Cambridge International AS and A Level Economics: Factors and economic systems (9708) – 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 cover sections 1.3 and 1.4 of the Cambridge International AS & A Level Economics 9708 syllabus for examination in 2026, 2027 and 2028. They are AS Level content, assumed knowledge for A Level Papers 3 and 4. All firms, countries and figures are invented, and money is in currency units (cu). Read the study guide and revision notes first. The course hub and checklist show the rest of the syllabus, and the free diagnostics help you find weak spots.

Questions

1. Define enterprise as a factor of production. [2]

2. A florist uses a delivery van, the work of a driver, the cash in her till and a plot of ground for growing flowers.

(a) Identify the factor of production each of the van, the driver and the plot represents. [3] (b) Explain why the cash is not capital. [2]

3. A technician takes a course costing 1,800 cu. It raises her pay by 450 cu a year for 8 years.

(a) Calculate the payback period. [2] (b) Calculate the net gain over the 8 years. [2] (c) Explain why her employer may be unwilling to pay for the course. [3]

4. An orchard has yearly revenue of 84,000 cu. It pays 30,000 in wages, 9,000 in rent, 4,000 in interest, and 21,000 for other costs.

(a) Calculate profit. [2] (b) Calculate profit as a percentage of revenue, to one decimal place. [1] (c) A poor harvest cuts revenue by 25%. Other costs and the rewards above stay the same. Calculate the new profit or loss. [2] (d) Explain why the owner, not the workers or lender, bears this result. [2]

5. A sandal workshop employs 3 workers, each paid 70 cu a day. Each makes 4 sandals a day working alone. After dividing the work into cutting, stitching and finishing, the shop makes 21 sandals a day.

(a) Calculate output per worker before and after. [2] (b) Calculate the percentage rise in output per worker. [2] (c) Calculate labour cost per sandal before and after. [2] (d) Explain one risk of the new system for the shop. [2]

6. Explain two disadvantages of division of labour. [4]

7. A kiosk has fixed costs of 2,400 cu a month. It sells each item for 5 cu and each costs 2 cu to supply.

(a) Calculate the break-even output. [2] (b) Calculate profit or loss if it sells 650 items. [2] (c) Margin of safety is the gap between sales and break-even output, as a percentage of sales. Calculate it for sales of 1,000 items. [1] (d) Explain how your answers to (b) and (c) show the risk taken by the owner. [2]

8. Compare how the question of what to produce is answered in a market economy and in a planned economy. [6]

9. In Country C the market for a good has these demand and supply schedules.

Price (cu)	Quantity demanded	Quantity supplied
4	700	300
6	600	400
8	500	500
10	400	600

(a) State the market equilibrium price and quantity. [1] (b) Planners fix the price at 6 cu and set output at the quantity producers would supply at that price. Calculate the shortage and express it as a percentage of the quantity demanded. [3] (c) Explain two consequences of this shortage. [4]

10. Evaluate whether a mixed economy is better than a market economy. [8]

11. A factory in Country D has 10 workers paid 100 cu a day each. Before it divides tasks, it makes 60 units a day. After, it makes 110 units a day, but yearly staff turnover rises from 5% to 20%.

(a) Calculate labour cost per unit before and after, to two decimal places. [3] (b) Evaluate whether the factory should keep the new system. [8]

Answers

1. Enterprise is taking the risk of starting or running a business [1] and organising land, labour and capital to produce [1]. [2] Examiner insight: A definition with only one of the two roles is incomplete, so include both risk and organisation.

2. (a) The van is capital [1]. The driver’s work is labour [1]. The plot is land [1]. (b) Cash is money, a claim on resources, and it does not itself produce anything [1]. Only goods bought with it, such as a van or an oven, are capital [1]. [5] Examiner insight: Say why the cash does not produce goods, not just that “money is not capital”. The explanation earns the credit.

3. (a) Payback = cost ÷ yearly gain [1] = 1,800 ÷ 450 = 4 years [1]. (b) Total gain = 450 × 8 = 3,600 cu [1]. Net gain = 3,600 − 1,800 = 1,800 cu [1]. (c) Human capital leaves with the worker [1]. The employer pays but gains only while she stays [1]. If she left after 2 years the gain would be 900 cu against a cost of 1,800 cu [1]. [7] Examiner insight: In a “calculate” part, show the formula and each step so your method is clear even if a slip occurs.

4. (a) Costs = 30,000 + 9,000 + 4,000 + 21,000 = 64,000 [1]. Profit = 84,000 − 64,000 = 20,000 cu [1]. (b) 20,000 ÷ 84,000 × 100 = 23.8% [1]. (c) New revenue = 84,000 × 0.75 = 63,000 [1]. Profit = 63,000 − 64,000 = −1,000 cu (a loss of 1,000 cu) [1]. (d) Wages, rent and interest are agreed and paid whatever the harvest [1]. Profit is the residual, so the owner absorbs the fall [1]. [7] Examiner insight: A negative profit should be stated as a loss, with the sign. Do not write a positive figure.

