ECONOMICS - IGCSE 1.1.1 - 1.1.3 EDEXCEL EXAM QUESTIONS WITH ELABOLATED ANSWERS 2025  

What is the economic problem? - ANSWERSThere are finite resources and infinite wants meaning that economic agents have to make choices. What questions does the basic economic problem lead to? - ANSWERSWhat to produce? How to produce it? For whom to produce it? What is the meaning of opportunity cost? - ANSWERSOpportunity cost is the next best alternative foregone What is the meaning of scarcity in Economics? - ANSWERSScarcity is when there are insufficient resources to meet all of our needs and wants What are the 3 main types of economic agents? - ANSWERSConsumers, producers, governments What do economists assume that rational consumers maximise? - ANSWERSUtility (satisfaction or happiness) What do economists assume that rational producers maximise? - ANSWERSProfit Why might consumers not always maximise their utility? - ANSWERSThey may not be very good at calculating their utility, they might have habits that are hard to give up, or they might just copy other's behaviour What does a production possibility frontier show? - ANSWERSThe different combinations of goods / the maximum potential output of a 2 good economy with given technical resources. What will cause a PPF (PPC) to shift inwards? - ANSWERSEconomic decline - caused by Weather, War or Resource Depletion (WWR) What will cause a PPF (PPC) to shift outwards? - ANSWERSEconomic growth - caused by Technology, (new) Resources, Education & training, Efficiency (TREE) How can unemployment be illustrated on a PPF (PPC)? - ANSWERSBy any point inside the PPF/PCC curve which shows that the economy is not producing the maximum potential output and that some resources are therefore unemployed.