AQA ECONOMICS A UPDATED 2026 EXAM SCRIPT
QUESTIONS AND ANSWERS RATED A+
✔✔Capital - ✔✔The equipment and structures used to produce goods and services
✔✔Enterprise - ✔✔The skill and risk taking abilities of an individual that are needed to
make a new idea work
✔✔Unlimited Wants - ✔✔The side of human nature that wants an endless number of
things, yet has a limited amount of resources to achieve these wants.
✔✔Limited Resources - ✔✔The condition of there not being enough resources to fulfill
all wants and needs
✔✔Resource Allocation - ✔✔Assigning available resources, or factors of production, to
specific uses chosen among many possible and competing alternatives. It involves
answering "What to produce" and "How to produce".
✔✔Trade-Offs - ✔✔Alternative that must be given up when one choice is made rather
than another
✔✔Productively Inefficient - ✔✔Points inside of the PPF curve showing that a firm is not
producing at its lowest unit cost.
✔✔Extension of Demand - ✔✔When quantity demanded for a good increases because
its price falls; it is shown by a movement down the demand curve
✔✔Contraction of Demand - ✔✔When quantity demanded for a good falls because its
price rises; it is shown by a movement up the demand curve
✔✔Shift in Demand - ✔✔When a change in some economic factor (other than price)
causes a different quantity to be demanded at every price
✔✔Factors of Demand - ✔✔Population, Income, Tastes and Preferences,
Complementary Goods, Substitutes
✔✔Factors of Supply - ✔✔...ROTTEN
Resources: cost and availability
Other goods' prices
Taxes, subsidies, gov regulations
Technology (productivity)
Expectations of the producer
Number of firms in the industry
,✔✔Elasticity of Supply - ✔✔a measure of how responsive producers are to price
changes in the marketplace
✔✔Total Revenue - ✔✔Price x Quantity
✔✔Disequilibrium - ✔✔Describes any price or quantity not at equilibrium; when quantity
supplied is not equal to quantity demanded in a market
✔✔Joint Demand - ✔✔Joint demand refers to the relationship between two or more
commodities or services when they are demanded together. There is joint demand for
cars and petrol, pens and ink, tea and sugar, etc. Jointly demanded goods are
complementary.
✔✔Composite Demand - ✔✔Demand for a good which has more than one use e.g. land
for housing or a factory.
✔✔Derived Demand - ✔✔Derived demand occurs when there is a demand for a good
or factor of production resulting from demand for an intermediate good or service.
The rise in demand for mobile phones and other devices has led to a strong rise in
demand for lithium. Lithium is used in the batteries.
✔✔Joint Supply - ✔✔Refers to the production of two or more goods that are derived
from a single product, so that it is not possible to produce more of one without
producing more of the other. Example: Butter and Skimmed milk are both produced
from whole milk, producing more of one means to produce more of the other.
✔✔Productivity - ✔✔The value of a particular product compared to the amount of labour
needed to make it.
✔✔Production - ✔✔The process of creating goods and services
✔✔Labour Productivity - ✔✔Output per time period / number of employees
✔✔Specialisation of labour - ✔✔When a worker becomes an expert in a particular
profession or in a part of a production process.
✔✔Division of Labour - ✔✔The breaking down of the production process into small
parts with each worker allocated to a specific task.
✔✔Money as a medium of exchange - ✔✔something that buyers will exchange with a
seller when they want to purchase goods or services from the seller
✔✔Short Run - ✔✔The period of time during which at least one factor of production is
fixed (usually capital)
, ✔✔Long Run - ✔✔The period of time in which a firm can vary all its inputs, adopt new
technology, and increase or decrease the size of its physical plant
✔✔Fixed Cost - ✔✔Costs that do not vary with the quantity of output produced
✔✔Variable Cost - ✔✔a cost that varies with changes in the level of output
✔✔Total Costs - ✔✔fixed costs + variable costs
✔✔Average Costs - ✔✔Total costs / output
✔✔Long Run Average Cost Curve - ✔✔a curve that shows the lowest cost at which a
firm is able to produce a given quantity of output in the long run, when no inputs are
fixed. The curve is assumed to be 'U' shaped, because of the impact of internal
economies and diseconomies of scale.
✔✔Economies of Scale - ✔✔factors that cause a producer's average cost per unit to fall
as output rises
✔✔Diseconomies of Scale - ✔✔the situation in which a firm's long-run average costs
rise as the firm increases output
✔✔Internal Economies of Scale - ✔✔The cost benefits that an individual firm can enjoy
when it expands.
✔✔Purchasing Economies of Scale - ✔✔A reduction in unit costs as a result of buying
in large quantities; these are sometimes called buying economies of scale.
✔✔Managerial Economies of Scale - ✔✔Reductions in average cost as a result of being
able to employ specialist managers who are more productive
✔✔Technical Economies of Scale - ✔✔reductions in average costs of production due to
the use of more advanced machinery.
✔✔Financial Economies of Scale - ✔✔A situation where large firms are able to borrow
money on better terms than smaller firms which makes the cost of financing investment
and therefore unit costs lower.
✔✔Marketing Economies of Scale - ✔✔A situation where larger firms are able to lower
the unit cost of advertising and promotion perhaps through access to more effective
marketing media.
