Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
Economics - (ANSWERS)The study of human behaviour under scarcity
Scarcity - (ANSWERS)Describes any situation in which factors of production are finite, whereas
wants are infinite
Ceteris Paribus - (ANSWERS)latin expression meaning "other things equal" which is another
way of saying that all other things are assumed to be constant or unchanging
Consumers - (ANSWERS)those who demand goods and services
Producers - (ANSWERS)those who supply goods and services
Government - (ANSWERS)those who tax and distribute certain goods and services to both
consumers and producers
Demand - (ANSWERS)the quantity of goods consumers are willing to buy at a given price- an
inverse relationship
Supply - (ANSWERS)the quantity of goods producers are willing to sell at a given price- a direct
relationship
equilibrium price - (ANSWERS)the price at which there is no tendency to change because
planned purchases (demand) are equal to planned sales (supply)
Income effect - (ANSWERS)as prices fall, consumers can purchase more- even with a fixed
income
substitution effect - (ANSWERS)as the price of one good rises, consumers find substitute goods
more attractive
law of diminishing marginal utility - (ANSWERS)For quantity demanded to increase, prices must
fall given that marginal unites generate less utility
What causes a movement along the demand curve? - (ANSWERS)it is when there is a change in
quantity demanded due to an increase or decrease in price while all other factors remain
constant
What causes a shift in the demand curve? - (ANSWERS)it is caused by changes in non-price
factors (PASIFICS)
What is PASIFICS - (ANSWERS)POPULATION
ADVERTISING
SUBSTITUTIONS
,Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
INCOME LEVELS
FASHION/TREND
INTEREST RATES
COMPLEMENTARY GOODS
SPECULATION
What is GDP? - (ANSWERS)- Gross domestic product
- the total value of all new goods and services produced in a given year
Recession - (ANSWERS)two consecutive quarters of negative GDP growth
what are the limitations of GDP- PC - (ANSWERS)Per capita- population growth leads to an
increase in GDP due to greater spending/earning/output. However, individuals may be ported if
the rate of population growth is greater than the rate of economic growth
what are the limitations of GDP- HE - (ANSWERS)Hidden economy: Unpaid work isn't captured
in official figures, such as: caring responsibilities; subsistence farming; black markets; hobbies
what are the limitations of GDP- I - (ANSWERS)Inequality- Rising GDP could result from the
richest getting richer, rather than everyone, or even the average becoming better off
what are the limitations of GDP- ED - (ANSWERS)Environmental degradation- Critics have
argued that GDP fails to consider whether economic activity is sustainable, or the damage it
might do to the natural world
what are the limitations of GDP- C - (ANSWERS)Comparisons- Different estimation techniques
and purchasing power make it difficult to make international/historical comparisons
what are the limitations of GDP- H - (ANSWERS)Happiness- In 2010, the ONS started measuring
well-being alongside economic growth. This measures health, relationships, education and
skills, as well as personal finances and the environment
Easterlin Paradox - (ANSWERS)Increases in a country's per capita income does not necessarily
lead to an increase in happiness.There is little direct relationship within countries. Other factors
are more important determinants such as social connections.
working age population - (ANSWERS)all those between the ages of 16-64 years.
