Pearson Edexcel International GCSE Economics: Scarcity, the PPF and assumptions (4EC1) – 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 1.1.1 and 1.1.2 of the Pearson Edexcel International GCSE Economics (4EC1) specification, Issue 3, February 2026, a single-tier qualification. Country B, its firms and all figures are invented and illustrative. Learn the content first from the study guide and the revision notes. The course hub and checklist show the full course, and the free diagnostics test you across topics.

Country B produces rice and textiles. Its production possibilities (thousands of units) are:

Textile bales	Rice
0	90
20	80
40	56
60	0

Questions

1. What is meant by scarcity? [2]

2. Amir has 90 units to spend. In order of preference he could buy football boots (90), three months of gym membership (30 a month) or six books (15 each). He buys the boots. (a) State his opportunity cost. [1] (b) Explain why the books are not part of his opportunity cost. [2]

3. The government of Country B has 90 million units. It could build a bridge (90 million), three clinics (30 million each) or 450 scholarships (0.2 million each). In order of preference these are the bridge, the clinics, then the scholarships. It builds the bridge. Show that each alternative costs the whole budget and state the opportunity cost. [3]

4. Use the table. (a) Calculate the opportunity cost in rice of each extra textile bale when output rises from 20 to 40 bales. [3] (b) Explain why the opportunity cost per bale is higher when output rises from 40 to 60 bales. [4]

5. Country B produces 40 bales and 40 units of rice. A second possible plan is 60 bales and 30 units of rice. (a) State which plan is possible and which is unobtainable. [2] (b) Calculate how far below its potential rice output Country B is in the first plan, as a percentage of potential. [3]

6. Country B’s maximum rice output rises by 20% and its maximum textile output by 25%. (a) Calculate the new maximum outputs. [2] (b) Describe how this change would be shown on the PPF diagram. [3]

7. Explain one cause of positive economic growth and one cause of negative economic growth. [4]

8. State the two assumptions economists make about consumers and businesses. [2]

9. A shopper in Country B buys the same cereal brand at 4.20 a box every week, although an own-brand box costs 3.00. Many neighbours buy the same brand. Explain two reasons why this shopper may not be maximising benefit. [6]

10. A workshop in Country B faces the following figures.

Output	Price	Total cost
10	60	320
15	50	420
20	40	520
25	30	620

(a) Calculate the workshop’s profit at each output. [4] (b) State the profit-maximising output. [1] (c) The manager is paid on revenue and chooses the output with the highest revenue. Explain the effect on the workshop’s profit. [3]

11. A tailor in Country B repairs school uniforms free for 15 families a month. A repair normally sells for 6 and costs 1.5 in materials. Evaluate whether the assumption that businesses maximise profit is realistic. [8]

Answers

1. Wants are unlimited [1] but resources are finite (limited) [1]. [2] Examiner insight: “What is meant by” needs two separate parts, so one of the two ideas alone is not a full definition.

2. (a) The three months of gym membership (the next best alternative) [1]. [1] (b) Opportunity cost is the single next best alternative given up [1]; he could not have had the gym and the books with the same 90, so only the best forgone use counts [1]. [2] Examiner insight: Listing every alternative shows the common misunderstanding, so name one option and say why it is the next best.

3. Three clinics: 3 × 30 = 90 million [1]. Scholarships: 450 × 0.2 = 90 million [1]. The opportunity cost of the bridge is the three clinics, as the next best choice [1]. [3] Examiner insight: In a “show that” question write each multiplication, because stating only that they are equal gives no evidence.

4. (a) Rice falls from 80 to 56, so 80 − 56 = 24 [1]. 24 ÷ 20 bales [1]. 1.2 rice per bale [1]. [3] (b) From 40 to 60 bales rice falls from 56 to 0, so 56 ÷ 20 = 2.8 per bale [1]. This is higher than 1.2 [1]. Resources moved to textiles are less suited to textiles (they are better suited to rice) [1], so less textile output is gained for each unit of rice lost [1]. [4] Examiner insight: Support the explanation with the numbers from the table, and give the economic reason as well as the calculation.

