AS LEVEL ECONOMICS
Topical Pastpapers
Unit 1
Compiled By: ASIF FAROOQ
0321-2915945
CONTENTS
Message from INSTRUCTOR ..................................................................................................... 02
UNIT 1 SYLLABUS ...................................................................................................................... 03
1 Basic Economic Ideas and Resource Allocation ..................................................................... 04
1.1 Basic Economic Problem ..................................................................................................... 04
1.2 The Factors of Production................................................................................................... 05
1.3 Economic Systems .............................................................................................................. 06
1.4 Production Possibility Curve (PPC) ..................................................................................... 11
1.5 Money ................................................................................................................................ 14
1.6 Classification of Goods ....................................................................................................... 16
Message from Instructor:
Whether you are a novice or a veteran economics student, it doesn't
take you long to see that economics is an important element in world
affairs and that economics is a powerful and influential discipline.
Knowledge of economics gives you a unique perspective of the world
community and is an essential tool for good decision making. Economic
ideas and principles are used by world leaders and corporate executives
to make decisions that change the course of human history. This is the
main reason that the Bank of Sweden awards a Nobel Prize each year to
economists who have significantly contributed ideas to the science.
Less Brown
Compiled by: M. Asif Farooq
0321-2915945
Unit 1 Syllabus
1
Basic economic ideas and resource allocation (AS Level)
a) Scarcity, choice and opportunity cost
•
the fundamental economic problem
•
the meaning of scarcity and the
inevitability of choices at all levels
(individual, firms, governments)
•
the basic questions of what will be
produced, how and for whom
•
the meaning of the term, ‘ceteris
paribus’
•
the margin and decision making at the
margin
•
short run, long run, very long run
the distinction between facts
and value judgements
b) Positive and normative statements
•
c) Factors of production
•
the rewards to the factors of
production: land, labour, capital and
enterprise
specialisation and division of labour
• decision making in market, planned
and mixed economies
•
d) Resource allocation in different
economic systems and issues of
transition
e) Production possibility curves
f) Money
g) Classification of goods and services
•
the role of the factor enterprise in a
modern economy
•
shape and shifts of the curve
•
constant and increasing opportunity
costs
•
functions and characteristics in a
modern economy
•
barter, cash and bank deposits,
cheques, near money, liquidity
•
free goods, private goods (economic
goods) and public goods
•
merit goods and demerit goods as the
outcome of imperfect information by
consumers.
AS Level Economics
1 Basic Economic Ideas and Resource Allocation
1.1 Basic Economic Problem
(Nov 2016/P23/Q3b)
Discuss whether it is likely that economies that have an increase in labour and a high
rate of technological innovation will come nearer to solving the economic problem. [12]
(June 2013/P22/Q2a)
In a free market price rations scarce goods.
Explain this statement and, with the help of a diagram, show how price rations scarce
goods when there is an increase in the costs of production. [8]
(Nov 2011/P22/Q2b)
Discuss whether the combination of improved technology and globalisation will result in
solving the basic economic problem. [12]
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AS Level Economics
1.2 Factors of Production
(Nov 2020/P22/Q3a)
Explain how the factor of production enterprise contributes to aggregate supply in a
modern economy and how it differs from the other factors of production in terms of the
reward for its services. [8]
(Nov 2018/P21/Q2a)
Explain how capital goods contribute to production in a modern economy and how
capital is rewarded. [8]
(June 2018/P23/Q3a)
In 2015, it was reported that the global demand for chocolate was projected to increase
but it was unlikely that the global supply of cocoa beans, required to produce chocolate,
would increase.
State and explain two factors of production needed for the manufacture of chocolate.
Explain the benefits of specialisation in the manufacture of chocolate. [8]
(June 2017/P22/Q2a)
Explain the role of the factor enterprise in allocating resources in a market economy
when there is an increase in the demand for a good. Use a diagram to support your
answer. [8]
(June 2015/P21/Q3a)
Explain how the contribution of each factor of production differs in an agricultural
economy from that in an industrialised economy. [8]
(June 2012/P23/Q2a)
Explain whether the factors of production are always of equal economic importance
within and between economies. [8]
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AS Level Economics
1.3 Economic Systems
(Nov 2020/P21/Q2b)
Discuss why in most mixed economies, resources are mainly allocated using market
forces and the price mechanism. [12]
(June 2020/P22/Q2b)
Discuss whether the transition of an economy from one that is centrally planned to one
in which resources are allocated through the free market is likely to be of overall benefit
to the citizens of that economy. [12]
(June 2019/P21/Q2b)
Discuss what the most significant issues of transition are that a country will face as it
moves from a planned economy to a mixed economy. [12]
(Nov 2018/P21/Q2b)
Discuss whether enterprise is crucial to the outward shift of the production possibility
curve in a mixed economy. [12]
(June 2018/P22/Q2a)
Explain the different ways in which resources are allocated in a market economy and in
a mixed economy. [8]
(Nov 2017/P22/Q3b)
Discuss the way in which resources are allocated in planned economies and free
market economies. Consider which type of economic system is likely to have the more
beneficial outcome. [12]
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AS Level Economics
(June 2017/P23/Q3)
(a) Explain the role of profit in an economy where the price mechanism operates to
allocate resources. [8]
(b) Discuss whether resources are more effectively allocated in a planned economy or
in a market economy. [12]
(June 2017/P22/Q2b)
Discuss two methods of increasing the provision of merit goods in a mixed economy.
