Cambridge International AS and A Level Economics: Scarcity, choice and methods (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 1.1 and 1.2 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 businesses, places 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 scarcity. [2]

2. A tailor can make 16 shirts or 4 suits in a day, using all her time either way. Assume the trade-off is constant. Calculate the opportunity cost of one suit, and the number of shirts she can still make if she makes 3 suits. [3]

3. A government collects very high tax revenue. Explain why it still faces the problem of scarcity. [3]

4. A firm has 80,000 to invest. Project X adds 9,000 a year to profit, project Y adds 7,500, project Z adds 6,000, and a bank deposit pays 4% a year.

(a) State the opportunity cost of choosing project X. [1] (b) A manager says the opportunity cost of X is 16,700. Explain the error. [2] (c) X is expected to add only 7,000 instead. State which project the firm should now choose and its opportunity cost. [2]

5. Identify which of the three basic questions each decision mainly answers.

(a) A farm replaces 20 fruit pickers with one harvesting machine. [1] (b) A country devotes more land to housing and less to golf courses. [1] (c) A country gives free school meals only to low-income households. [1] (d) Explain why the farm in (a) might keep its pickers if wages for pickers fell sharply. [2]

6. A workshop must make 200 units a day. Method P uses 5 workers at 80 cu a day each plus equipment costing 60 cu a day. Method R uses 2 workers and a robot costing 250 cu a day.

(a) Calculate the cost per unit of each method and state which the workshop should choose. [3] (b) Calculate the daily wage at which the two methods cost the same. [2] (c) State the cheaper method if the wage falls to 30 cu a day. [1]

7. A bike-hire stall cuts its price from 8 to 6. Daily hires rise from 150 to 180, but the weather also improved.

(a) Define ceteris paribus. [1] (b) Calculate the percentage change in price and in hires. [1] (c) Explain why the stall cannot conclude that the price cut alone raised hires by 20%. [2]

8. Classify each statement as positive or normative.

(a) The average rent in City D rose by 7% last year. [1] (b) Rents in City D should be capped. [1] (c) A rent cap reduces the supply of rented homes. [1] (d) Inequality in City D is unfairly high. [1] (e) Explain why statement (c) can be positive even if economists disagree about whether it is true. [2]

9. A small brewery expects demand to rise permanently. Explain how its possible responses differ in the short run, the long run and the very long run. [6]

10. Evaluate whether economics can be described as a science. [8]

11. Country E has a fixed budget of 420 million. A clinic network costs 105 million and a rail upgrade costs 70 million.

(a) Calculate the opportunity cost of one clinic network in rail upgrades. [2] (b) The government builds two clinic networks. Calculate how many rail upgrades it can still fund. [2] (c) Evaluate how useful the idea of opportunity cost is to the government in choosing between these projects. [6]

Answers

1. Scarcity is the problem that human wants are unlimited [1] while the resources to satisfy them are limited [1]. [2] Examiner insight: A definition usually needs both halves, unlimited wants and limited resources. Saying only “not enough” is vague and does not show the contrast.

2. Opportunity cost of one suit = 16 / 4 = 4 shirts [1]. Three suits use 3 x 4 = 12 shirts’ worth of time [1]. Shirts left = 16 - 12 = 4 shirts [1]. [3] Examiner insight: State the unit with the answer (shirts). Show the ratio first so that a slip in the later step is easy to trace.

3. Revenue, however large, is finite [1]. Demands on it, such as health, education and defence, exceed what it can fund [1]. So spending more on one use means giving up another, which is an opportunity cost [1]. [3] Examiner insight: A common weaker answer says rich countries have no scarcity. Link the finite budget to the choice between competing uses.

4. (a) The next best alternative is project Y, so the opportunity cost is 7,500 a year [1]. (b) Opportunity cost counts only the next best alternative [1]. The manager added Y (7,500), Z (6,000) and the deposit (4% x 80,000 = 3,200), which gives 16,700, but the firm could only have chosen one of them [1]. (c) Y (7,500) now beats X (7,000), so the firm should choose Y [1]. Its opportunity cost is 7,000, the forgone return on X [1]. [5] Examiner insight: Answers that explain the error name the rule (next best only) and also show why adding the alternatives is wrong.

5. (a) How to produce [1]. (b) What to produce [1]. (c) For whom to produce [1]. (d) Cheaper labour makes pickers less costly relative to the machine [1]. The labour-intensive method may then give the lower cost per unit, so the farm keeps its pickers [1]. [5] Examiner insight: In part (d), link the change in a relative price to the cost per unit. Saying only “pickers are cheap” leaves the choice unexplained.

