in extra cost per crate. [3]

9. A plastics firm increases all its inputs together. Scale 1 costs £1,500 a week, and each later scale uses that many times the inputs of scale 1 (scale 2 uses twice as much, scale 3 three times, and so on) at unchanged input prices.

Scale	1	2	3	4
Output	400	880	1,320	1,760

(a) Calculate the percentage change in inputs and in output from scale 1 to scale 2, and state the type of returns to scale. [3] (b) State the type of returns to scale from scale 2 to scale 3, with a calculation. [2] (c) Calculate cost per unit at scale 1 and at scale 2, and state what the change shows. [3]

10. Distinguish between diminishing returns and decreasing returns to scale. [4]

11. A parcel depot has 6 workers. Each used to sort, label and load, and handled 90 parcels a shift. After dividing the tasks, the depot handles 696 parcels a shift with the same 6 workers. Assess whether dividing tasks will always raise a firm’s labour productivity. [10]

Answers

1. Output per worker [1], or per worker-hour [1]. [2] Examiner insight: “Output” alone describes production, not productivity. The definition needs a divisor, an input.

2. (a) Hours Year 1 = 15 × 32 = 480 [1]. Hours Year 2 = 13 × 33 = 429 [1]. Output per hour: 3,600 ÷ 480 = 7.5 and 5,148 ÷ 429 = 12.0 [1]. [3] (b) (12.0 − 7.5) ÷ 7.5 [1] × 100 = +60% [1]. [2] Examiner insight: When the data gives hours, work out total hours first and show it. Output per worker would give 65%, which is a different measure from the one asked.

3. Inputs are the services of factors of production: labour (dentists), capital (chairs and equipment) and materials [1]. These are combined in the production process [1]. The surgery converts them into final output, such as completed treatments [1]. [3] Examiner insight: Name actual inputs in the context given. A general statement about factors of production, with no surgery in it, stays at definition.

4. Benefit 1: workers repeat one task, so they gain skill and speed [1], which raises output per worker [1]. Benefit 2: no time is lost moving between tasks or tools [1], so output per hour rises or unit cost falls [1]. (Other valid benefits: keeping machines busy, matching workers to tasks.) [4] Examiner insight: Each benefit needs its consequence for the firm. A list of benefits with no explanation covers only part of the question.

5. (a) n(n − 1) ÷ 2 [1] = 9 × 8 ÷ 2 = 36 [1]. [2] (b) Specialists make one thing but need many [1]. Barter needs a double coincidence of wants, which wastes search time [1]. Money is accepted in payment for anything, so a worker sells output for money and buys what they need, which allows more specialisation [1]. [3] Examiner insight: Link money to specialisation explicitly. A description of money as accepted in payment, with no link to specialisation, does not answer the question.

6. The short run is a period in which at least one factor is fixed [1]. The long run is a period in which all factors can be varied [1]. Example: a salad farm cannot add growing space in a month (short run) but can buy more land in a few years (long run) [1]. [3] Examiner insight: Define the periods in terms of factors, not months or years. An example shows you can apply the idea.

7. (a) MP of fifth worker = 82 − 64 = 18 [1]. AP = 82 ÷ 5 = 16.4 [1]. [2] (b) Diminishing marginal returns begin with the fifth worker [1], because MP falls from 24 for the fourth worker to 18 [1]. [2] (c) AP at four workers is 64 ÷ 4 = 16 [1]. The fifth worker’s MP of 18 is above that average, so AP rises to 16.4 [1]. [2] Examiner insight: Quote both numbers when justifying where returns diminish. Saying “output rises more slowly” without figures leaves the point unproved.

8. (a) Fourth worker: 120 ÷ 24 = £5.00 [1]. Fifth worker: 120 ÷ 18 = £6.67 [1]. [2] (b) The wage is constant, so extra cost per crate is wage ÷ MP [1]. Once MP falls because the growing space is fixed, each worker adds fewer crates [1]. The same wage is spread over fewer crates, so extra cost per crate rises [1]. [3] Examiner insight: State the assumption that the wage is constant. The chain runs from fixed factor to falling MP to rising extra cost.

9. (a) Inputs: +100% [1]. Output: (880 − 400) ÷ 400 × 100 = +120% [1]. Output rises by a greater proportion: increasing returns to scale [1]. [3] (b) Inputs +50%. Output (1,320 − 880) ÷ 880 = +50% [1]. Same proportion: constant returns to scale [1]. [2] (c) Scale 1: £1,500 ÷ 400 = £3.75 [1]. Scale 2: £3,000 ÷ 880 = £3.41 [1]. Cost per unit falls when returns to scale increase, if input prices do not change [1]. [3] Examiner insight: Calculate both percentages before naming the returns. A label with no comparison of inputs and output is an assertion.

10. Diminishing returns apply in the short run [1], when one factor is varied and at least one other is fixed [1]. Decreasing returns to scale apply in the long run [1], when all inputs rise by the same proportion and output rises by a smaller proportion [1]. [4] Examiner insight: Cover both differences: the time period, and which factors change. Defining one term twice, without contrasting them, answers only half of a “distinguish” question.

11. Output per worker rises from 90 to 696 ÷ 6 = 116, an increase of 28.9% [1]. Division of labour raises skill and speed through repetition [1]. It cuts time lost switching tasks [1]. It can keep equipment in use [1]. So productivity in the depot is likely to have risen because of these gains [1]. But it is not guaranteed. Repetitive work can cause boredom and absence, and turnover reduces output [1]. Stages depend on each other: a slow stage holds up the rest [1]. If tasks cannot be split further, or handling between stages takes extra time, gains stop [1]. Judgement: the depot suggests gains are likely when work is high volume, repeatable and balanced between stages [1], but the outcome depends on worker response and on the type of work, so it is not always true [1]. [10] Examiner insight: Use the 90 and 116 from the question, then evaluate. A balanced answer ends with a judgement that depends on a stated condition, not a repeat of both sides.

Where marks are usually lost

• Dividing by workers when the question gives hours and the hours changed.
• Calling a rise in output a rise in productivity without comparing inputs.
• Quoting a benefit of division of labour with no effect on the firm.
• Describing money without saying how it supports specialisation.
• Defining the short run as a number of months.
• Saying diminishing returns means total product falls.
• Giving MP or AP with no working, so a slip cannot be traced.
• Naming the type of returns to scale without comparing the percentage changes.
• Finishing an assessment with no overall judgement.

Next steps

• Review the revision notes and the study guide.
• Return to the AQA A-level Economics hub and tick off the printable checklist.
• Take one of the free 10-minute diagnostics to find weak areas.
• Book a free trial class.

Official syllabus

AQA AS and A-level Economics specification, version 1.3, 29 June 2022, published by AQA.