Consider which is more likely to be effective. [12]
(June 2016/P22/Q2b)
‘The factor enterprise and the free working of the price mechanism always ensure a
satisfactory outcome for consumers even when imperfect information exists.’ Discuss
this view. [12]
(June 2016/P21/Q3)
(a) Outline the functions of the factor enterprise in a modern economy, and explain how
enterprise responds to a rise in the demand for a good. [8]
(b) Discuss why some goods and services are provided by private enterprise and others
are provided by the government in a mixed economy. [12]
(Nov 2015/P23/Q2)
(a) Explain the functions of price, enterprise and profit in a free market economy. [8]
(b) Discuss whether an outward shift in an economy’s production possibility curve is
more likely to occur in a free market economy or a centrally planned economy. [12]
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AS Level Economics
(June 2015/P21/Q3b)
Discuss whether entrepreneurs or governments are more likely to cause economic
growth in a mixed economy. [12]
(Nov 2014/P22/Q2)
(a) With the use of a diagram, explain how prices allocate scarce resources in a market
economy. [8]
(b) Discuss whether prices are less important in allocating scarce resources in a mixed
economy compared with a market economy. [12]
(June 2014/P21/Q3b)
Discuss the view that a market economy is always preferable to a planned economy
because of the existence of the price mechanism. [12]
(Nov 2013/P23/Q2)
(a) Explain the role of the enterprise factor of production in a free market economy, and
compare this with the role of the other factors in the production process. [8]
(b) Explain the key differences between centrally planned and mixed economies, and
discuss whether enterprise is a factor of production that is needed in a centrally planned
economy. [12]
(June 2013/P23/Q2b)
Discuss whether free market economies or centrally planned economies are more likely
to make choices that will maximise the benefit for consumers. [12]
(Nov 2012/P23/Q2b)
Discuss why in many countries some services, such as education and healthcare, are
supplied both by the government and private producers. [12]
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AS Level Economics
(Nov 2012/P22/Q2b)
Discuss the ease with which a planned economy may be changed into a market
economy. [12]
(June 2012/P23/Q2b)
Discuss whether planned economies should always be replaced by free market
economies. [12]
(June 2012/P22/Q2a)
Explain why all types of economic system benefit from the existence and use of
money.[8]
(June 2012/P21/Q2b)
Discuss the difficulties involved in changing a planned economy to a successful market
economy. [12]
(Nov 2011/P23/Q2b)
Discuss the effectiveness of free market economies in raising the level of welfare. [12]
(Nov 2011/P22/Q3b)
Discuss whether healthcare can and should be provided by the free market. [12]
(Nov 2011/P21/Q2a)
Explain how a government’s approach to making a decision about a construction project
might differ from that of a private firm. [8]
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AS Level Economics
(June 2011/P23/Q2)
(a) Explain how resources are allocated in a free market economy. [8]
(b) Discuss how the market system might be influenced by government intervention to
provide appropriate quantities of goods and services. [12]
(June 2011/P22/Q2a)
Explain the role that a government should fulfil in a mixed economy. [8]
(June 2011/P21/Q2)
(a) Explain the functions of an economic system. [8]
(b) Discuss possible reasons why mixed economic systems have replaced most of the
former planned economic systems. [12]
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AS Level Economics
1.4 Production Possibility Curve
(June 2020/P22/Q2a)
Use a production possibility curve diagram(s) to distinguish between the growth of an
economy and a reduction in the number of unused resources in an economy and
explain one reason that might cause each to occur. [8]
(June 2020/P21/Q2a)
Explain, with the aid of a production possibility curve (PPC) diagram, why scarcity
makes choice inevitable for firms and how each choice has an opportunity cost. [8]
(June 2019/P21/Q2a)
Explain, with the help of diagrams, how (i) constant and (ii) increasing opportunity costs
determine the shape of an economy’s production possibility curve. [8]
(Nov 2017/P23/Q3a)
Explain how a production possibility curve with increasing opportunity costs illustrates
the consequences of a government’s choice to produce more military goods. Use a
diagram to support your answer. [8]
(Nov 2017/P22/Q3a)
Show the difference between a movement along, and a shift in, a production possibility
curve. Explain what might cause each to occur. Use diagrams to support your
answer.[8]
(Nov 2017/P21/Q4a)
Use production possibility curves to explain the different impact on an economy of a rise
in the unemployment rate and an increase in the working population. [8]
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AS Level Economics
(Nov 2016/P23/Q3a)
Explain with the help of a diagram why production possibility curves are usually drawn
with increasing opportunity costs, and show how they can be used to illustrate
scarcity.[8]
(Nov 2014/P23/Q2)
(a) Show how the economic problem can be explained with the use of a production
possibility curve. [8]
(b) Discuss whether an outward shift in a country’s production possibility curve will
always raise the welfare of the citizens of that country. [12]
(June 2013/P23/Q2a)
