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Edexcel A Level Economics B 1.1 2024 Exam Questions and Answers
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Edexcel A Level Economics B 1.1 2024 Exam Questions and Answers
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Edexcel A Level Economics B 1.1 2024Exam Questions and Answers
1.1.1 - The Economic Problem
The basic economic problem - Answer>>Scarcity - unlimited
wants and finite resources, so choices have to be made.
Resources have to be used and distributed optimally. Scarcity
refers to the shortage of resources in relation to the quantity of
human wants.
Scarcity Example - Answer>>For example, if you only have £1
and you go to a shop, you can buy either the chocolate bar or the
packet of crisps. The scarcity of the resource (the money) means
a choice has to be made between the chocolate and the crisps.
Opportunity Cost - Answer>>Cost of the next best alternative
use of money, time, or resources when one choice is made rather
than another. In the £1 example, the opportunity cost of choosing
the crisps is the chocolate bar.
Example of opportunity cost - Answer>>If a car was bought for
£15,000 and after 5 years the value depreciates by £5,000, the
opportunity cost of keeping the car is £5,000 (which could have
been gained by selling the car), regardless of the starting price.
Who is opportunity cost important to and why? -
Answer>>Opportunity cost is important to economic agents,
such as consumers, producers and governments. For example,
producers might have to choose between hiring extra staff and
investing in a new machine. The government might have to
choose between spending more on the NHS and spending more
on education. They cannot do both because of finite resources, so
a choice has to be made for where resources are best spent.
, Trade-off - Answer>>When looking at a balance between 2
choices, choosing more of one than the other.
When producing goods, what does the economy need to
consider? - Answer>>What to produce: determined by what the
consumer prefers. Consumers tell producers what they prefer by
demanding goods and using their 'spending votes' and
demanding certain goods.
How to produce it: producers seek profits and aim to minimise
production costs.
Positive Statements - Answer>>Testable as factual or false,
normally based on observation or evidence.
Normative Statements - Answer>>(AKA value judgements)
Statements about the economy which depend on opinion and
judgement. Often involve ideas on what should be done.
1.1.2 - Business Objectives - Answer>>
Entrepreneurs - Answer>>Individuals who set up in business,
accepting risks involved, taking decisions about what to produce
and how, and working out how to market the product.
Profit Maximisation - Answer>>Making as much profit as
possible in a given time period.
A firm profit maximises when they are operating at the price and
output which derives the greatest profit. Profit maximisation
occurs where marginal cost (MC) = marginal revenue (MR). In
other words, each extra unit produced gives no extra loss or no
extra revenue. - Answer>>Models that consider the traditional
theory of the firm are based upon the assumption that firms aim to
maximise profits.
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