AQA ECONOMICS EXAMS SET 2025/2026 QUESTIONS AND
SOLUTIONS MARKED A+
✔✔ECONOMIC WELFARE - ✔✔THE ECONOMIC WELL-BEING OF AN INDIVIDUAL,
A GROUP WITHIN SOCIETY, OR AN ECONOMY.
✔✔ECONOMY OF SCALE - ✔✔AS OUTPUT INCREASES, LONG RUN AVERAGE
COSTS FALLS
✔✔EFFECTIVE DEMAND - ✔✔THE DESIRE FOR A GOOD OR SERVICE BACKED
BY AN ABILITY TO PAY.
✔✔ELASTICITY - ✔✔THE PROPORTIONATE RESPONSIVENESS OF A SECOND
VARIABLE TO AN INTIAL PROPORTIONATE CHANGE IN THE FIRST VARIABLE
✔✔ENTRY BARRIER - ✔✔MAKES IT DIFFICULT OR IMPOSSIBLE FOR NEW FIRMS
TO ENTER A MARKET.
✔✔EQUILIBRIUM - ✔✔A STATE OF REST OR BALANCE BETWEEN OPPOSING
FORCES.
✔✔EQUILIBRIUM PRICE - ✔✔THE PRICE AT WHICH PLANNED DEMAND FOR A
GOOD OR SERVICE EXACTLEY EQUALS PLANNED SUPPLY.
✔✔EQUITY - ✔✔FAIRNESS OR JUSTNESS.
✔✔EXCESS DEMAND - ✔✔WHEN CONSUMERS WISH TO BUY MORE THAN
FIRMS WISH TO SELL, WITH THE PRICE BELOW THE EQUILIBRIUM PRICE.
✔✔EXCESS SUPPLY - ✔✔WHEN FIRMS WISH TO SELL MORE THAN
CONSUMERS WISH TO BUY, WITH THE PRICE ABOVE THE EQUILIBRIUM PRICE.
✔✔EXCHANGE - ✔✔TO GIVE SOMETHING IN RETURN FOR SOMETHING ELSE
RECIEVED. MONEY IS A MEDIUM OF EXCHANGE.
✔✔EXIT BARRIER - ✔✔MAKES IT DIFFICULT OR IMPOSSIBLE FOR FIRMS TO
LEAVE A MARKET.
✔✔EXTERNAL ECONOMY OF SCALE - ✔✔COST SAVING RESULTING FROM THE
GROWTH OF THE INDUSTRY OR MARKET OF WHICH THE FIRM IS A PART.
✔✔EXTERNALITIES - ✔✔A PUBLIC GOOD, IN THE CASE OF AN EXTERNAL
BENEFIT, OR A PUBLIC BAD IN THE CASE OF AN EXTERNAL COST, THAT IS
'DUMPED' ON THIRD PARTIES OUTSIDE THE MARKET.
, ✔✔FACTORS OF PRODUCTION - ✔✔INPUTS INTO THE PRODUCTION PROCESS,
SUCH AS LAND, LABOUR, CAPITAL AND ENTERPRISE.
✔✔FINITE RESOURCE - ✔✔A RESOURCE, SUCH AS OIL, WHICH IS SCARCE AND
RUNS OUT AS IT IS USED. ALSO KNOWN AS A NON-RENEWABLE RESOURCE.
✔✔FIXED COST - ✔✔COST OF PRODUCTION WHICH, IN THE SHORT RUN, DOES
NOT CHANGE WITH OUTPUT.