With the help of a diagram, explain how a production possibility curve can illustrate the
concepts of opportunity cost and economic growth. [8]
(Nov 2012/P22/Q2a)
Explain, with the help of a production possibility diagram, how the opportunity cost of
producing different combinations of goods can be measured. [8]
(June 2012/P22/Q2b)
Discuss whether an economy’s production possibility curve is more likely to move
inward or outward over time. [12]
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AS Level Economics
(June 2012/P21/Q2a)
Explain how the loss of confidence in money will affect an economy’s production
possibility curve. [8]
(Nov 2011/P23/Q2a)
Explain, with the help of a diagram, how an economy can in the short run and long run
enjoy consumption beyond its current production possibility curve. [8]
(Nov 2011/P22/Q2a)
Show how production possibility curves may be used to explain any two economic
ideas. [8]
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AS Level Economics
1.5 Money
(June 2018/P21/Q4)
(a) Explain the characteristics that money needs to have in order to perform its
functions effectively. [8]
(b) Discuss the likely consequences for an economy of an increase in the money
supply. [12]
(June 2017/P23/Q4a)
Explain how the functions of money are affected when there is a high rate of inflation in
an economy. [8]
(Nov 2016/P22/Q4a)
Explain what is used as money in a modern economy and how an increase in the
quantity of money can cause prices to rise. [8]
(Nov 2015/P22/Q3)
(a) Ex plain what is meant by the term ‘money’ and outline its characteristics in a
modern economy. [8]
(b) Discuss whether money is able to perform all its functions effectively in an economy
that is experiencing a high rate of inflation. [12]
(June 2015/P21/Q4a)
Explain what acts as money in a modern economy and what is likely to happen to the
price level if the quantity of money increases significantly. [8]
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AS Level Economics
(June 2014/P21/Q4)
(a) Explain what is meant by the term ‘money’ and outline its characteristics in a modern
twenty-first century economy. [8]
(b) Discuss whether money is able to perform all of its functions in an economy that is
experiencing a high rate of inflation. [12]
(Nov 2013/P23/Q3)
(a) Explain the relationship between the quantity of money in an economy and the value
of money in that economy. [8]
(b) Explain the effects on the functions of money of a significant rise in the general price
level and discuss which you consider to be most damaging for a modern economy. [12]
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AS Level Economics
1.6 Classification of Goods
(June 2021/P21/Q2a)
(a) Explain whether private goods, free goods and public goods will all be sold in a free
market economy. [8]
(June 2020/P22/Q4a)
(a) Explain, using examples, the difference between private goods and public goods
and why public goods will not be supplied by private enterprise. [8]
(June 2020/P21/Q2a)
Discuss the view that the only goods a government should produce are public
goods.[12]
(Nov 2018/P23/Q2a)
Using examples, explain why some goods cannot be provided as private goods. [8]
(Nov 2018/P22/Q4a)
Explain the features of a public good. Consider whether a motorway (highway) provides
an example of a public good. [8]
(June 2018/P21/Q2)
(a) Explain why both merit goods and demerit goods are examples of private goods. [8]
(b) Discuss whether merit goods and demerit goods are best provided by a market
economy. [12]
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AS Level Economics
(June 2017/P21/Q2a)
Using examples, explain the difference between a merit good and a public good.
Explain why a profit can be made from the provision of one of these types of good, but
not the other. [8]
(June 2016/P23/Q2b)
Discuss how knowledge of the differences between these types of goods would help
government policy makers and entrepreneurs to make decisions. [12]
(June 2016/P22/Q2a)
Use examples to illustrate the difference between private goods and public goods, and
explain why only private goods wi ll be supplied in a free market economy. [8]
(June 2015/P23/Q3a)
Explain what economists mean when they describe a good as a ‘demerit good’ and,
using a diagram, show why such goods will be over-consumed in a free market. [8]
(June 2015/P22/Q3a)
Using examples, explain the difference between merit goods and public goods and
show why it is possible for profit to be made in the supply of one of these types of good
but not the other. [8]
(June 2014/P21/Q3a)
Explain the difference between private goods and public goods, and why it is possible
for a business to make a profit in the supply of private goods but not in the supply of a
public good. [8]
(Nov 2013/P22/Q3a)
Use diagrams to explain the difference between merit goods and demerit goods. [8]
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AS Level Economics
(June 2013/P23/Q3a)
Explain, using economic analysis, how economists decide whether goods are
substitutes or complementary goods. [8]
(June 2013/P21/Q2a)
Explain why the free market is ineffective in arriving at the correct price for merit goods
and demerit goods. [8]
(Nov 2011/P21/Q2b)
Discuss whether economists would classify healthcare and national defence in the
same way. [12]
(June 2011/P22/Q2b)
Discuss the accuracy of the definition of public and merit goods as ‘goods that must be
provided by the government’. [12]
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