Cambridge O Level Economics: Trade unions, factor demand, labour and capital, and market structure (2281) – 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 3.4, 3.6 and 3.8 of the Cambridge O Level Economics (2281) syllabus for examination in 2026. All firms, countries and figures are invented. Study first with the study guide and the revision notes. Course links: the hub, the checklist and the free diagnostics.

Questions

1. Define a trade union. [2]

2. Identify three matters that a trade union may negotiate through collective bargaining. [3]

3. A bakery in Country A employs 30 workers at 360 a week each and bakes 9,000 loaves a week. The union wins a 5% pay rise.

(a) Calculate the new weekly wage bill and the increase in the bill. [3] (b) Calculate the labour cost per loaf before and after the rise. [2]

4. Explain why a trade union may be weaker when unemployment is high. [4]

5. A tile maker employs 20 workers and produces 2,000 tiles a day. Demand for tiles rises and output must grow by 25%.

(a) Explain why the firm’s demand for workers is a derived demand. [2] (b) Calculate how many workers are needed if productivity stays the same. [2] (c) Calculate how many workers are needed if training raises output per worker to 125 tiles. [2]

6. A workshop can make 400 units a week in two ways. Method X uses 10 workers and equipment costing 600 a week. Method Y uses 2 workers and equipment costing 2,300 a week. Each worker is paid 250 a week.

(a) State which method is capital-intensive. [1] (b) Calculate the cost per unit of each method. [2] (c) Wages fall to 200 a week. Calculate the new costs per unit and state which method is now cheaper. [2] (d) Give one disadvantage to the firm of the capital-intensive method. [1]

7. A fishing fleet in Country B lands 500 tonnes with 25 crew in year 1 and 540 tonnes with 30 crew in year 2.

(a) Calculate output per crew member in each year. [2] (b) Calculate the percentage change in production and in productivity. [2] (c) Explain one reason why productivity might have fallen. [2]

8. Many bakeries sell similar bread in a town. Explain how the large number of firms is likely to affect price and quality. [4]

9. One firm sells 63,000 of the 70,000 units of electricity bought on a small island each month.

(a) State two characteristics of a monopoly. [2] (b) Calculate the firm’s market share. [1] (c) Explain one disadvantage of this market structure for consumers. [2]

10. A firm in Country C has 40 workers paid 300 a week each and produces 1,600 units a week. The union claims a 10% pay rise.

(a) Calculate the new wage bill and the new labour cost per unit. [3] (b) Calculate the weekly output needed to keep labour cost per unit at its original level. [2] (c) Evaluate whether the firm should reject the claim. [4]

11. The government of a small country is considering allowing one firm to be the only supplier of piped water. Evaluate whether this would benefit the country. [8]

Answers

1. An organisation of workers [1] that exists to protect or improve members’ pay, conditions or job security [1]. [2] Examiner insight: A definition earns more by naming both the group (workers) and the purpose; “a group that goes on strike” describes only one tactic.

2. Any three of: wages [1]; working hours [1]; working conditions such as safety or holidays [1]. [3] Examiner insight: Three different matters are needed, so “pay” and “wages” count as one idea only.

3. (a) New wage: 360 × 1.05 = 378 [1]. New bill: 30 × 378 = 11,340 [1]. Old bill 30 × 360 = 10,800, so the increase is 540 a week [1]. (b) Before: 10,800 ÷ 9,000 = 1.20 [1]. After: 11,340 ÷ 9,000 = 1.26 [1]. Examiner insight: Show each stage of the working and include the units; a bare final figure gives the examiner nothing to credit if it is wrong.

4. High unemployment means many people are looking for work [1]. The employer can replace workers who strike or leave [1], so the threat of industrial action is less credible [1]. Members may also accept lower pay to protect their jobs, so the union wins smaller increases [1]. [4] Examiner insight: Answers gain credit by linking each step in a chain, from unemployment to replacement to bargaining power, instead of repeating “the union is weaker”.

