PEARSON EDEXCEL IGCSE
ECONOMICS: 1-9 MICROECONOMICS
EXAM QUESTIONS AND ANSWERS
100% VERIFIED
,economics - ANSWERSsocial science of how society/economic agents make choices
about allocating its scarce resources in relation to its wants
basic economic problem - ANSWERSissue of scarcity, how a society/economic agent
allocates its individual resources between competing uses that represents infinite wants
economic agent - ANSWERSAny group or individual that makes economic choices,
such as consumers, firms, parents, politicians, etc.
Consumers/firms/governments want to maximise their benefit. Benefit from consuming
is called welfare/utility
needs - ANSWERSbasic requirements for basic human survival like shelter, food,
water, clothing
wants - ANSWERSgood and services which people would like to have but are not
essential for survival like a holiday home, bigger cars
macroeconomics - ANSWERSthe study of the economy as a whole, including topics
such as inflation, unemployment, and economic growth
microeconomics - ANSWERSthe study of the economic behavior and decision making
of small units, such as individuals, families, and businesses
ceteris parabus - ANSWERSall other things held constant
problems off the basic economic problem - ANSWERSwhat to produce with finite
resources, how to produce it and whom to produce it for with finite resources
all economic agents are faced with choices - ANSWERSindividuals must choose how to
spend their limited budget and time
governments must choose which services they provide - a new school, hospital etc.
firms have to choose whether to spend money on advertising, extra capital, extra staff
opportunity cost - ANSWERSopportunity cost is the benefit of the next best alternative
forgone when making a choice
Production Possibility Curve (PPC) / Production Possibility Frontier (PPF) -
ANSWERSshows the different combinations of goods which can be produced if all the
resources in a firm/country are used and the trade-off between the production of those
goods
, workers aim - ANSWERSmaximise their wages
customers aim - ANSWERSto maximise personal benefit and consumption of goods
and services
business aim - ANSWERSto maximise the profit of their business
simple model of the economy - ANSWERS.
what factors move the PPC? - ANSWERSAny change that affects the quality/amount of
the factors of production (land, labour, capital, entrepreneurs)
what else can the PPC show? - ANSWERSOpportunity costs of changing the allocation
of scarce resources between products on one axis and products on the other at a
particular point in time
How the PPC may shift over time as the quality and/or quantity of factors of production
change
what factors shift the PPC outwards? - ANSWERSEconomic growth
reasons why consumers may sometimes make irrational decisions in relation to
economical choices - ANSWERS1. Computational problems - may be hard to decipher
which option has the most benefit, e.g. mobile phone tariffs
2. habits, when a habit or a loyalty to a brand makes it hard to switch to better choices
3. influence of others, peer pressure and trends or familiarity with brands led into
irrationality
rational customer - ANSWERSone who makes clear choices to maximise their
consumption
reasons why producers may seem to make irrational choices in terms of economics -
ANSWERS1. Worker incentive, when owners/managers delegate tasks to workers, they
may not behave in the way the owners would want - e.g. if they are paid commission,
they may sell the most popular products, not the most profitable
2. Objectives of firm: sometimes profit may not be the primary aim, it could be:
Putting customer care first (Waitrose)
Operating as charities (Oxfam)
Be social enterprises (Big Issue)
why do firms exist? - ANSWERSto produce goods and services to satisfy society's
wants and needs
goods - ANSWERStangible/physical products that can be bought and the property of
the buyer e.g. crisps, cars, bags, ropes
ECONOMICS: 1-9 MICROECONOMICS
EXAM QUESTIONS AND ANSWERS
100% VERIFIED
,economics - ANSWERSsocial science of how society/economic agents make choices
about allocating its scarce resources in relation to its wants
basic economic problem - ANSWERSissue of scarcity, how a society/economic agent
allocates its individual resources between competing uses that represents infinite wants
economic agent - ANSWERSAny group or individual that makes economic choices,
such as consumers, firms, parents, politicians, etc.
Consumers/firms/governments want to maximise their benefit. Benefit from consuming
is called welfare/utility
needs - ANSWERSbasic requirements for basic human survival like shelter, food,
water, clothing
wants - ANSWERSgood and services which people would like to have but are not
essential for survival like a holiday home, bigger cars
macroeconomics - ANSWERSthe study of the economy as a whole, including topics
such as inflation, unemployment, and economic growth
microeconomics - ANSWERSthe study of the economic behavior and decision making
of small units, such as individuals, families, and businesses
ceteris parabus - ANSWERSall other things held constant
problems off the basic economic problem - ANSWERSwhat to produce with finite
resources, how to produce it and whom to produce it for with finite resources
all economic agents are faced with choices - ANSWERSindividuals must choose how to
spend their limited budget and time
governments must choose which services they provide - a new school, hospital etc.
firms have to choose whether to spend money on advertising, extra capital, extra staff
opportunity cost - ANSWERSopportunity cost is the benefit of the next best alternative
forgone when making a choice
Production Possibility Curve (PPC) / Production Possibility Frontier (PPF) -
ANSWERSshows the different combinations of goods which can be produced if all the
resources in a firm/country are used and the trade-off between the production of those
goods
, workers aim - ANSWERSmaximise their wages
customers aim - ANSWERSto maximise personal benefit and consumption of goods
and services
business aim - ANSWERSto maximise the profit of their business
simple model of the economy - ANSWERS.
what factors move the PPC? - ANSWERSAny change that affects the quality/amount of
the factors of production (land, labour, capital, entrepreneurs)
what else can the PPC show? - ANSWERSOpportunity costs of changing the allocation
of scarce resources between products on one axis and products on the other at a
particular point in time
How the PPC may shift over time as the quality and/or quantity of factors of production
change
what factors shift the PPC outwards? - ANSWERSEconomic growth
reasons why consumers may sometimes make irrational decisions in relation to
economical choices - ANSWERS1. Computational problems - may be hard to decipher
which option has the most benefit, e.g. mobile phone tariffs
2. habits, when a habit or a loyalty to a brand makes it hard to switch to better choices
3. influence of others, peer pressure and trends or familiarity with brands led into
irrationality
rational customer - ANSWERSone who makes clear choices to maximise their
consumption
reasons why producers may seem to make irrational choices in terms of economics -
ANSWERS1. Worker incentive, when owners/managers delegate tasks to workers, they
may not behave in the way the owners would want - e.g. if they are paid commission,
they may sell the most popular products, not the most profitable
2. Objectives of firm: sometimes profit may not be the primary aim, it could be:
Putting customer care first (Waitrose)
Operating as charities (Oxfam)
Be social enterprises (Big Issue)
why do firms exist? - ANSWERSto produce goods and services to satisfy society's
wants and needs
goods - ANSWERStangible/physical products that can be bought and the property of
the buyer e.g. crisps, cars, bags, ropes
