Exam
Official June 2024 AQA A-
level ECONOMICS 7136/3
Paper 3 Economic
Principles and Issues
Merged Question Paper +
Mark Scheme + Insert
The Law of Demand - ANSWER ✓✓✓consumers will buy more of a good when its
price is lower and less when its price is higher
The Law of Supply - ANSWER ✓✓✓producers offer more of a good as its price
increases and less as its price falls
Equilibrium Price - ANSWER ✓✓✓the price at which the quantity demanded equals
the quantity supplied
,Excess Supply - ANSWER ✓✓✓the amount by which quantity supplied exceeds
quantity demanded when the price of a good exceeds the equilibrium price
Surplus - ANSWER ✓✓✓A situation in which quantity supplied is greater than quantity
demanded
Deficit - ANSWER ✓✓✓A situation in which quantity supplied is less than the quantity
demanded
Economics - ANSWER ✓✓✓A social science that studies how people seek to satisfy
their needs and wants by making choices
Price Elasticity of Demand - ANSWER ✓✓✓a measure of how much the quantity
demanded of a good responds to a change in the price of that good.
Income Elasticity of Demand - ANSWER ✓✓✓a measure of the responsiveness of the
quantity demanded to changes in income.
Cross Price Elasticity of Demand - ANSWER ✓✓✓measures the response of demand
for one good to changes in the price of another good
PED Formula - ANSWER ✓✓✓% change in quantity demanded / % change in price
YED Formula - ANSWER ✓✓✓% change in quantity demanded / % change in income
XED Formula - ANSWER ✓✓✓% change in quantity demanded of good X / % change
in price of good Y
Luxury Good - ANSWER ✓✓✓a good with an income elasticity greater than 1 for
which demand rises by a greater amount than the rise in income.
Normal Good - ANSWER ✓✓✓a good for which the demand increases as income
rises and decreases as income falls
Veblen Good - ANSWER ✓✓✓A good with a positively sloped demand curve. As price
increases people buy more of these goods to demonstrate their social status.
Inferior Good - ANSWER ✓✓✓a good for which, other things being equal, an increase
in income leads to a decrease in demand
Substitute Good - ANSWER ✓✓✓A good that can be used in place of another good
, Excess Demand - ANSWER ✓✓✓The situation that exists when demand is greater
than supply.
Complementary Good - ANSWER ✓✓✓Products and services that are used together.
When the price of one falls, the demand for the other increases (and conversely).
Positive Economic Statement - ANSWER ✓✓✓A statement that can be proved or
disproved by reference to facts
Normative Economic Statement - ANSWER ✓✓✓A statement that reflects on opinion,
which cannot be proved or disproved by reference to the facts.
Production Possibilities Frontier (PPF) - ANSWER ✓✓✓a diagram that shows the
productively efficient combinations of two products that an economy can produce given
the resources it has available
Opportunity Cost - ANSWER ✓✓✓The cost of the next best alternative forgone.
Scarcity - ANSWER ✓✓✓A situation in which unlimited wants exceed the limited
resources available to fulfill those wants
The Basic Economic Problem - ANSWER ✓✓✓Resources have to be allocated
between competing uses because wants are infinite whilst resources are scarce
Value Judgement - ANSWER ✓✓✓An opinion based on a person's individual values
and beliefs
Allocative Efficiency - ANSWER ✓✓✓When the mix of goods being produced
represents the mix that society most desires. A more precise definition of is at an output
level where the price equals the Marginal Cost (MC) of production. This is because the
price that consumers are willing to pay is equivalent to the marginal utility that they get
Economic Good - ANSWER ✓✓✓Things people want that are scarce - there is an
opportunity cost involved.
The Factors of Production - ANSWER ✓✓✓Land, labour, capital and enterprise.
