AQA A-Level 2 & 3 Economics Practice
Exam Guide 2026 with Updated Course
Solution for Student Pass
Positive statement - ............ANSWER..........A statement that does not
include a value judgement and can be tested against the facts or evidence.
Normative statement - ............ANSWER..........A statement that includes
a value judgement and cannot be refuted just by looking at data or
evidence.
Value judgement - ............ANSWER..........A view about what is right or
wrong, good or bad in a moral sense. Statements that include value
judgements often, but not always, contain the words 'should' or 'ought'.
Economic activity - ............ANSWER..........The production,
consumption, exchange and distribution of goods and services.
Economic resources (factors of production) - ............ANSWER..........The
inputs into the production process that are needed to produce the goods
and services that satisfy people's wants. They are usually classified as
land, labour, capital and enterprise.
Land - ............ANSWER..........The factor of production that includes all
the natural resources that are available on the earth. It includes the land
and sea.
,
Capital - ............ANSWER..........The human-made factor of production.
Examples of capital include machines, tools, lorries and buildings.
Labour - ............ANSWER..........The human resource. The contribution
made by people to the production of goods and services.
Entrepreneur - ............ANSWER..........The person or group of people
who organise the other economic resources to allow goods and services to
be produced.
Enterprise - ............ANSWER..........Enterprise involves making decisions
and taking risks.
Scarce resource - ............ANSWER..........A factor of production that is
limited in supply. There are not enough available to satisfy people's needs
and wants.
Scarcity - ............ANSWER..........The fundamental economic problem
that results from limited resources and unlimited wants. It means that
choices have to be made which have an opportunity cost.
Opportunity cost - ............ANSWER..........The next best alternative
foregone when a choice is made.
,
Production possibility diagram - ............ANSWER..........Shows the
quantities of two goods or services that can be produced with the
available resources, given the current state of technology.
Production possibility boundary (PPB) - ............ANSWER..........The
PPB is also known as the production possibility curve (PPC) and the
production possibility frontier (PPF). It shows the various quantities of
two goods or services that can be produced, with the current state of
technology, when all the available resources are fully employed.
Resource allocation - ............ANSWER..........How the available factors
of production are used to produce different goods and services. The
allocation of resources involves determining what is produced, how it is
produced and for whom it is produced.
Rational economic decision making - ............ANSWER..........Using all
the available information to select the best option to maximise the welfare
of the decision maker. A rational consumer chooses to buy the goods and
services that, given their limited income, will maximise their total utility.
Utility - ............ANSWER..........The satisfaction that is derived from
consuming a good or service.
Marginal utility - ............ANSWER..........The change in total utility that
results from the consumption of one more, or one fewer, goods or
services.
,
Hypothesis of diminishing marginal utility - ............ANSWER..........The
proposition that as more of a product is consumed, the additional
satisfaction gained from each extra unit declines.
Imperfect information - ............ANSWER..........When an economic agent
does not have all the information needed to make a rational decision, or
the information is distorted in some way.
Asymmetric information - ............ANSWER..........A type of imperfect
information where one party to an economic transaction has more
information than the other party.
Behavioural economics - ............ANSWER..........A branch of economics
that includes elements of psychology to improve our understanding of
how people's decision making is influenced by biases and emotional
factors.
Bounded rationality - ............ANSWER..........The idea that human
limitations mean that people's decision making is not completely rational.
Bounded rationality means that when an individual makes a decision,
they choose an option that is satisfactory rather than optimal.
Bounded self-control - ............ANSWER..........The idea that people do
not have sufficient willpower or self-discipline to resist choices that may
be tempting but are not in their self-interest.
Exam Guide 2026 with Updated Course
Solution for Student Pass
Positive statement - ............ANSWER..........A statement that does not
include a value judgement and can be tested against the facts or evidence.
Normative statement - ............ANSWER..........A statement that includes
a value judgement and cannot be refuted just by looking at data or
evidence.
Value judgement - ............ANSWER..........A view about what is right or
wrong, good or bad in a moral sense. Statements that include value
judgements often, but not always, contain the words 'should' or 'ought'.
Economic activity - ............ANSWER..........The production,
consumption, exchange and distribution of goods and services.
Economic resources (factors of production) - ............ANSWER..........The
inputs into the production process that are needed to produce the goods
and services that satisfy people's wants. They are usually classified as
land, labour, capital and enterprise.
Land - ............ANSWER..........The factor of production that includes all
the natural resources that are available on the earth. It includes the land
and sea.
,
Capital - ............ANSWER..........The human-made factor of production.
Examples of capital include machines, tools, lorries and buildings.
Labour - ............ANSWER..........The human resource. The contribution
made by people to the production of goods and services.
Entrepreneur - ............ANSWER..........The person or group of people
who organise the other economic resources to allow goods and services to
be produced.
Enterprise - ............ANSWER..........Enterprise involves making decisions
and taking risks.
Scarce resource - ............ANSWER..........A factor of production that is
limited in supply. There are not enough available to satisfy people's needs
and wants.
Scarcity - ............ANSWER..........The fundamental economic problem
that results from limited resources and unlimited wants. It means that
choices have to be made which have an opportunity cost.
Opportunity cost - ............ANSWER..........The next best alternative
foregone when a choice is made.
,
Production possibility diagram - ............ANSWER..........Shows the
quantities of two goods or services that can be produced with the
available resources, given the current state of technology.
Production possibility boundary (PPB) - ............ANSWER..........The
PPB is also known as the production possibility curve (PPC) and the
production possibility frontier (PPF). It shows the various quantities of
two goods or services that can be produced, with the current state of
technology, when all the available resources are fully employed.
Resource allocation - ............ANSWER..........How the available factors
of production are used to produce different goods and services. The
allocation of resources involves determining what is produced, how it is
produced and for whom it is produced.
Rational economic decision making - ............ANSWER..........Using all
the available information to select the best option to maximise the welfare
of the decision maker. A rational consumer chooses to buy the goods and
services that, given their limited income, will maximise their total utility.
Utility - ............ANSWER..........The satisfaction that is derived from
consuming a good or service.
Marginal utility - ............ANSWER..........The change in total utility that
results from the consumption of one more, or one fewer, goods or
services.
,
Hypothesis of diminishing marginal utility - ............ANSWER..........The
proposition that as more of a product is consumed, the additional
satisfaction gained from each extra unit declines.
Imperfect information - ............ANSWER..........When an economic agent
does not have all the information needed to make a rational decision, or
the information is distorted in some way.
Asymmetric information - ............ANSWER..........A type of imperfect
information where one party to an economic transaction has more
information than the other party.
Behavioural economics - ............ANSWER..........A branch of economics
that includes elements of psychology to improve our understanding of
how people's decision making is influenced by biases and emotional
factors.
Bounded rationality - ............ANSWER..........The idea that human
limitations mean that people's decision making is not completely rational.
Bounded rationality means that when an individual makes a decision,
they choose an option that is satisfactory rather than optimal.
Bounded self-control - ............ANSWER..........The idea that people do
not have sufficient willpower or self-discipline to resist choices that may
be tempting but are not in their self-interest.
