2022 May/June · Paper 12 · Q11 markEconomic methodology (positive and normative)
2022 May/June · Paper 12 · Q21 markResource allocation in economic systems
2022 May/June · Paper 12 · Q31 markProduction possibility curves
2022 May/June · Paper 12 · Q41 markMoney
2022 May/June · Paper 12 · Q181 markClassification of goods and services
2022 May/June · Paper 22 · Q1 (b)4 marksClassification of goods and services
2022 May/June · Paper 22 · Q2 (a, b)6.6667 marksProduction possibility curves · Resource allocation in economic systems
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References only, not question text. Open Official paper ↗ where Cambridge publishes the paper,
or see the official Cambridge past-papers page; for other papers, ask your
school. “Paper 42” means Paper 4, variant 2.
Practice questions
Original questions written by HomiLabs in the style of the exam, with answers and mark schemes. They are not
Cambridge past paper questions and have not been reviewed by Cambridge. Try each one before opening the answer.
Q1Production possibility curves · Core · Paper 1 style · 1 mark
(a)[1]
Show answer
(a) B some resources are unemployed or used inefficiently
A point inside the PPC means output could rise without giving up any other good, so resources are unemployed or misallocated. C describes a point outside the curve, not inside it.
Q2Production possibility curves · Core · Paper 2 style · 5 marks
(a)A flood destroys roads, bridges and factories in a country. Using a production possibility curve described in words, explain the effect on the country's productive capacity.[3]
(b)Explain how this differs from the effect of a rise in unemployment caused by a fall in demand.[2]
Show answer
(a) The PPC shifts inwards because the quantity of capital (a factor of production) has fallen.
1 mark: axes are two goods/services (e.g. agricultural goods and manufactured goods), not price and quantity. 1 mark: capital stock is destroyed, so the maximum output possible falls. 1 mark: the whole PPC shifts inwards (towards the origin); if mainly factories are lost the shift is larger on the manufactured goods axis.
(b) Unemployment moves the economy to a point inside an unchanged PPC.
1 mark: productive capacity is unchanged, so the PPC does not shift. 1 mark: actual output falls, shown by a movement from a point on the curve to a point inside it.
Q3Production possibility curves · Standard · Paper 1 style · 1 mark
(a)An economy moves along its production possibility curve from 60 units of capital goods and 300 units of consumer goods to 80 units of capital goods and 260 units of consumer goods. What is the opportunity cost of each extra unit of capital goods?[1]
Show answer
(a) B 2 units of consumer goods
Consumer goods given up = 300 − 260 = 40; extra capital goods = 80 − 60 = 20; 40 ÷ 20 = 2 units of consumer goods per unit. D is the total sacrifice, not the cost per unit; A inverts the ratio.
Q4Production possibility curves · Standard · Paper 2 style · 8 marks
The table shows the production possibilities of a farming region in Punjab that grows only wheat and cotton (invented data).Combination: wheat (thousand tonnes), cotton (thousand bales)A: 0, 500B: 100, 470C: 200, 420D: 300, 340E: 400, 220F: 500, 0
(a)Calculate the opportunity cost of one extra tonne of wheat when production moves from combination C to combination D.[2]
(b)Calculate the opportunity cost of one extra tonne of wheat when production moves from combination E to combination F.[1]
(c)Using your answers to (a) and (b), explain why the production possibility curve for this region is concave (bowed outwards) from the origin.[3]
(d)State whether the combination 200 thousand tonnes of wheat and 450 thousand bales of cotton can be produced. Give a reason.[2]
Show answer
(a) 0.8 bales of cotton per tonne of wheat
Cotton given up = 420 − 340 = 80 thousand bales (M1); ÷ 100 thousand tonnes of wheat = 0.8 bales per tonne (A1).
(c) Opportunity cost rises as more wheat is produced because resources are not equally suited to both crops.
1 mark: opportunity cost of wheat increases (0.8 → 2.2). 1 mark: land and labour best suited to cotton are moved into wheat last / factors are not perfectly mobile or equally productive in both uses. 1 mark: so each extra unit of wheat needs more cotton to be given up, making the slope steeper and the curve concave.
(d) No, it is unattainable.
B1 not attainable; B1 at 200 thousand tonnes of wheat the maximum cotton output is 420 thousand bales, so 450 lies outside the PPC with current resources and technology.
Q5Production possibility curves · Standard · Paper 2 style · 8 marks
(a)With the help of a production possibility curve diagram, explain the effect of a new technology that raises productivity in the textile industry only, and consider whether such a change will always increase the economic welfare of the country.[8]
Show answer
(a) The PPC pivots outwards along the textile axis only; welfare usually rises but not always.