Labour force - (ANSWERS)all those able and willing to work
employment - (ANSWERS)the proportion of the working-age population that is working
,Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
unemployment - (ANSWERS)the proportion of the working-age population that is actively
seeking work but not working
underemployment - (ANSWERS)employed but seeking more hours
- not doing work that makes use of their full skills and abilities
Ways to measure unemployment - (ANSWERS)Claimant count and international labour
organisation
Claimaint Count - (ANSWERS)Records the number of people claiming unemployment-related
benefits
Positives and negatives of claimant count - (ANSWERS)Positive: Easy and cheap to collect
Negatives: May be susceptible to political manipulation
-Exclude people who are out of work, actively seeking work but don't claim
-Fraud could lead to overestimating population
International Labour Organisation - (ANSWERS)Surveys and estimated the number of people
who are without a job + actively seeking work + available to start work in the next two weeks
Positives and negatives of the international labour organisation - (ANSWERS)Positives: More
accurate
- Based on international standards
Negatives: More costly to
compile
-Only need to work for 1 hour a week to be counted as employed
Inflation - (ANSWERS)An increase in the general price level
Index - (ANSWERS)A statistical measure of relative change
Real - (ANSWERS)When a figure has been adjusted for inflation
nominal - (ANSWERS)when a figure has not been adjusted for inflation
Disinflation - (ANSWERS)A fall in the rate of inflation- prices are increasing but at a slower rate
Deflation - (ANSWERS)A decrease in the general price level
Hyperinflation - (ANSWERS)A rapid, significant and uncontrollable increase in the general price
level
Problems with inflation - (ANSWERS)- Erodes the value of money, savings and wages
, Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
- Uncertainty leads to lower consumer and business confidence
- Worsens inequality- worse for those who spend a high proportion of their income on
necessities
Problems with deflation - (ANSWERS)- A sign of an economic slowdown
-Discourages consumer spending: downwards spiral
- Debt value increase in real terms; borrowers worse off
The profit incentive - (ANSWERS)as prices increase, firms have a larger incentive to produce
more/enter the market
Crowding out of fixed factors - (ANSWERS)As firms produce more, marginal costs increase.
Firms must set higher prices to cover these increased costs
What causes a movement along the supply curve? - (ANSWERS)change in price
What causes a shift in the supply curve? - (ANSWERS)Productivity
Indirect Tax
Number of firms
Technology
Subsidy
Weather
Cost of production
Positive statements - (ANSWERS)statements that can be tested to be true or false
is, will, has, can
Normative statements - (ANSWERS)Statements that cannot be tested as they are based on
value judgements
Opportunity cost - (ANSWERS)The foregone value of the next best alternative
-that which must be sacrificed when faced with a trade-off
Factors of production - (ANSWERS)the different elements that are required to produce goods
and services
CAPITAL
ENTERPRISE
LABOUR
LAND
The profit incentive - (ANSWERS)as prices increase, firms have a larger incentive to produce
more/enter the market
VERIFIED)
Economics - (ANSWERS)The study of human behaviour under scarcity
Scarcity - (ANSWERS)Describes any situation in which factors of production are finite, whereas
wants are infinite
Ceteris Paribus - (ANSWERS)latin expression meaning "other things equal" which is another
way of saying that all other things are assumed to be constant or unchanging
Consumers - (ANSWERS)those who demand goods and services
Producers - (ANSWERS)those who supply goods and services
Government - (ANSWERS)those who tax and distribute certain goods and services to both
consumers and producers
Demand - (ANSWERS)the quantity of goods consumers are willing to buy at a given price- an
inverse relationship
Supply - (ANSWERS)the quantity of goods producers are willing to sell at a given price- a direct
relationship
equilibrium price - (ANSWERS)the price at which there is no tendency to change because
planned purchases (demand) are equal to planned sales (supply)
Income effect - (ANSWERS)as prices fall, consumers can purchase more- even with a fixed
income
substitution effect - (ANSWERS)as the price of one good rises, consumers find substitute goods
more attractive
law of diminishing marginal utility - (ANSWERS)For quantity demanded to increase, prices must
fall given that marginal unites generate less utility
What causes a movement along the demand curve? - (ANSWERS)it is when there is a change in
quantity demanded due to an increase or decrease in price while all other factors remain
constant
What causes a shift in the demand curve? - (ANSWERS)it is caused by changes in non-price
factors (PASIFICS)
What is PASIFICS - (ANSWERS)POPULATION
ADVERTISING
SUBSTITUTIONS
,Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
INCOME LEVELS
FASHION/TREND
INTEREST RATES
COMPLEMENTARY GOODS
SPECULATION
What is GDP? - (ANSWERS)- Gross domestic product
- the total value of all new goods and services produced in a given year
Recession - (ANSWERS)two consecutive quarters of negative GDP growth
what are the limitations of GDP- PC - (ANSWERS)Per capita- population growth leads to an
increase in GDP due to greater spending/earning/output. However, individuals may be ported if
the rate of population growth is greater than the rate of economic growth
what are the limitations of GDP- HE - (ANSWERS)Hidden economy: Unpaid work isn't captured
in official figures, such as: caring responsibilities; subsistence farming; black markets; hobbies
what are the limitations of GDP- I - (ANSWERS)Inequality- Rising GDP could result from the
richest getting richer, rather than everyone, or even the average becoming better off
what are the limitations of GDP- ED - (ANSWERS)Environmental degradation- Critics have
argued that GDP fails to consider whether economic activity is sustainable, or the damage it
might do to the natural world
what are the limitations of GDP- C - (ANSWERS)Comparisons- Different estimation techniques
and purchasing power make it difficult to make international/historical comparisons
what are the limitations of GDP- H - (ANSWERS)Happiness- In 2010, the ONS started measuring
well-being alongside economic growth. This measures health, relationships, education and
skills, as well as personal finances and the environment
Easterlin Paradox - (ANSWERS)Increases in a country's per capita income does not necessarily
lead to an increase in happiness.There is little direct relationship within countries. Other factors
are more important determinants such as social connections.