Land - ANSWER ✓✓✓Natural resources that are used to make goods and services
Capital - ANSWER ✓✓✓The equipment and structures used to produce goods and
services
Official June 2024 AQA A-
level ECONOMICS 7136/3
Paper 3 Economic
Principles and Issues
Merged Question Paper +
Mark Scheme + Insert
The Law of Demand - ANSWER ✓✓✓consumers will buy more of a good when its
price is lower and less when its price is higher
The Law of Supply - ANSWER ✓✓✓producers offer more of a good as its price
increases and less as its price falls
Equilibrium Price - ANSWER ✓✓✓the price at which the quantity demanded equals
the quantity supplied
,Excess Supply - ANSWER ✓✓✓the amount by which quantity supplied exceeds
quantity demanded when the price of a good exceeds the equilibrium price
Surplus - ANSWER ✓✓✓A situation in which quantity supplied is greater than quantity
demanded
Deficit - ANSWER ✓✓✓A situation in which quantity supplied is less than the quantity
demanded
Economics - ANSWER ✓✓✓A social science that studies how people seek to satisfy
their needs and wants by making choices
Price Elasticity of Demand - ANSWER ✓✓✓a measure of how much the quantity
demanded of a good responds to a change in the price of that good.
Income Elasticity of Demand - ANSWER ✓✓✓a measure of the responsiveness of the
quantity demanded to changes in income.
Cross Price Elasticity of Demand - ANSWER ✓✓✓measures the response of demand
for one good to changes in the price of another good
PED Formula - ANSWER ✓✓✓% change in quantity demanded / % change in price
YED Formula - ANSWER ✓✓✓% change in quantity demanded / % change in income
XED Formula - ANSWER ✓✓✓% change in quantity demanded of good X / % change
in price of good Y
Luxury Good - ANSWER ✓✓✓a good with an income elasticity greater than 1 for
which demand rises by a greater amount than the rise in income.
Normal Good - ANSWER ✓✓✓a good for which the demand increases as income
rises and decreases as income falls
Veblen Good - ANSWER ✓✓✓A good with a positively sloped demand curve. As price
increases people buy more of these goods to demonstrate their social status.
Inferior Good - ANSWER ✓✓✓a good for which, other things being equal, an increase
in income leads to a decrease in demand
Substitute Good - ANSWER ✓✓✓A good that can be used in place of another good
, Excess Demand - ANSWER ✓✓✓The situation that exists when demand is greater
than supply.
Complementary Good - ANSWER ✓✓✓Products and services that are used together.
When the price of one falls, the demand for the other increases (and conversely).
Positive Economic Statement - ANSWER ✓✓✓A statement that can be proved or
disproved by reference to facts
Normative Economic Statement - ANSWER ✓✓✓A statement that reflects on opinion,
which cannot be proved or disproved by reference to the facts.
Production Possibilities Frontier (PPF) - ANSWER ✓✓✓a diagram that shows the
productively efficient combinations of two products that an economy can produce given
the resources it has available
Opportunity Cost - ANSWER ✓✓✓The cost of the next best alternative forgone.
Scarcity - ANSWER ✓✓✓A situation in which unlimited wants exceed the limited
resources available to fulfill those wants
The Basic Economic Problem - ANSWER ✓✓✓Resources have to be allocated
between competing uses because wants are infinite whilst resources are scarce
Value Judgement - ANSWER ✓✓✓An opinion based on a person's individual values
and beliefs
Allocative Efficiency - ANSWER ✓✓✓When the mix of goods being produced
represents the mix that society most desires. A more precise definition of is at an output
level where the price equals the Marginal Cost (MC) of production. This is because the
price that consumers are willing to pay is equivalent to the marginal utility that they get
Economic Good - ANSWER ✓✓✓Things people want that are scarce - there is an
opportunity cost involved.
The Factors of Production - ANSWER ✓✓✓Land, labour, capital and enterprise.
Land - ANSWER ✓✓✓Natural resources that are used to make goods and services
Capital - ANSWER ✓✓✓The equipment and structures used to produce goods and
services