Knowledge (3): PPC shows maximum combinations of two goods (textiles and other goods) with given resources and technology; opportunity cost; correct axis labels. Analysis (3): the maximum output of textiles rises while the maximum of other goods is unchanged, so the curve pivots outwards from the other-goods intercept; at every point except that intercept the country can now produce more; the opportunity cost of textiles falls. Evaluation (2): welfare may not rise if the economy is inside its PPC (unemployment), if workers displaced by machines stay unemployed, if extra output creates pollution, or if textiles are mostly exported and the gains go to a few owners; a justified conclusion.
Q6Production possibility curves · Standard · Paper 2 style · 5 marks
A small island economy can produce either 400 tablet computers or 1000 tonnes of rice per month, or any combination on a straight-line production possibility curve between these two points (invented data).
(a)Calculate the opportunity cost of producing one tablet computer.[1]
(b)Calculate the maximum quantity of rice the country can produce if it makes 150 tablet computers.[2]
(c)Explain what the straight-line shape of this production possibility curve assumes about the country's resources.[2]
Show answer
(a) 2.5 tonnes of rice
1000 ÷ 400 = 2.5 tonnes of rice (B1).
(b) 625 tonnes
Rice given up = 150 × 2.5 = 375 (M1); 1000 − 375 = 625 tonnes (A1).
(c) Resources are equally suited to both goods, so opportunity cost is constant.
1 mark: constant opportunity cost (same slope throughout). 1 mark: this assumes factors are equally productive in making tablets and rice / perfectly transferable, which is unlikely in reality.
Q7Production possibility curves · Challenge · Paper 2 style · 12 marks
Invented data for two countries, average for 2015–2024:Country X: investment as a share of GDP 32 %; average annual real GDP growth 6.1 %Country Y: investment as a share of GDP 14 %; average annual real GDP growth 2.8 %
(a)Compare the average growth rates of the two countries over the period.[2]
(b)With the help of a production possibility curve described in words, explain how a decision to produce more capital goods now can affect a country's future output.[4]
(c)Assess whether the data prove that Country Y should increase the share of output it devotes to investment.[6]
Show answer
(a) Country X's average growth (6.1 %) was about 2.2 times that of Country Y (2.8 %), i.e. 3.3 percentage points higher.
1 mark: X grew faster. 1 mark: data manipulated, e.g. 3.3 percentage points higher or about 2.2 times as fast.
(b) Choosing a point with more capital goods and fewer consumer goods now raises the capital stock, shifting the PPC outward in future.
Axes labelled capital goods and consumer goods (1). Moving along the PPC towards capital goods means an opportunity cost of current consumer goods (1). Extra capital raises productive capacity (1). Future PPC shifts outwards further than for a country choosing more consumer goods, allowing more of both goods later (1).
(c) Not proven: the data show an association, but growth also depends on other factors; a higher investment share has a current consumption cost.
Analysis (up to 4): higher investment links to faster capacity growth (X); sacrifice of current consumption may harm living standards of poor households; return depends on type/quality of investment; growth also depends on labour skills, technology, demand, political stability; the data cover only two countries and averages, so correlation not causation. Evaluation (up to 2): a judgement, e.g. investment is likely to help but the data alone cannot prove it; it depends on whether Y has spare capacity or weak demand.
Q8Production possibility curves · Challenge · Paper 2 style · 12 marks
(a)Assess whether the production possibility curve is a useful way to explain the economic problem facing a low-income country.[12]
Show answer
(a) Useful for showing scarcity, choice, opportunity cost and growth, but limited because it is a simplified two-good model.
Up to 8 marks for analysis: PPC illustrates scarcity (finite resources), choice between combinations, opportunity cost (slope), unemployment (inside), growth (outward shift) and the trade-off between capital and consumer goods, which is key for a low-income country with low savings. Limitations: only two goods; assumes fixed resources and technology; does not show distribution of output, quality of life, or which point is best (a normative choice); points outside may be reached through trade or aid. Up to 4 marks for evaluation: a supported judgement, e.g. useful as a starting framework but policy decisions need further evidence on income distribution and markets. Level 3 (9–12): balanced, applied to low-income country, justified conclusion; Level 2 (5–8): some analysis, limited evaluation; Level 1 (1–4): descriptive.
Q9Production possibility curves · Challenge · Paper 2 style · 6 marks
Invented data for a country (US$ billion, at constant prices): potential output in 2024 was 500 and actual output was 470. In 2025 potential output grew by 5 % and actual output grew by 3 %.