working age population - (ANSWERS)all those between the ages of 16-64 years.
Labour force - (ANSWERS)all those able and willing to work
employment - (ANSWERS)the proportion of the working-age population that is working
,Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
unemployment - (ANSWERS)the proportion of the working-age population that is actively
seeking work but not working
underemployment - (ANSWERS)employed but seeking more hours
- not doing work that makes use of their full skills and abilities
Ways to measure unemployment - (ANSWERS)Claimant count and international labour
organisation
Claimaint Count - (ANSWERS)Records the number of people claiming unemployment-related
benefits
Positives and negatives of claimant count - (ANSWERS)Positive: Easy and cheap to collect
Negatives: May be susceptible to political manipulation
-Exclude people who are out of work, actively seeking work but don't claim
-Fraud could lead to overestimating population
International Labour Organisation - (ANSWERS)Surveys and estimated the number of people
who are without a job + actively seeking work + available to start work in the next two weeks
Positives and negatives of the international labour organisation - (ANSWERS)Positives: More
accurate
- Based on international standards
Negatives: More costly to
compile
-Only need to work for 1 hour a week to be counted as employed
Inflation - (ANSWERS)An increase in the general price level
Index - (ANSWERS)A statistical measure of relative change
Real - (ANSWERS)When a figure has been adjusted for inflation
nominal - (ANSWERS)when a figure has not been adjusted for inflation
Disinflation - (ANSWERS)A fall in the rate of inflation- prices are increasing but at a slower rate
Deflation - (ANSWERS)A decrease in the general price level
Hyperinflation - (ANSWERS)A rapid, significant and uncontrollable increase in the general price
level
Problems with inflation - (ANSWERS)- Erodes the value of money, savings and wages
, Micro Economics Edexcel A level Exam QUESTIONS & ANSWERS 2024( A+ GRADED 100%
VERIFIED)
- Uncertainty leads to lower consumer and business confidence
- Worsens inequality- worse for those who spend a high proportion of their income on
necessities
Problems with deflation - (ANSWERS)- A sign of an economic slowdown
-Discourages consumer spending: downwards spiral
- Debt value increase in real terms; borrowers worse off
The profit incentive - (ANSWERS)as prices increase, firms have a larger incentive to produce
more/enter the market
Crowding out of fixed factors - (ANSWERS)As firms produce more, marginal costs increase.
Firms must set higher prices to cover these increased costs
What causes a movement along the supply curve? - (ANSWERS)change in price
What causes a shift in the supply curve? - (ANSWERS)Productivity
Indirect Tax
Number of firms
Technology
Subsidy
Weather
Cost of production
Positive statements - (ANSWERS)statements that can be tested to be true or false
is, will, has, can
Normative statements - (ANSWERS)Statements that cannot be tested as they are based on
value judgements
Opportunity cost - (ANSWERS)The foregone value of the next best alternative
-that which must be sacrificed when faced with a trade-off
Factors of production - (ANSWERS)the different elements that are required to produce goods
and services
CAPITAL
ENTERPRISE
LABOUR
LAND
The profit incentive - (ANSWERS)as prices increase, firms have a larger incentive to produce
more/enter the market
