OCR A LEVEL ECONOMICS LATEST 2025-2026
EXAM UPDATE QUESTIONS AND ANSWERS
consumer surplus - Answer-difference between what a consumer
expects to pay and what they actually pay
producer surplus - Answer-difference between how a producer expects
to price their product and how they can actually afford to price it
invisible hand - Answer-consumers dictate the price of goods and
services through their purchases
free market economy - Answer-no public sector, no government sector,
production dictated by invisible hand
command economy - Answer-no private sector, government dictates
production
mixed economy - Answer-there is both a private and public sector
three functions of money - Answer-store of value, unit of account,
medium of exchange
, double coincidence of wants - Answer-two parties are willing to swap
items because they have inferred an equal value on the items
specialisation - Answer-in a production process, each worker has only
one job to do
advantages of specialisation - Answer-more efficient, less training,
lower wages, standardised product, automation
disadvantages of specialisation - Answer-less transferable skills, absent
worker stops production, lower motivation due to boredom
determinants of pes - Answer-how much surplus the producer has,
availability of factors of production, time period
cross elasticity of demand - Answer-responsiveness of demand for one
product to a change in price of another
xed formula - Answer-%change in qd of good A/%change in price of
good B
xed value of a substitute - Answer->1
xed value of a complementary good - Answer-<1
, large divergence of xed from 0 - Answer-strong relationship between
two products
indirect tax - Answer-a tax passed onto consumers by producers
incidence of a tax if ped>pes - Answer-less incidence on consumers
incidence of a tax if pes>ped - Answer-less incidence on producers
monetary policy - Answer-policy which influences the supply of money
in an economy
fiscal policy - Answer-policy that controls spending and taxation in an
economy
expansionary fiscal policy - Answer-increasing ad/as and expanding
real output through government spending and/or a decrease in net taxes
expansionary monetary policy - Answer-increasing ad, output and
employment by reducing interest rates
contractionary monetary policy - Answer-reducing ad, output by
increasing interest rates
, contractionary fiscal policy - Answer-decreasing ad/as by decreasing
government spending and/or increasing net taxes
foreign direct investment - Answer-a foreign company spends money in
a country for a return, influenced by confidence
confidence - Answer-the degree of optimism that a consumer has in an
economy and its future
allocative efficiency - Answer-every good or service is produced to the
point where the last unit provides an msb=msc of production
productive efficiency - Answer-production at the lowest possible cost
dynamic efficiency - Answer-productive efficiency over a long period
of time
social efficiency - Answer-occurs where msc=msb, production has a net
benefit on society
corporate social responsibility - Answer-a business's concern for
society's welfare
marginal social cost - Answer-the extra cost to society of producing one
additional unit
EXAM UPDATE QUESTIONS AND ANSWERS
consumer surplus - Answer-difference between what a consumer
expects to pay and what they actually pay
producer surplus - Answer-difference between how a producer expects
to price their product and how they can actually afford to price it
invisible hand - Answer-consumers dictate the price of goods and
services through their purchases
free market economy - Answer-no public sector, no government sector,
production dictated by invisible hand
command economy - Answer-no private sector, government dictates
production
mixed economy - Answer-there is both a private and public sector
three functions of money - Answer-store of value, unit of account,
medium of exchange
, double coincidence of wants - Answer-two parties are willing to swap
items because they have inferred an equal value on the items
specialisation - Answer-in a production process, each worker has only
one job to do
advantages of specialisation - Answer-more efficient, less training,
lower wages, standardised product, automation
disadvantages of specialisation - Answer-less transferable skills, absent
worker stops production, lower motivation due to boredom
determinants of pes - Answer-how much surplus the producer has,
availability of factors of production, time period
cross elasticity of demand - Answer-responsiveness of demand for one
product to a change in price of another
xed formula - Answer-%change in qd of good A/%change in price of
good B
xed value of a substitute - Answer->1
xed value of a complementary good - Answer-<1
, large divergence of xed from 0 - Answer-strong relationship between
two products
indirect tax - Answer-a tax passed onto consumers by producers
incidence of a tax if ped>pes - Answer-less incidence on consumers
incidence of a tax if pes>ped - Answer-less incidence on producers
monetary policy - Answer-policy which influences the supply of money
in an economy
fiscal policy - Answer-policy that controls spending and taxation in an
economy
expansionary fiscal policy - Answer-increasing ad/as and expanding
real output through government spending and/or a decrease in net taxes
expansionary monetary policy - Answer-increasing ad, output and
employment by reducing interest rates
contractionary monetary policy - Answer-reducing ad, output by
increasing interest rates
, contractionary fiscal policy - Answer-decreasing ad/as by decreasing
government spending and/or increasing net taxes
foreign direct investment - Answer-a foreign company spends money in
a country for a return, influenced by confidence
confidence - Answer-the degree of optimism that a consumer has in an
economy and its future
allocative efficiency - Answer-every good or service is produced to the
point where the last unit provides an msb=msc of production
productive efficiency - Answer-production at the lowest possible cost
dynamic efficiency - Answer-productive efficiency over a long period
of time
social efficiency - Answer-occurs where msc=msb, production has a net
benefit on society
corporate social responsibility - Answer-a business's concern for
society's welfare
marginal social cost - Answer-the extra cost to society of producing one
additional unit
