Cambridge A Level Economics: Production possibility curves and the classification of goods (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 1.5 and 1.6 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 countries, markets and figures are invented, and money is in currency units (cu). Read the study guide and the revision notes first. The course hub and checklist show the rest of the syllabus.

Questions

1. Define a production possibility curve. [2]

2. A workshop can make 36 chairs or 12 tables a day using all its resources, and the trade-off is constant. Calculate the opportunity cost of one table, and the number of chairs still made if it makes 5 tables. [3]

3. Country E can produce rice and cloth. Its production possibilities in a year are:

Rice (million tonnes)	0	10	20	30	40	50
Cloth (million metres)	80	79	75	66	48	0

(a) Calculate the opportunity cost of one million tonnes of rice when rice output rises from 20 to 30. [2] (b) State and explain whether the opportunity cost of rice is constant or increasing. [2]

4. Use the table in question 3.

(a) State whether each event shifts Country E’s PPC outwards or inwards: (i) a large mineral deposit is found; (ii) a flood destroys factories and farmland; (iii) a training programme raises workers’ skills. [3] (b) Capacity for both goods rises by 15%. Calculate the new maximum output of rice and of cloth. [2] (c) Explain why this shift does not guarantee that actual output rises. [2]

5. Country E produces 20 million tonnes of rice and 60 million metres of cloth.

(a) State where this point lies relative to the PPC and what it implies. [1] (b) Calculate the spare capacity in cloth, in million metres and as a percentage of the maximum cloth possible at 20 million tonnes of rice. [2] (c) State one possible cause. [1]

6. (a) Define a free good. [1] (b) A hiker breathes fresh mountain air. A hospital buys bottled oxygen. Explain which is a free good and which is an economic good. [3]

7. A town has 80 households. Each values a new storm-warning beacon at 150 cu. The beacon costs 9,600 cu.

(a) Calculate the total benefit and the net benefit. [2] (b) Explain why a private firm would be unlikely to provide the beacon. [3] (c) Calculate the tax per household that would just fund it. [1]

8. Classify each as a private good or a public good, giving one reason: (a) a sandwich; (b) a foghorn sounding across a harbour; (c) a seat on a privately run bus; (d) the beam of a coastal lighthouse. [4]

9. In an invented market for adult literacy classes, private demand is P = 60 - 2Q, marginal social benefit is P = 84 - 2Q, and supply (marginal cost) is P = 12 + 2Q, where P is in cu and Q in thousand places.

(a) Calculate the equilibrium quantity and price in a free market. [3] (b) Calculate the socially best quantity and the amount of under-consumption. [2] (c) Explain why literacy classes are a merit good and why the market quantity is too low. [3]

10. In an invented market for a harmful product, private demand is P = 80 - 2Q, marginal social benefit is P = 56 - 2Q, and supply is P = 8 + 2Q.

(a) Calculate the equilibrium quantity and price in a free market. [3] (b) Calculate the socially best quantity and the amount of over-consumption. [2] (c) Explain why the product is a demerit good and why the market quantity is too high. [3]

11. Evaluate whether a government should provide vaccinations free of charge. [10]

Answers

1. The largest output pairs of two goods [1] that an economy can make in a period when every resource is used fully and efficiently and technology is fixed [1]. [2] Examiner insight: Answers that give only “the different goods an economy can make” have not said maximum, full use or fixed technology, and those three ideas are what the definition rests on.

2. Opportunity cost of one table = 36 / 12 = 3 chairs [1]. Five tables forgo 5 x 3 = 15 chairs [1]. Chairs still made = 36 - 15 = 21 [1]. [3] Examiner insight: Show the division. A bare “21” leaves nothing to reward if the number is wrong, and “3” without the good named is incomplete.

3. (a) Cloth lost = 75 - 66 = 9 [1]. Opportunity cost = 9 / 10 = 0.9 million metres of cloth per million tonnes of rice [1]. (b) It is increasing [1]. The cost per million tonnes rises across the table (0.1, 0.4, 0.9, 1.8, 4.8) because resources are not equally suited to both goods, so moving them gives up more cloth each time [1]. [4] Examiner insight: Back “increasing” with figures taken from the table. An unsupported assertion shows less than a comparison of the first and last moves.

4. (a) (i) Outwards [1]. (ii) Inwards [1]. (iii) Outwards [1]. (b) Rice maximum = 50 x 1.15 = 57.5 million tonnes [1]. Cloth maximum = 80 x 1.15 = 92 million metres [1]. (c) The shift increases potential output only [1]. Actual output rises only if the economy moves to a point on the new curve by employing the extra resources, so the economy could stay at a point inside it [1]. [7] Examiner insight: Part (c) rewards the difference between potential and actual growth. A restatement that “the PPC moves out” repeats the question without answering it.

5. (a) The point is inside the PPC, so resources are unemployed or inefficiently used [1]. (b) At 20 rice the curve gives 75 cloth, so spare capacity = 75 - 60 = 15 million metres [1]. As a percentage of the maximum = 15 / 75 x 100 = 20% [1]. (c) Unemployment of workers (or inefficient organisation) [1]. [4] Examiner insight: State clearly which base you divide by. Using 60 instead of 75 gives 25%, which answers a different question to the one asked.