✔✔GEOGERAPHICAL IMMOBILITY OF LABOUR - ✔✔OCCURS WHEN WORKERS
FIND IT DIFFICULT OR IMPOSSIBLE TO MOVE TO JOBS IN OTHER PARTS OF
THE COUNTRY OR IN OTHER PARTWS OF THE COUNTRY OR IN OTHER
COUNTRIESFOR REASONS SUCH AS HIGHER HOUSING COSTS IN LOCATIONS
WHERE THE JOBS EXIST
✔✔GOVERNMENT FAILURE - ✔✔OCCURS WHEN GOVERNMENT INTERVENTION
REDUCES ECONOMIC WELFARE, LEADING TO AN ALLOCATION OF RESOURCES
THAT IS WORSE THAN THE FREE-MARKET OUTCOME
✔✔IMMOBILITY OF LABOUR - ✔✔THE INABILITY OF LABOUR TO MOVE FROM
ONE JOB TO ANOTHER, EITHER FOR OCCUPATIONAL REASONS (E.G. THE
NEED FOR TRAINING) OR FOR GEOGRAPHICAL REASONS (E.G. THE COST OF
MOVING TO ANOTHER PART OF THE COUNTRY).
✔✔IMPERFECT COMPETITION - ✔✔ANY MARKET STRUCTURE LYING BETWEEN
THE EXTREMES OF PERFECT COMPETITION AND PURE MONOPOLY
✔✔INCENTIVE FUNCTION OF PRICES - ✔✔PRICES CREATE INCENTIVES FOR
PEOPLE TO ALTER THEIR ECONOMIC BEHAVIOUR; FOR EXAMPLE, A HIGHER
PRICE CREATES AN INCENTIVE FOR FIRMS TO SUPPLY MORE OF A GOOD OR
SERVICE.
✔✔INCOME ELASTICITY OF DEMAND - ✔✔MEASURES THE EXTENT TO WHICH
THE DEMAND FOR A GOOD CHANGES IN RESPONSE TO A CHANGE IN INCOME;
IT IS CALCULATED BY DIVIDING THE PERCENTAGE CHANGE IN QUANTITY
DEMANDED BY THE PERCENTAGE CHANGE IN INCOME
✔✔INCREASE IN DEMAND - ✔✔A RIGHTWARD SHIFT OF THE DEMAND CURVE
✔✔INCREASE IN SUPPLY - ✔✔A RIGHTWARD SHIFT OF THE SUPPLY CURVE
✔✔INEQUITY - ✔✔UNFAIRNESS OR UNJUSTNESS
SOLUTIONS MARKED A+
✔✔ECONOMIC WELFARE - ✔✔THE ECONOMIC WELL-BEING OF AN INDIVIDUAL,
A GROUP WITHIN SOCIETY, OR AN ECONOMY.
✔✔ECONOMY OF SCALE - ✔✔AS OUTPUT INCREASES, LONG RUN AVERAGE
COSTS FALLS
✔✔EFFECTIVE DEMAND - ✔✔THE DESIRE FOR A GOOD OR SERVICE BACKED
BY AN ABILITY TO PAY.
✔✔ELASTICITY - ✔✔THE PROPORTIONATE RESPONSIVENESS OF A SECOND
VARIABLE TO AN INTIAL PROPORTIONATE CHANGE IN THE FIRST VARIABLE
✔✔ENTRY BARRIER - ✔✔MAKES IT DIFFICULT OR IMPOSSIBLE FOR NEW FIRMS
TO ENTER A MARKET.
✔✔EQUILIBRIUM - ✔✔A STATE OF REST OR BALANCE BETWEEN OPPOSING
FORCES.
✔✔EQUILIBRIUM PRICE - ✔✔THE PRICE AT WHICH PLANNED DEMAND FOR A
GOOD OR SERVICE EXACTLEY EQUALS PLANNED SUPPLY.
✔✔EQUITY - ✔✔FAIRNESS OR JUSTNESS.
✔✔EXCESS DEMAND - ✔✔WHEN CONSUMERS WISH TO BUY MORE THAN
FIRMS WISH TO SELL, WITH THE PRICE BELOW THE EQUILIBRIUM PRICE.
✔✔EXCESS SUPPLY - ✔✔WHEN FIRMS WISH TO SELL MORE THAN
CONSUMERS WISH TO BUY, WITH THE PRICE ABOVE THE EQUILIBRIUM PRICE.