5. (a) Firms hire workers only to produce goods [1], so demand for workers comes from demand for tiles [1]. (b) Output 2,000 × 1.25 = 2,500 [1]. At 100 per worker, 2,500 ÷ 100 = 25 workers [1]. (c) 2,500 ÷ 125 = 20 workers [1], so no extra hiring is needed [1]. Examiner insight: In part (c) say what the figure means for the firm; a number with no conclusion is incomplete.

6. (a) Method Y [1]. (b) X: 10 × 250 + 600 = 3,100, so 3,100 ÷ 400 = 7.75 [1]. Y: 2 × 250 + 2,300 = 2,800, so 2,800 ÷ 400 = 7.00 [1]. (c) X: 10 × 200 + 600 = 2,600, so 6.50. Y: 2 × 200 + 2,300 = 2,700, so 6.75 [1]. X is now cheaper [1]. (d) For example: high set-up cost or borrowing; breakdowns stop output; risky if demand falls [1]. [6] Examiner insight: In part (c) a comparison needs both costs per unit and a stated conclusion; give the reason, which is cheaper labour.

7. (a) Year 1: 500 ÷ 25 = 20 tonnes [1]. Year 2: 540 ÷ 30 = 18 tonnes [1]. (b) Production: 40 ÷ 500 = +8% [1]. Productivity: −2 ÷ 20 = −10% [1]. (c) For example: the five extra crew were less experienced or less trained [1], so each caught less on average [1]. Equally valid: poorer weather or more crew sharing the same boats. [6] Examiner insight: Show that production and productivity moved in different directions, and name the cause as a link to output per worker.

8. Firms compete for customers [1], so none can charge much above its costs without losing sales [1], which holds prices down. To stand out, firms improve quality or service [1], and poor producers lose business [1]. [4] Examiner insight: Link the number of firms to rivalry before stating the effect on price and quality, since the economic reason is where the marks sit.

9. (a) Any two of: one dominant seller [1]; high barriers to entry [1]; few or no close substitutes; able to influence price. [2] (b) 63,000 ÷ 70,000 = 90% [1]. (c) With little competition the firm can charge higher prices [1] and consumers have no alternative supplier to choose [1]. [5] Examiner insight: Name the disadvantage and then explain why it follows from lack of competition; a list of costs without a reason is not enough.

10. (a) New wage: 300 × 1.10 = 330 [1]. New bill: 40 × 330 = 13,200 [1]. Per unit: 13,200 ÷ 1,600 = 8.25 [1]. (b) Original cost per unit: 12,000 ÷ 1,600 = 7.50 [1]. Output needed: 13,200 ÷ 7.50 = 1,760 units, a 10% rise [1]. (c) Rejecting avoids a 1,200 rise in weekly costs and protects profit [1], but may cause industrial action and lower morale [1]. Accepting is more sensible if productivity can rise 10% [1], so the firm should link the rise to productivity and judge by demand for its product [1]. [9] Examiner insight: Weigh both sides, then end with a conclusion that rests on named conditions, here productivity and demand for the product.

11. For: one supplier avoids duplicated pipes [1]; economies of scale may lower costs [1]; profits can fund investment [1]. Against: consumers have no alternative supplier [1]; price may be higher and quality lower with no competition [1]; the firm may be inefficient [1]. Judgement: the benefit depends on whether savings are passed to consumers, which regulation by the government can influence [1], so a regulated monopoly is more likely to benefit the country than an unregulated one [1]. [8] Examiner insight: Answers tend to be stronger when they weigh both sides and finish with a judgement that names the deciding condition.

Where marks are usually lost

• Defining a trade union as a group that strikes rather than as an organisation of workers.
• Giving workers’ viewpoint only when firms and the government are also asked for.
• Quoting a final figure without the working, or without units.
• Mixing production and productivity.
• Choosing between production methods without calculating cost per unit.
• Describing “monopoly” as simply “big” without barriers to entry or lack of substitutes.
• Stating “competition lowers prices” without explaining why.
• Writing a one-sided evaluation with no judgement.

Next steps

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

Official syllabus

The source is the Cambridge International syllabus for O Level Economics (2281), examination year 2026, version 2. The relevant parts are 3.4, 3.6 and 3.8.