6. (a) P: 5 x 80 + 60 = 460, so 460 / 200 = 2.30 per unit [1]. R: 2 x 80 + 250 = 410, so 410 / 200 = 2.05 per unit [1]. Choose R, the cheaper method [1]. (b) 5w + 60 = 2w + 250 [1], so 3w = 190 and w = 63.33 cu a day [1]. (c) P costs 5 x 30 + 60 = 210 and R costs 2 x 30 + 250 = 310, so P is cheaper [1]. [6] Examiner insight: Show total cost and then cost per unit. An unlabelled final figure is harder to credit than one with working and a unit.

7. (a) Ceteris paribus means all other things being equal, so only one variable changes [1]. (b) Price change = (6 - 8) / 8 = -25%, and hires change = (180 - 150) / 150 = +20% [1]. (c) The weather also improved [1], so part of the rise may come from better weather. The price effect on its own cannot be identified unless other influences are held constant [1]. [4] Examiner insight: Name the specific other factor from the stem. Generic remarks such as “other things might change” earn less than a reference to the weather.

8. (a) Positive, as it can be checked against rent data [1]. (b) Normative, as “should” expresses a value judgement [1]. (c) Positive, as it is a testable claim about cause and effect [1]. (d) Normative, as “unfairly” is a judgement [1]. (e) A positive statement is one that can be tested, not one that is true [1]. Evidence could be used to test whether supply falls, so economists can disagree about the result while the statement stays positive [1]. [6] Examiner insight: Give a reason with each label, not only the label. Judging statements by whether they sound true is a frequent error.

9. In the short run some factor cannot be changed [1], so the brewery can only change variable inputs, such as hiring more staff, buying more grain or running extra shifts [1]. In the long run all factors can vary [1], so it can build more vats or larger premises [1]. In the very long run technology and the quality of factors can change [1], so it can adopt a new brewing process or train workers in new skills [1]. [6] Examiner insight: Define each period by what can change, then pair it with an example from the brewery. Fixed numbers of months are not part of the definitions.

10. Support: economics uses the scientific method [1]. It builds models and tests hypotheses against data, such as whether a price rise reduces quantity demanded [1]. Limits: ceteris paribus cannot be held in real economies [1], so results are tendencies, not exact laws [1]. Economists rarely run controlled experiments, and behaviour changes with expectations [1]. Policy advice also involves value judgements, which are normative and cannot be tested [1]. Judgement: economics is best described as a social science that applies scientific methods with less precision than the natural sciences [1]. The positive parts are closest to science, and the normative parts fall outside it [1]. [8] Examiner insight: Evaluation answers tend to gain credit when they reach a supported judgement, not just two lists. Tie your conclusion to the positive and normative distinction.

11. (a) 105 / 70 [1] = 1.5 rail upgrades [1]. (b) Two networks cost 2 x 105 = 210, leaving 420 - 210 = 210 [1]. 210 / 70 = 3 rail upgrades [1]. (c) Opportunity cost makes the trade-off explicit, such as 1.5 upgrades per network [1]. Numbers let the public and ministers scrutinise the choice [1]. However, benefits are not measured in the same units, for example lives saved against time saved [1], so the cost ratio does not show which is more valuable [1]. Benefits arrive over time and are uncertain [1]. Overall, it is useful for showing what is given up, but the final choice rests on value judgements about priorities [1]. [10] Examiner insight: In part (c), use the figures from parts (a) and (b), then weigh them against what the numbers leave out. A judgement should say how far, not just whether, the idea helps.

Where marks are usually lost

• Writing “the cost of the thing” instead of the value of the next best alternative.
• Adding all alternatives together to find opportunity cost.
• Giving a ratio without units, or using the wrong base for the ratio.
• Treating scarcity as only a poor-country or shortage problem.
• Labelling a statement as positive because it sounds true, or normative because it names a policy.
• Defining ceteris paribus without identifying which other factors change in the stem.
• Defining the short run as a fixed number of months or years.
• Giving two lists in an evaluation answer and no supported judgement.

Next steps

• Review the revision notes and the study guide.
• Return to the course hub and the printable checklist.
• Try the basic ideas practice set for the rest of topic 1.
• 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, sections 1.1 and 1.2 (Cambridge University Press & Assessment).