(a)Calculate the output gap (potential minus actual output) as a percentage of potential output in 2024 and in 2025. Give your answers to 1 decimal place.[3]
(b)Using a production possibility curve described in words, explain what happened to actual and potential growth between 2024 and 2025.[3]
(b) The PPC shifted outwards (potential growth 5 %) and the production point moved outwards (actual growth 3 %), but the point ended up further inside the new curve.
1 mark: outward shift of PPC shows potential growth. 1 mark: movement of the production point away from the origin shows actual growth. 1 mark: because actual grew less than potential, the gap between the point and the curve widened (more unused resources).
Q10Classification of goods and services · Core · Paper 1 style · 1 mark
(a)Which is the best example of a free good?[1]
Show answer
(a) B sunlight used by a family to dry washing on a roof
A free good has no opportunity cost: it is not scarce, and using it does not take resources from other uses. Sunlight is unlimited relative to demand. C and D have zero price to the user but use scarce resources, so they are economic goods.
Q11Classification of goods and services · Core · Paper 2 style · 5 marks
(a)Define a public good.[2]
(b)Explain why a private firm is unlikely to provide street lighting in a residential area of Lahore.[3]
Show answer
(a) A good that is non-rival and non-excludable.
1 mark non-rival: one person's consumption does not reduce the amount available to others. 1 mark non-excludable: people who do not pay cannot be stopped from benefiting.
(b) Because of the free-rider problem, the firm could not charge users and would make no revenue.
1 mark: street lighting is non-excludable, so non-payers cannot be prevented from using it. 1 mark: consumers have an incentive to be free riders and not reveal their willingness to pay. 1 mark: the firm cannot earn revenue to cover costs, so the market fails to provide it (missing market).
Q12Classification of goods and services · Standard · Paper 1 style · 1 mark
(a)[1]
Show answer
(a) C a private good, because they are rival and excludable
One pupil's lunch cannot be eaten by another (rival) and people can be prevented from getting one (excludable), so it is a private good, whoever provides it; it may also be a merit good. A is the common error of linking public goods to who supplies them.
Q13Classification of goods and services · Standard · Paper 2 style · 5 marks
(a)Explain why motorcycle helmets are classified as a merit good.[3]
(b)Explain one reason why the government might make the wearing of helmets compulsory rather than subsidise their price.[2]
Show answer
(a) Riders underestimate the benefit of a helmet (protection from serious head injury), so in a free market fewer helmets are bought and worn than is in the riders' own interest.
1 mark: a merit good is one that would be under-consumed if left to the free market / benefits are greater than consumers realise. 1 mark: information failure – riders underestimate the risk of an accident or the severity of head injuries (or are over-confident about short journeys). 1 mark: so demand and consumption are below the level that best serves the rider (and society, e.g. lower hospital costs).
(b) A subsidy lowers the price, but riders who underestimate the benefit may still not buy or wear a helmet; a law changes behaviour directly.
1 mark reason (the cause of under-consumption is information failure, not mainly price / regulation has a low budget cost). 1 mark development, e.g. even a cheaper helmet may be left at home, while a law backed by fines makes every rider wear one; it also costs the government little compared with a subsidy.
Q14Classification of goods and services · Standard · Paper 2 style · 8 marks
(a)Explain the difference between a merit good and a public good, and consider whether secondary education in Pakistan should be regarded as a merit good.[8]
Show answer
(a) Public goods are defined by non-rivalry and non-excludability; merit goods by under-consumption due to information failure; education is usually a merit good, though this involves a value judgement.
Knowledge (3): public good definition (non-rival, non-excludable, free-rider, missing market); merit good definition (under-consumed in free market, information failure, judged by government). Analysis (3): education is rival and excludable, so it is not a public good; households may underestimate future earnings and wider benefits, poor families face cost barriers or need children's labour; so consumption is below the level society desires. Evaluation (2): classification as merit good is partly a value judgement; for well-informed households demand may already be high; private schools show it can be supplied by the market; a justified conclusion.
Q15Classification of goods and services · Challenge · Paper 2 style · 6 marks
(a)A motorway between two cities charges drivers a toll at booths on every entrance. At night, when traffic is light, vehicles travel freely; during the morning rush hour it is heavily congested. Explain why the motorway is best described as a quasi-public good rather than a pure public good.[4]
(b)Suggest one reason why the government might still choose to finance the motorway from taxation.[2]
Show answer
(a) It is partly rival (congestion) and partly excludable (tolls), so it has some but not all characteristics of a public good.