5. (a) 40 bales and 40 rice is possible, as it is inside the PPF (56 rice is possible at 40 bales) [1]. 60 bales and 30 rice is unobtainable, as it lies outside the PPF (maximum is 0 rice at 60 bales) [1]. [2] (b) Potential rice at 40 bales is 56, so the gap is 56 − 40 = 16 [1]. 16 ÷ 56 × 100 [1]. 28.6% [1]. [3] Examiner insight: A percentage needs the right base, here potential output, so write the formula before the numbers.

6. (a) Rice: 90 × 1.2 = 108 [1]. Textiles: 60 × 1.25 = 75 [1]. [2] (b) The PPF shifts outwards [1]. The rice intercept moves from 90 to 108 and the textile intercept from 60 to 75 [1]. Both the original and the new curve are drawn and labelled, with labelled axes, so that the change is clear [1]. [3] Examiner insight: Describe a shift of the whole curve, not a movement along it, and give the intercept values.

7. Positive: investment in machinery raises the capital stock [1] so more rice and textiles can be produced and the PPF shifts out [1]. Negative: a flood destroys farmland and factories [1] so productive capacity falls and the PPF shifts inwards [1]. [4] Examiner insight: A cause alone earns little, so add what happens to resources and then to the PPF.

8. Consumers aim to maximise their benefit [1]. Businesses aim to maximise their profit [1]. [2] Examiner insight: Keep each assumption tied to the right agent, because swapping benefit and profit risks losing the credit.

9. Habit: the shopper keeps buying the brand without reviewing alternatives [1]. The extra cost is 4.20 − 3.00 = 1.20 a week, or 1.20 × 52 = 62.40 a year [1], so money is spent that could have bought more benefit elsewhere [1]. Copying others: neighbours buy the brand, so the shopper follows them [1] without checking the price or taste [1], so the choice rests on what others do rather than on the shopper’s own benefit [1]. [6] Examiner insight: Each reason needs its own development, ideally using the data in the question, rather than two named reasons with no explanation.

10. (a) Revenue is price × output: 600, 750, 800, 750 [1]. Profit is revenue minus cost: 600 − 320 = 280 [1]; 750 − 420 = 330 [1]; 800 − 520 = 280 and 750 − 620 = 130 [1]. [4] (b) 15 units, where profit is 330 [1]. [1] (c) Revenue is highest at 20 units (800) [1]. Profit there is 280 [1], which is 330 − 280 = 50 lower than at the profit-maximising output [1]. [3] Examiner insight: Show the revenue and profit workings in a table, because each figure supports the later comparison.

11. The tailor gives up revenue of 15 × 6 = 90 a month [1] and spends 15 × 1.5 = 22.50 on materials, so profit forgone is 90 − 22.50 = 67.50 a month, or 810 a year [1]. The assumption is not realistic here because the owner pursues charitable work [1] and values helping families over profit [1]. In other cases the assumption holds better: firms in tough competition must earn profit to survive [1], and a small cost may bring goodwill and loyalty that raise later sales [1]. Other firms depart from profit through revenue-maximising managers [1]. Judgement: the assumption is a useful simplification but not always true, and the tailor’s free work is a small departure from profit if 67.50 a month is only a minor part of the tailor’s income [1]. [8] Examiner insight: Use the figures given, set a point for and against, and finish with a supported conclusion rather than a summary.

Where marks are usually lost

• Giving the price paid instead of the thing given up as the opportunity cost.
• Listing every alternative rather than the single next best one.
• Dividing by the wrong base in a percentage, or giving no working.
• Treating a point inside the PPF as unobtainable, or a point outside as possible.
• Describing growth as a movement along the curve.
• Naming a cause of growth without linking it to resources and output.
• Giving a reason why consumers or firms depart from the assumptions with no development.
• Writing an evaluation answer with no judgement at the end.

Next steps

• Re-read the revision notes and the study guide.
• Go to the Edexcel IGCSE Economics hub and tick off the checklist.
• Try the all free 10-minute diagnostics.
• Book a free trial class.

Official syllabus

Pearson Edexcel International GCSE in Economics (4EC1) specification, Issue 3, February 2026, for first teaching September 2017, published by Pearson Education Limited, sections 1.1.1 and 1.1.2.