✔✔EXCHANGE - ✔✔TO GIVE SOMETHING IN RETURN FOR SOMETHING ELSE
RECIEVED. MONEY IS A MEDIUM OF EXCHANGE.
✔✔EXIT BARRIER - ✔✔MAKES IT DIFFICULT OR IMPOSSIBLE FOR FIRMS TO
LEAVE A MARKET.
✔✔EXTERNAL ECONOMY OF SCALE - ✔✔COST SAVING RESULTING FROM THE
GROWTH OF THE INDUSTRY OR MARKET OF WHICH THE FIRM IS A PART.
✔✔EXTERNALITIES - ✔✔A PUBLIC GOOD, IN THE CASE OF AN EXTERNAL
BENEFIT, OR A PUBLIC BAD IN THE CASE OF AN EXTERNAL COST, THAT IS
'DUMPED' ON THIRD PARTIES OUTSIDE THE MARKET.
, ✔✔FACTORS OF PRODUCTION - ✔✔INPUTS INTO THE PRODUCTION PROCESS,
SUCH AS LAND, LABOUR, CAPITAL AND ENTERPRISE.
✔✔FINITE RESOURCE - ✔✔A RESOURCE, SUCH AS OIL, WHICH IS SCARCE AND
RUNS OUT AS IT IS USED. ALSO KNOWN AS A NON-RENEWABLE RESOURCE.
✔✔FIXED COST - ✔✔COST OF PRODUCTION WHICH, IN THE SHORT RUN, DOES
NOT CHANGE WITH OUTPUT.
✔✔GEOGERAPHICAL IMMOBILITY OF LABOUR - ✔✔OCCURS WHEN WORKERS
FIND IT DIFFICULT OR IMPOSSIBLE TO MOVE TO JOBS IN OTHER PARTS OF
THE COUNTRY OR IN OTHER PARTWS OF THE COUNTRY OR IN OTHER
COUNTRIESFOR REASONS SUCH AS HIGHER HOUSING COSTS IN LOCATIONS
WHERE THE JOBS EXIST
✔✔GOVERNMENT FAILURE - ✔✔OCCURS WHEN GOVERNMENT INTERVENTION
REDUCES ECONOMIC WELFARE, LEADING TO AN ALLOCATION OF RESOURCES
THAT IS WORSE THAN THE FREE-MARKET OUTCOME
✔✔IMMOBILITY OF LABOUR - ✔✔THE INABILITY OF LABOUR TO MOVE FROM
ONE JOB TO ANOTHER, EITHER FOR OCCUPATIONAL REASONS (E.G. THE
NEED FOR TRAINING) OR FOR GEOGRAPHICAL REASONS (E.G. THE COST OF
MOVING TO ANOTHER PART OF THE COUNTRY).
✔✔IMPERFECT COMPETITION - ✔✔ANY MARKET STRUCTURE LYING BETWEEN
THE EXTREMES OF PERFECT COMPETITION AND PURE MONOPOLY
✔✔INCENTIVE FUNCTION OF PRICES - ✔✔PRICES CREATE INCENTIVES FOR
PEOPLE TO ALTER THEIR ECONOMIC BEHAVIOUR; FOR EXAMPLE, A HIGHER
PRICE CREATES AN INCENTIVE FOR FIRMS TO SUPPLY MORE OF A GOOD OR
SERVICE.
✔✔INCOME ELASTICITY OF DEMAND - ✔✔MEASURES THE EXTENT TO WHICH
THE DEMAND FOR A GOOD CHANGES IN RESPONSE TO A CHANGE IN INCOME;
IT IS CALCULATED BY DIVIDING THE PERCENTAGE CHANGE IN QUANTITY
DEMANDED BY THE PERCENTAGE CHANGE IN INCOME
✔✔INCREASE IN DEMAND - ✔✔A RIGHTWARD SHIFT OF THE DEMAND CURVE
✔✔INCREASE IN SUPPLY - ✔✔A RIGHTWARD SHIFT OF THE SUPPLY CURVE
✔✔INEQUITY - ✔✔UNFAIRNESS OR UNJUSTNESS