1 mark: definition/idea of quasi-public good. 1 mark: at night one extra car does not reduce space for others (non-rival), but at rush hour extra users slow others down, so it becomes rival. 1 mark: toll booths mean non-payers can be excluded, so it is excludable. 1 mark: therefore it does not fully meet both conditions of a pure public good.
(b) Large external benefits/high fixed cost mean the market may under-provide it; tolls could reduce efficient use when the road is empty.
1 mark reason, 1 mark development (e.g. charging a toll when the road is empty discourages use that costs nothing extra; the economy-wide benefits of trade and travel are not captured by tolls).
Q16Classification of goods and services · Challenge · Paper 2 style · 12 marks
(a)Assess whether the classification of goods as merit goods or demerit goods is always based on objective evidence.[12]
Show answer
(a) Not always: some classifications rest on strong evidence (tobacco harm), but many involve value judgements by governments.
Analysis (up to 8): definitions of merit and demerit goods; role of information failure; evidence-based cases (smoking, vaccinations) where harm or benefit is measured scientifically; cases that are value judgements (alcohol, certain entertainment, arts, sugary foods) where the government's view replaces consumers' own preferences; paternalism; classification can vary between countries and over time; positive vs normative statements. Evaluation (up to 4): a weighed judgement, e.g. the evidence may be objective, but the decision that consumption is 'too high' or 'too low' is always partly normative. Level 3 (9–12) balanced with justified conclusion; Level 2 (5–8); Level 1 (1–4).
Q17Resource allocation in economic systems · Core · Paper 1 style · 1 mark
(a)In a planned economy, how are most decisions about what to produce made?[1]
Show answer
(a) C by the state through central planning
In a planned (command) economy the state owns most resources and decides what, how and for whom to produce. A and B describe the price mechanism in a market economy.
Q18Resource allocation in economic systems · Standard · Paper 2 style · 6 marks
(a)Explain two problems that a planned economy may face in allocating resources.[4]
(b)State two features of a mixed economy.[2]
Show answer
(a) e.g. information problems and weak incentives.
2 marks for each of two explained problems: (1) planners lack information about consumer preferences and costs, leading to shortages and surpluses; (2) weak profit/wage incentives reduce effort, innovation and quality; (3) bureaucracy and slow response to change; (4) limited consumer choice. 1 mark for identification, 1 for explanation.
(b) Both private and public sectors; prices allocate most goods but government intervenes.
1 mark each: private and public ownership exist together; market prices allocate many goods; the government provides public/merit goods, regulates markets or redistributes income.
Q19Resource allocation in economic systems · Standard · Paper 2 style · 12 marks
(a)Assess whether a mixed economy is the best way to allocate a country's scarce resources.[12]
Show answer
(a) Often yes, because it combines the incentives of markets with government correction of market failure, but the outcome depends on the balance and on government failure.
Analysis (up to 8): the economic problem (what, how, for whom); market economy strengths (price signals, efficiency, choice, incentives) and weaknesses (public goods not provided, inequality, information failure, demerit goods); planned economy strengths (equity, coordination of large projects) and weaknesses (information, incentives); mixed economy aims to gain the advantages of both. Evaluation (up to 4): depends on the size and quality of the public sector, corruption and government failure, stage of development; 'best' depends on value judgements about equity vs efficiency; justified conclusion.
Q20Resource allocation in economic systems · Challenge · Paper 2 style · 12 marks
Invented data for a country that moved from a planned economy to a market economy, starting in Year 1.Year: real GDP index (Year 1 = 100), inflation rate (%), unemployment rate (%)Year 1: 100, 4, 1Year 2: 88, 300, 8Year 3: 84, 95, 14Year 4: 90, 30, 12Year 5: 99, 12, 9
(a)Calculate the percentage fall in real GDP between Year 1 and Year 3.[2]
(b)Using the data, explain why the move from a planned to a market economy might cause inflation and unemployment in the short run.[4]
(c)Assess whether the data suggest that the move to a market economy was a mistake.[6]
Show answer
(a) 16.0 %
(100 − 84) ÷ 100 × 100 (M1) = 16.0 % (A1).
(b) Price controls removed → prices jump to market levels; inefficient state firms close → workers lose jobs while new firms take time to grow.
Inflation (2): removal of maximum prices lets prices rise to equilibrium where there were shortages; 300 % inflation in Year 2. Unemployment (2): subsidies to loss-making state enterprises end, so they cut jobs or close; labour is occupationally immobile and new private firms take time to develop; unemployment rose from 1 % to 14 %.
