Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
Factors influencing demand for labour - Correct Answers
✅Demand for final product - if rise in output > increase in
productivity
Relative productivity of labour to capital - substitution effect
£3,000 subsidy for hiring unemployed 18-24 y.o. = half UK's
youth minimum wage
Factors influencing supply of labour - Correct Answers
✅Cost of living
Cost of gaining skills
UK uni fees capped at £9,250 per year
Number of workers
UK raises state pension age from 67 to 68
Market failures in labour markets - Correct Answers
✅Geographical immobility - inability of labour to move from
one location to another
Occupational immobility - inability of labour to move form one
industry to another
,Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
Employer monopsony -> wage-setting power -> wage lower
than equilibrium
10% decline in real wages of NHS worker since start of
recession
Solutions to market failures in labour market - Correct
Answers ✅Education and training
Housing market reform
Wage-setting
UK raises NMW from £7.50 to £7.83
Evaluate solutions to market failures in labour market -
Correct Answers ✅If increases elasticity of S(labour) ->
lower wages
If D(labour) if elastic -> min wage will increase
unemployment
Explain wage determination in competitive labour market -
Correct Answers ✅Firms are wage takers -> set W where S
=D
,Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
S(labour) is perfectly elastic -> AC = MC -> max profits at
MRP = MC -> employ Q₁
Positive statement (def.) - Correct Answers ✅Evidence
based statement which can be proven true or false
Normative statement (def.) - Correct Answers ✅Value
judgment which cannot be tested
Scarcity (def.) - Correct Answers ✅Lack of resources to
fulfil everyone's wants and needs
Renewable resources (def.) - Correct Answers ✅Resources
which can be replenished over time
Non-renewable resources (def.) - Correct Answers
✅Resources which cannot be replenished once they are used
PPF (def.) - Correct Answers ✅Max amount of two goods
that can possibly be produced in economy with given set of
resources, time and technology
Capital goods (def.) - Correct Answers ✅Useful not in
themselves but for goods and services they can help produce
in future
, Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
Opportunity cost (def.) - Correct Answers ✅Value of next
best alternative forgone
Pareto efficiency (def.) - Correct Answers ✅State of
allocation of resources in which it is impossible to make any
one party better off without making at least one party worse
off
Allocative efficiency (def.) - Correct Answers ✅When value
consumers place on good or service (reflected in price) =
cost of resources used up in production
Specialisation (def.) - Correct Answers ✅When worker
concentrates on performing specific task or narrow range of
tasks in production process
Division of labour (def.) - Correct Answers ✅Separation of
production process into individual tasks
Advantages of specialisation (micro) - Correct Answers
✅Workers gain skills in narrow range of tasks -> higher
productivity
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
Factors influencing demand for labour - Correct Answers
✅Demand for final product - if rise in output > increase in
productivity
Relative productivity of labour to capital - substitution effect
£3,000 subsidy for hiring unemployed 18-24 y.o. = half UK's
youth minimum wage
Factors influencing supply of labour - Correct Answers
✅Cost of living
Cost of gaining skills
UK uni fees capped at £9,250 per year
Number of workers
UK raises state pension age from 67 to 68
Market failures in labour markets - Correct Answers
✅Geographical immobility - inability of labour to move from
one location to another
Occupational immobility - inability of labour to move form one
industry to another
,Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
Employer monopsony -> wage-setting power -> wage lower
than equilibrium
10% decline in real wages of NHS worker since start of
recession
Solutions to market failures in labour market - Correct
Answers ✅Education and training
Housing market reform
Wage-setting
UK raises NMW from £7.50 to £7.83
Evaluate solutions to market failures in labour market -
Correct Answers ✅If increases elasticity of S(labour) ->
lower wages
If D(labour) if elastic -> min wage will increase
unemployment
Explain wage determination in competitive labour market -
Correct Answers ✅Firms are wage takers -> set W where S
=D
,Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
S(labour) is perfectly elastic -> AC = MC -> max profits at
MRP = MC -> employ Q₁
Positive statement (def.) - Correct Answers ✅Evidence
based statement which can be proven true or false
Normative statement (def.) - Correct Answers ✅Value
judgment which cannot be tested
Scarcity (def.) - Correct Answers ✅Lack of resources to
fulfil everyone's wants and needs
Renewable resources (def.) - Correct Answers ✅Resources
which can be replenished over time
Non-renewable resources (def.) - Correct Answers
✅Resources which cannot be replenished once they are used
PPF (def.) - Correct Answers ✅Max amount of two goods
that can possibly be produced in economy with given set of
resources, time and technology
Capital goods (def.) - Correct Answers ✅Useful not in
themselves but for goods and services they can help produce
in future
, Edexcel A Level Microeconomics EXAM
QUESTIONS AND ANSWERS 100%
SOLVED (Newest 2025)
Opportunity cost (def.) - Correct Answers ✅Value of next
best alternative forgone
Pareto efficiency (def.) - Correct Answers ✅State of
allocation of resources in which it is impossible to make any
one party better off without making at least one party worse
off
Allocative efficiency (def.) - Correct Answers ✅When value
consumers place on good or service (reflected in price) =
cost of resources used up in production
Specialisation (def.) - Correct Answers ✅When worker
concentrates on performing specific task or narrow range of
tasks in production process
Division of labour (def.) - Correct Answers ✅Separation of
production process into individual tasks
Advantages of specialisation (micro) - Correct Answers
✅Workers gain skills in narrow range of tasks -> higher
productivity
