OxfordAQA International AS and A-level Economics: The economic problem and method (9640) – 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 section 3.1.1 (the economic problem and methodology) of the OxfordAQA International AS and A-level Economics (9640) specification, first teaching September 2020. Section 3.1 is International AS content. All countries, firms and figures are fictional. Revise first with the study guide and revision notes. Other links: course hub, printable checklist, markets practice and the free diagnostics.

Questions

1. Define scarcity and explain why it forces choices. [3]

2. Classify each statement about Country Red as positive or normative.

(a) Unemployment rose from 6% to 8% last year. [1] (b) The government ought to spend more on railways. [1] (c) Raising the minimum wage will reduce employment. [1] (d) The gap between rich and poor is too wide. [1]

3. A café raises the price of a coffee. Explain the role of ceteris paribus in predicting that quantity demanded will fall, and show how the prediction could appear to fail. [4]

4. A potter has 36 hours a week. A bowl takes 1.5 hours and sells for 12. A vase takes 4 hours and sells for 34.

(a) State the maximum number of bowls or vases she could make in a week. [2] (b) Work out what one vase costs her in bowls. [2] (c) Evaluate which product she should make. [3]

5. Five items are used by a small firm: a delivery van, a coal seam it mines, the owner who risks personal savings to run it, a call-centre agent’s hours and a managed forest it owns.

(a) Classify each as land, labour, capital or enterprise. [5] (b) Which of the natural resources is renewable? [1]

6. A fishery has a stock of 8,000 tonnes. The stock regrows by 10% of the opening stock each year. 1,200 tonnes are caught each year.

(a) Calculate the stock after three years. [3] (b) State the catch that would keep the stock constant in year 1. [1] (c) Explain why this shows that the environment is a scarce resource. [2]

7. Country Beta produces tractors (T) and bolts of textile (B). Boundary points (T, B): (0, 90), (20, 84), (40, 66), (60, 30).

(a) Calculate the opportunity cost per tractor of raising output from 20 to 40 tractors. [2] (b) Explain why the opportunity cost rises as more tractors are made. [2] (c) Describe what each point means: (T = 40, B = 60) and (T = 60, B = 50). [3] (d) Explain the effect on the diagram of a technology that improves both industries. [2]

8. In question 7, society values one extra tractor at 1.2 bolts. Identify the allocatively efficient point and justify it. [5]

9. A firm makes 200 units a day. Method X uses 10 workers and 2 machines. Method Y uses 4 workers and 5 machines. A machine costs 50 a day.

(a) Compare daily costs at wages of 18 and 32. [3] (b) Find the wage at which the methods cost the same. [2]

10. Assess the advantages and disadvantages of allocating resources through a centrally planned system rather than a free market. [8]

11. Country Red has five people who each earn 150. Country Blue has five people earning 500, 100, 50, 50 and 50.

(a) Calculate Blue’s mean and median income and the richest person’s share of total income. [3] (b) Explain why average income gives an incomplete view of economic welfare. [3] (c) “Blue should redistribute income.” Explain why economists might disagree. [4]

Answers

1. Scarcity is limited resources set against unlimited wants [1]. Not all wants can be met [1], so choices must be made between uses, and each choice has an opportunity cost [1]. [3] Examiner insight: Mention both sides, limited resources and unlimited wants. Saying only “there is not enough” is incomplete.

2. (a) Positive: a testable fact [1]. (b) Normative: “ought” is a value judgement [1]. (c) Positive: a prediction that evidence can test, even if it proves wrong [1]. (d) Normative: “too wide” is a judgement [1]. [4] Examiner insight: A prediction is positive even if it might be false. Explaining your classification is safer than a bare label.

3. Ceteris paribus means other factors are held constant [1]. This isolates the effect of price on quantity demanded [1]. If incomes rise, or a nearby rival closes, at the same time, demand could increase and offset the price effect [1]. Sales might then not fall, although the price relationship still holds. The prediction is conditional [1]. [4] Examiner insight: Make the example specific: name the other factor that moved and the direction of its effect.

4. (a) 36 ÷ 1.5 = 24 bowls [1]; 36 ÷ 4 = 9 vases [1]. (b) Vase hours ÷ bowl hours: 4 ÷ 1.5 [1] = 2.67 bowls (8/3) [1]. (c) All bowls earn 24 × 12 = 288; all vases earn 9 × 34 = 306, so vases earn 18 more [1]. Per hour, bowls earn 8 and vases earn 8.50 [1]. The gap is small, so the decision depends on whether she can sell 24 bowls or 9 vases, on risk and on her preferences [1]. [7] Examiner insight: Evaluation requires a judgement. State the choice, then say what could change it.