QUESTIONS AND ANSWERS RATED A+
✔✔Capital - ✔✔The equipment and structures used to produce goods and services
✔✔Enterprise - ✔✔The skill and risk taking abilities of an individual that are needed to
make a new idea work
✔✔Unlimited Wants - ✔✔The side of human nature that wants an endless number of
things, yet has a limited amount of resources to achieve these wants.
✔✔Limited Resources - ✔✔The condition of there not being enough resources to fulfill
all wants and needs
✔✔Resource Allocation - ✔✔Assigning available resources, or factors of production, to
specific uses chosen among many possible and competing alternatives. It involves
answering "What to produce" and "How to produce".
✔✔Trade-Offs - ✔✔Alternative that must be given up when one choice is made rather
than another
✔✔Productively Inefficient - ✔✔Points inside of the PPF curve showing that a firm is not
producing at its lowest unit cost.
✔✔Extension of Demand - ✔✔When quantity demanded for a good increases because
its price falls; it is shown by a movement down the demand curve
✔✔Contraction of Demand - ✔✔When quantity demanded for a good falls because its
price rises; it is shown by a movement up the demand curve
✔✔Shift in Demand - ✔✔When a change in some economic factor (other than price)
causes a different quantity to be demanded at every price
✔✔Factors of Demand - ✔✔Population, Income, Tastes and Preferences,
Complementary Goods, Substitutes
✔✔Factors of Supply - ✔✔...ROTTEN
Resources: cost and availability
Other goods' prices
Taxes, subsidies, gov regulations
Technology (productivity)
Expectations of the producer
Number of firms in the industry
,✔✔Elasticity of Supply - ✔✔a measure of how responsive producers are to price
changes in the marketplace
✔✔Total Revenue - ✔✔Price x Quantity
✔✔Disequilibrium - ✔✔Describes any price or quantity not at equilibrium; when quantity
supplied is not equal to quantity demanded in a market
✔✔Joint Demand - ✔✔Joint demand refers to the relationship between two or more
commodities or services when they are demanded together. There is joint demand for
cars and petrol, pens and ink, tea and sugar, etc. Jointly demanded goods are
complementary.
✔✔Composite Demand - ✔✔Demand for a good which has more than one use e.g. land
for housing or a factory.
✔✔Derived Demand - ✔✔Derived demand occurs when there is a demand for a good
or factor of production resulting from demand for an intermediate good or service.
The rise in demand for mobile phones and other devices has led to a strong rise in
demand for lithium. Lithium is used in the batteries.
✔✔Joint Supply - ✔✔Refers to the production of two or more goods that are derived
from a single product, so that it is not possible to produce more of one without
producing more of the other. Example: Butter and Skimmed milk are both produced
from whole milk, producing more of one means to produce more of the other.
✔✔Productivity - ✔✔The value of a particular product compared to the amount of labour
needed to make it.
✔✔Production - ✔✔The process of creating goods and services
✔✔Labour Productivity - ✔✔Output per time period / number of employees
✔✔Specialisation of labour - ✔✔When a worker becomes an expert in a particular
profession or in a part of a production process.
✔✔Division of Labour - ✔✔The breaking down of the production process into small
parts with each worker allocated to a specific task.
✔✔Money as a medium of exchange - ✔✔something that buyers will exchange with a
seller when they want to purchase goods or services from the seller
✔✔Short Run - ✔✔The period of time during which at least one factor of production is
fixed (usually capital)
, ✔✔Long Run - ✔✔The period of time in which a firm can vary all its inputs, adopt new
technology, and increase or decrease the size of its physical plant
✔✔Fixed Cost - ✔✔Costs that do not vary with the quantity of output produced
✔✔Variable Cost - ✔✔a cost that varies with changes in the level of output
✔✔Total Costs - ✔✔fixed costs + variable costs
✔✔Average Costs - ✔✔Total costs / output
✔✔Long Run Average Cost Curve - ✔✔a curve that shows the lowest cost at which a
firm is able to produce a given quantity of output in the long run, when no inputs are
fixed. The curve is assumed to be 'U' shaped, because of the impact of internal
economies and diseconomies of scale.
✔✔Economies of Scale - ✔✔factors that cause a producer's average cost per unit to fall
as output rises
✔✔Diseconomies of Scale - ✔✔the situation in which a firm's long-run average costs
rise as the firm increases output
✔✔Internal Economies of Scale - ✔✔The cost benefits that an individual firm can enjoy
when it expands.
✔✔Purchasing Economies of Scale - ✔✔A reduction in unit costs as a result of buying
in large quantities; these are sometimes called buying economies of scale.
✔✔Managerial Economies of Scale - ✔✔Reductions in average cost as a result of being
able to employ specialist managers who are more productive
✔✔Technical Economies of Scale - ✔✔reductions in average costs of production due to
the use of more advanced machinery.
✔✔Financial Economies of Scale - ✔✔A situation where large firms are able to borrow
money on better terms than smaller firms which makes the cost of financing investment
and therefore unit costs lower.
✔✔Marketing Economies of Scale - ✔✔A situation where larger firms are able to lower
the unit cost of advertising and promotion perhaps through access to more effective
marketing media.
