AQA ECONOMICS A CORE EXAM 2026 TEST QUESTIONS
AND ANSWERS RATED A+
✔✔Private good - ✔✔a good which is excludable and diminishable
✔✔public good - ✔✔a good which is non-excluadable and non-diminshable
✔✔quasi-public good - ✔✔a good which is not fully non-rival and/or where it is not
possible to exclude people from consuming the product
✔✔externality - ✔✔an external benefit or an external cost that is 'dumped' on third
parties outside the market
✔✔positive externality - ✔✔an external benefit - when the consumption or production of
a good causes a benefit to a third party and the MSB > MPB
✔✔negative externality - ✔✔an external cost - occurs when the consumption or
production of a good causes costs to a third party and the MSC > MPC
✔✔production externality - ✔✔an externality (positive or negative) generated in the
course of producing a good or service
✔✔consumption externality - ✔✔an externality (positive or negative) generated in the
course of consuming a good or service
✔✔social benefit - ✔✔the total benefit of an activity, including the external benefit and
the private benefit
✔✔social benefit - ✔✔private benefit + external benefit
✔✔social cost - ✔✔the total cost of an activity, including the external cost and private
cost
✔✔social cost - ✔✔external cost + private cost
✔✔Merit goods - ✔✔goods for which the social benefits of consumption exceed the
private benefits
(value judgements are involved in deciding whether a good is a merit good or not)
✔✔Subsidy - ✔✔a payment given by the government or another authority usually to
producers, for each of the units of the subsidised good that they produce
a subsidy can also be given to consumers - subsidies uni fees, subsidised transport for
kids
, ✔✔Demerit goods - ✔✔A good for which the social costs of consumption exceed the
private costs
(value judgements are used to decide if a good is demerit or not)
✔✔Information problem - ✔✔Occurs when people make wrong decisions because they
don't possess or they ignore relevant information. Very often they are myopic (short-
sighted) about the future
✔✔Immobility of labour - ✔✔the inability of labour to move from one job to another,
either for occupational reasons or geographical reasons
✔✔geographical immobility of labour - ✔✔occurs when workers find it difficult or
impossible to move jobs in other parts of the country or in other countries for reasons
such as higher housing costs in locations where jobs exist
✔✔occupational immobility of labour - ✔✔occurs when workers find it difficult or
impossible to move between jobs because ether lack or cannot develop the skills
required for the new jobs
✔✔equity - ✔✔fairness or justice
✔✔inequity - ✔✔unfairness or injustice
✔✔distribution of income and wealth - ✔✔the way in which income and wealth are
divided among the population
✔✔regulation - ✔✔involves the imposition of rules, controls and constraints, which
restrict freedom of economic action in the,market place
✔✔tax - ✔✔a compulsory levy imposed by the government to pay for its activities
✔✔Maximum price (price ceiling) - ✔✔a price set below the equilibrium and above
which it is illegal to trade. These can distort markets by creating excess demand
✔✔Minimum price (price floor) - ✔✔a price set above the equilibrium, below which it is
illegal to trade. These can distort markets by creating excess supply.
✔✔causes of government failure - ✔✔o policy myopia
o high administrative costs
o unintended consequences
o information failure
AND ANSWERS RATED A+
✔✔Private good - ✔✔a good which is excludable and diminishable
✔✔public good - ✔✔a good which is non-excluadable and non-diminshable
✔✔quasi-public good - ✔✔a good which is not fully non-rival and/or where it is not
possible to exclude people from consuming the product
✔✔externality - ✔✔an external benefit or an external cost that is 'dumped' on third
parties outside the market
✔✔positive externality - ✔✔an external benefit - when the consumption or production of
a good causes a benefit to a third party and the MSB > MPB
✔✔negative externality - ✔✔an external cost - occurs when the consumption or
production of a good causes costs to a third party and the MSC > MPC
✔✔production externality - ✔✔an externality (positive or negative) generated in the
course of producing a good or service
✔✔consumption externality - ✔✔an externality (positive or negative) generated in the
course of consuming a good or service
✔✔social benefit - ✔✔the total benefit of an activity, including the external benefit and
the private benefit
✔✔social benefit - ✔✔private benefit + external benefit
✔✔social cost - ✔✔the total cost of an activity, including the external cost and private
cost
✔✔social cost - ✔✔external cost + private cost
✔✔Merit goods - ✔✔goods for which the social benefits of consumption exceed the
private benefits
(value judgements are involved in deciding whether a good is a merit good or not)
✔✔Subsidy - ✔✔a payment given by the government or another authority usually to
producers, for each of the units of the subsidised good that they produce
a subsidy can also be given to consumers - subsidies uni fees, subsidised transport for
kids
, ✔✔Demerit goods - ✔✔A good for which the social costs of consumption exceed the
private costs
(value judgements are used to decide if a good is demerit or not)
✔✔Information problem - ✔✔Occurs when people make wrong decisions because they
don't possess or they ignore relevant information. Very often they are myopic (short-
sighted) about the future
✔✔Immobility of labour - ✔✔the inability of labour to move from one job to another,
either for occupational reasons or geographical reasons
✔✔geographical immobility of labour - ✔✔occurs when workers find it difficult or
impossible to move jobs in other parts of the country or in other countries for reasons
such as higher housing costs in locations where jobs exist
✔✔occupational immobility of labour - ✔✔occurs when workers find it difficult or
impossible to move between jobs because ether lack or cannot develop the skills
required for the new jobs
✔✔equity - ✔✔fairness or justice
✔✔inequity - ✔✔unfairness or injustice
✔✔distribution of income and wealth - ✔✔the way in which income and wealth are
divided among the population
✔✔regulation - ✔✔involves the imposition of rules, controls and constraints, which
restrict freedom of economic action in the,market place
✔✔tax - ✔✔a compulsory levy imposed by the government to pay for its activities
✔✔Maximum price (price ceiling) - ✔✔a price set below the equilibrium and above
which it is illegal to trade. These can distort markets by creating excess demand
✔✔Minimum price (price floor) - ✔✔a price set above the equilibrium, below which it is
illegal to trade. These can distort markets by creating excess supply.
✔✔causes of government failure - ✔✔o policy myopia
o high administrative costs
o unintended consequences
o information failure