5. (a) Delivery van: capital [1]. Coal seam: land [1]. Owner who risks savings: enterprise [1]. Agent’s hours: labour [1]. Managed forest: land [1]. (b) The managed forest is renewable (the coal seam is not) [1]. [6] Examiner insight: Use the four standard terms. A manager’s role can be labour or enterprise depending on risk-taking, so justify it.

6. (a) Year 1: 8,000 + 800 - 1,200 = 7,600 [1]. Year 2: 7,600 + 760 - 1,200 = 7,160 [1]. Year 3: 7,160 + 716 - 1,200 = 6,676 tonnes [1]. (b) 10% of 8,000 = 800 tonnes [1]. (c) The fish stock is a limited natural resource [1]. Catching more than regrowth reduces future output, so using it now has an opportunity cost in future catch [1]. [6] Examiner insight: Show the opening stock for each year, because growth is based on a changing stock.

7. (a) Bolts lost: 84 - 66 = 18 [1]. Per tractor: 18 ÷ 20 = 0.9 bolts [1]. (b) Some resources suit one good better than the other [1]. Making more tractors draws in resources better suited to textiles, so more bolts are lost per extra tractor [1]. (c) (40, 60): boundary at T = 40 is 66, so 6 bolts (9.1%) short, meaning unemployed or inefficiently used resources [1][1]. (60, 50): boundary at T = 60 is 30, so it is unattainable now [1]. (d) The whole boundary shifts outwards [1], showing economic growth, a rise in productive capacity [1]. [9] Examiner insight: Distinguish between inside (possible but inefficient) and outside (unattainable).

8. Moving from T = 20 to 40 costs 0.9 bolts per tractor, below the value of 1.2 [1], so it is worthwhile [1]. Moving from 40 to 60 costs 1.8, above 1.2 [1], so it is not [1]. The allocatively efficient point is (T = 40, B = 66). The other boundary points are also productively efficient, so productive efficiency alone cannot identify the best mix [1]. [5] Examiner insight: Compare opportunity cost with society’s valuation at each step. Naming the point with no comparison earns little.

9. (a) At 18: X = 180 + 100 = 280 and Y = 72 + 250 = 322, so X is cheaper [1]. At 32: X = 320 + 100 = 420 and Y = 128 + 250 = 378, so Y is cheaper [1]. Each gap is 42, or 0.21 a unit [1]. (b) 10w + 100 = 4w + 250 [1], so 6w = 150 and w = 25 [1]. [5] Examiner insight: Write the cost equations out. Quote totals and the per-unit difference to support the conclusion.

10. A planned system can direct resources to social goals [1] and avoid some market failures [1]. But planners lack the full information that prices supply, causing shortages or surpluses [1], and weak incentives can reduce effort and innovation [1]. A free market responds to wants through prices and profit [1] and rewards efficient firms [1]. But it ignores those without income [1] and may under-provide public goods [1]. Evaluation: most economies are mixed, so what matters is the extent and form of intervention. [8] Examiner insight: Weigh both systems against a criterion such as efficiency or fairness. A list of pros and cons without a judgement is weaker.

11. (a) Mean = 750 ÷ 5 = 150 [1]; median = 50 [1]; richest share = 500 ÷ 750 = 66.7% [1]. (b) Red and Blue have the same mean [1], but in Blue four of five people receive less than the mean and three receive only one-third of it [1], so welfare depends on how output is distributed as well as its total [1]. (c) The statement is normative, a value judgement [1]. People weigh equality and efficiency differently [1]. They may also disagree on positive questions, such as whether redistribution reduces incentives [1]. Evidence can inform the debate but cannot settle it [1]. [10] Examiner insight: Separate disagreement over facts from disagreement over values. That distinction is the point of the question.

Where marks are usually lost

• Writing opportunity cost as “money spent” rather than the best option rejected.
• Calculating an opportunity cost the wrong way up (bowls per vase instead of vases per bowl).
• Describing a point inside the boundary as unattainable.
• Calling any boundary point allocatively efficient without comparing cost with value.
• Forgetting that growth in a renewable stock depends on the opening stock.
• Classifying a prediction as normative because it might be wrong.
• Giving one-sided answers to questions asking for assessment or evaluation.
• Leaving out units, or the good in which an opportunity cost is measured.

Next steps

• Revise with the revision notes and the study guide.
• Course pages: OxfordAQA economics hub and checklist.
• Try all free 10-minute diagnostics.
• Book a free trial class: /trial/.

Official syllabus

OxfordAQA International AS and A-level Economics (9640), section 3.1.1 (the economic problem and methodology), published by OxfordAQA. First teaching September 2020, first AS exams May/June 2021, first A-level exams May/June 2022.