6. (a) A good with no opportunity cost of supply because it is not scarce, so it has no price [1]. (b) Mountain air is the free good, since using more does not use resources or mean giving something up [1]. Bottled oxygen is an economic good, because resources are used to make and supply it, so it has an opportunity cost and a price [1]. The same substance can differ in status because of the resources needed to supply it in that setting [1]. [4] Examiner insight: Link each classification to opportunity cost. Saying “air is free because you do not pay for it” confuses price with opportunity cost.

7. (a) Total benefit = 80 x 150 = 12,000 cu [1]. Net benefit = 12,000 - 9,600 = 2,400 cu [1]. (b) The beacon is non-excludable: once it is lit, no one can be stopped from seeing it [1]. So each household can free ride and hope others pay [1]. A firm would earn little or no revenue, so would not provide it despite the net benefit [1]. (c) Tax per household = 9,600 / 80 = 120 cu [1]. [6] Examiner insight: Name the mechanism, which is free riding caused by non-excludability. “People will not pay” without the reason scores less than a full chain.

8. (a) Private: only the buyer can eat it, so it is rivalrous and excludable [1]. (b) Public: every ship in range hears it (non-excludable) and one ship hearing it does not reduce its availability to others (non-rivalrous) [1]. (c) Private: the operator can refuse entry to non-payers and a seat taken is unavailable to others [1]. (d) Public: ships cannot be stopped from using the beam and its use by one does not reduce its use by others [1]. [4] Examiner insight: Give a reason that uses the two defining terms. A label alone, such as “public because the council runs it”, has not applied the definition.

9. (a) Set demand equal to supply: 60 - 2Q = 12 + 2Q [1]. So 48 = 4Q and Q = 12 thousand places [1]. Price = 12 + 2(12) = 36 cu [1]. (b) Set marginal social benefit equal to supply: 84 - 2Q = 12 + 2Q, so Q = 18 [1]. Under-consumption = 18 - 12 = 6 thousand places [1]. (c) People may lack information about the lifetime and wider benefits of literacy and so underestimate them [1]. So private demand lies 24 cu per place below marginal social benefit [1]. The market equates private demand with supply at 12, below the socially best 18 [1]. [8] Examiner insight: Part (c) needs the cause (imperfect information) tied to the result (under-consumption). Naming only “positive externalities” misses the information point the syllabus uses.

10. (a) 80 - 2Q = 8 + 2Q [1]. So 72 = 4Q and Q = 18 [1]. Price = 8 + 2(18) = 44 cu [1]. (b) 56 - 2Q = 8 + 2Q, so Q = 12 [1]. Over-consumption = 18 - 12 = 6 units [1]. (c) Consumers underestimate the harm to themselves and others because of imperfect information [1]. So private demand is 24 cu per unit above marginal social benefit [1]. The market output at 18 is above the socially best 12 [1]. [8] Examiner insight: State the direction of the gap in words. Many answers lose the final point by saying the market output is “wrong” without saying it is too high.

11. Definition and reasoning (up to 6): A merit good is under-consumed in a free market because consumers lack information about its benefits [1]. Vaccination also benefits others by lowering the spread of disease, so social benefit exceeds private benefit [1]. Free provision removes the price barrier and raises consumption towards the socially best level [1]. It helps low-income households who might otherwise go without [1]. It reduces long-term health costs, so spending may be recouped [1]. Taxes fund it, so there is an opportunity cost to taxpayers and for other public spending [1]. Evaluation (up to 4): Free provision may over-supply if demand rises beyond the social optimum [1]. Alternatives such as information campaigns or a subsidy could correct the information gap at lower cost [1]. The case is stronger where the information gap and external benefits are large and many households cannot pay [1]. A justified judgement, such as free provision for vaccination because external benefits are large, with targeted support elsewhere [1]. [10] Examiner insight: A balanced answer weighs benefits against opportunity cost and ends with a supported judgement. A list of points that does not reach a conclusion is likely to earn less than one that weighs them.

Where marks are usually lost

• Leaving “maximum”, “fully and efficiently” or “given technology” out of a PPC definition.
• Dividing the wrong way round when calculating opportunity cost, or not naming the good.
• Mistaking a move along the curve for a shift of it.
• Using the wrong base for a percentage, such as actual output when the question asks for the maximum.
• Confusing potential growth with actual growth.
• Calling a good free because it has a zero price, when it has an opportunity cost.
• Defining a public good as one provided by the government, rather than by non-excludability and non-rivalry.
• Describing merit and demerit goods as “good for you” or “bad for you” without imperfect information and the gap between private and social value.
• Ending an evaluation answer without a judgement.

Next steps

• Re-read the revision notes and the study guide.
• Go to the Cambridge A Level Economics hub and the printable checklist.
• Take one of the free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Cambridge International AS & A Level Economics 9708, syllabus for examination in 2026, 2027 and 2028, published by Cambridge University Press & Assessment (Cambridge Assessment International Education): sections 1.5 and 1.6.