5. (a) Before: 4 per worker [1]. After: 21 ÷ 3 = 7 per worker [1]. (b) (7 − 4) ÷ 4 × 100 [1] = 75% [1]. (c) Wage bill = 3 × 70 = 210 cu. Before: 210 ÷ 12 = 17.50 cu [1]. After: 210 ÷ 21 = 10 cu [1]. (d) If one worker is absent, the other stages cannot work at full speed [1], so total output could fall by far more than the share of work lost [1]. [8] Examiner insight: A risk explained as a chain (cause, then effect on output or cost) is stronger than a named risk alone.

6. Any two, each with a point and a development. Boredom and lower motivation [1]: repeating one task leads to errors, absence and workers leaving [1]. Narrow skills [1]: workers are harder to move to other jobs, which may cause structural unemployment if the task is no longer needed [1]. (Also allow: stoppage if one stage fails, or less variety for consumers.) [4] Examiner insight: “Boring” on its own gains little. Show what follows for the firm or the worker.

7. (a) Contribution = 5 − 2 = 3 cu [1]. Break-even = 2,400 ÷ 3 = 800 items [1]. (b) Revenue 3,250, variable costs 1,300, fixed costs 2,400, total costs 3,700 [1]. Profit = 3,250 − 3,700 = −450 cu (a loss) [1]. (c) (1,000 − 800) ÷ 1,000 × 100 = 20% [1]. (d) Costs are due whatever sales are, so at 650 items the owner takes a loss [1]. Even at 1,000 items the profit (600 cu) is lost if sales fall more than 20% [1]. [7] Examiner insight: Link the calculations back to risk in the final part. Repeating the figures without that link misses the point of the question.

8. Market: consumers signal demand through spending and willingness to pay [1]. Firms respond to expected profit [1]. Resources move to products where profit is high [1]. Planned: the state or planners decide [1] using targets and quotas based on estimates of need [1]. Difference: the market responds to prices and profit, the plan to central decisions, and the plan may miss real preferences [1]. [6] Examiner insight: A comparison needs a point of contrast (who decides, what signal). Two separate descriptions without a link are less effective.

9. (a) Price 8 cu, quantity 500 [1]. (b) At 6 cu demand is 600 and supply is 400 [1]. Shortage = 600 − 400 = 200 units [1]. 200 ÷ 600 × 100 = 33.3% [1]. (c) Queues or rationing, because the price cannot rise to clear the market [1], so buyers lose time or have to be selected by the state [1]. A black market may develop [1], where goods sell above 6 cu to those willing to pay more [1]. [8] Examiner insight: Each consequence should be explained, not just named. “Black market” earns more when tied to the unmet demand.

10. Relevant points, each developed:

• Market: price signals respond quickly to changes in wants [1] and profit rewards efficiency [1].
• Limits: markets can under-provide public goods and ignore those without income [1].
• Mixed: government can correct these through provision, tax and benefits [1].
• Cost: government can also err, creating costs or delays [1].
• Judgement: the answer depends on how well the state intervenes [1] and how large the gaps in the market are [1].
• Conclusion: a reasoned view, for example that a mixed economy is better where market gaps are large and the state is capable of acting [1]. [8] Examiner insight: A judgement that says “it depends” earns more when you state what it depends on and which way you lean.

11. (a) Wage bill = 10 × 100 = 1,000 cu [1]. Before: 1,000 ÷ 60 = 16.67 cu [1]. After: 1,000 ÷ 110 = 9.09 cu [1]. (b) Unit cost falls by 45.5% [1] and output rises 83.3% [1]. Turnover from 5% to 20% suggests lower motivation [1], so recruitment and training costs rise [1]. These costs are not in the wage-based unit costs above [1]. Whether to keep it depends on how large these extra costs are [1] and whether demand can absorb the extra output [1]. Judgement: keep the system, since unit cost has nearly halved, but monitor turnover [1]. [11] Examiner insight: Use the data in your argument, here the unit cost and the turnover, and weigh them against each other before you conclude.

Where marks are usually lost

• Defining enterprise as risk-taking only.
• Calling cash or a bank loan capital.
• Treating human capital as something the firm owns.
• Leaving out the sign on a loss.
• Giving percentages of the wrong base, such as dividing by the new value instead of the old.
• Listing disadvantages of division of labour without explaining the effect.
• Describing a planned economy as having no markets at all.
• Concluding an evaluation question without saying what the answer depends on.

Next steps

• Review the revision notes and the study guide.
• Check your coverage on the printable checklist and the course hub.
• Take one of the free 10-minute diagnostics.
• Book a free trial class at /trial/.

Official syllabus

Cambridge International AS & A Level Economics 9708 syllabus for examination in 2026, 2027 and 2028, published by Cambridge University Press & Assessment (Cambridge International Education). Sections 1.3.1 to 1.3.5 and 1.4.1 to 1.4.2.