(c) Not necessarily: short-run costs were high, but by Year 5 growth had resumed and inflation fallen.
Analysis (up to 4): Years 2–3 show large costs (inflation, unemployment, falling output); by Year 5 real GDP had recovered to 99 and inflation fell to 12 %, suggesting gains in efficiency; data say nothing about quality/choice of goods or distribution; unemployment still high at 9 %. Evaluation (up to 2): a judgement, e.g. too early to say; depends on the pace of reform and support for those who lost jobs.
Q21Factors of production and specialisation · Core · Paper 2 style · 5 marks
(a)Name the factor of production that each of the following represents and the reward paid to it: (i) a plot of farmland in Sindh; (ii) a delivery van owned by a bakery; (iii) a nurse working in a hospital.[3]
(b)Explain the role of the entrepreneur in a market economy.[2]
Show answer
(a) (i) land – rent; (ii) capital – interest; (iii) labour – wages
1 mark for each correct factor with its reward.
(b) The entrepreneur organises the other factors and takes the risk of business; the reward is profit.
1 mark: combines/organises land, labour and capital to produce goods. 1 mark: bears risk/uncertainty and receives profit (or loss).
Q22Factors of production and specialisation · Core · Paper 1 style · 1 mark
(a)Which of the following is classified as capital in economics?[1]
Show answer
(a) C a sewing machine used in a garment factory
Capital is a man-made aid to production, such as machinery. Money and shares (A, B) are financial assets, not real capital; the lake (D) is a natural resource, so land.
Q23Factors of production and specialisation · Standard · Paper 2 style · 7 marks
A furniture workshop in Chiniot employs 5 workers. When each worker made complete chairs, the workshop produced 20 chairs a day. After the work was divided into separate tasks (cutting, carving, joining, polishing), the same 5 workers produced 32 chairs a day (invented data).
(a)Calculate the percentage increase in output per worker after the workshop introduced division of labour.[2]
(b)Explain two reasons why division of labour may have raised output per worker.[4]
(c)State one disadvantage of division of labour for the workers.[1]
(b) Workers become skilled at one task through repetition; time is saved by not switching tasks / tools; workers suited to tasks.
2 marks each for two explained reasons: practice improves skill and speed; less time lost moving between tasks and tools; workers can be matched to tasks they are best at; easier to use specialised machinery; training is shorter.
(c) Boredom from repetitive work (or loss of variety of skills / risk of unemployment if the task is automated).
1 mark for any valid disadvantage to workers.
Q24Factors of production and specialisation · Standard · Paper 2 style · 8 marks
(a)Explain how specialisation and the division of labour can increase an economy's output, and consider whether a country should specialise in producing a narrow range of goods.[8]
Show answer
(a) Specialisation raises productivity and output; but over-specialisation creates risks.
Knowledge (3): meaning of specialisation (individuals, firms, regions, countries) and division of labour; need for exchange/money. Analysis (3): higher productivity through skill, time saving, use of machinery and economies of scale; lower unit costs; more output from given resources (PPC shifts outward / move to higher output). Evaluation (2): national specialisation increases dependence on world prices (e.g. a single crop or mineral), exposes the country to demand shocks and structural unemployment; diversification may reduce risk; justified conclusion.
Q25Economic methodology (positive and normative) · Core · Paper 1 style · 1 mark
(a)Which statement is normative?[1]
Show answer
(a) C The government should spend more on primary schools than on motorways.
C contains a value judgement ('should') and cannot be tested by evidence. D is positive: it is a testable prediction even though it uses 'may'.
Q26Economic methodology (positive and normative) · Standard · Paper 2 style · 6 marks
(a)Identify which of the following statements are positive and which are normative.(1) The unemployment rate among graduates in the country rose from 9 % to 12 %.(2) Income inequality in the country is unacceptably high.(3) A tax on sugary drinks would reduce their consumption.(4) Clean drinking water is more important than mobile phone coverage.[2]
(b)Explain why economists make the assumption of ceteris paribus when building economic models.[2]
(c)Explain why economics is described as a social science.[2]
Show answer
(a) Positive: (1) and (3). Normative: (2) and (4).
2 marks for all four correct; 1 mark for two or three correct.
(b) To isolate the effect of one variable by holding all other factors constant.
1 mark: ceteris paribus means other things remain equal. 1 mark: in the real world many variables change at once and controlled experiments are not possible, so the assumption lets economists study one cause and effect at a time.
(c) It studies human behaviour using scientific method but cannot run controlled experiments, and people do not behave consistently.
1 mark: it uses scientific method (theories, models, testing against data). 1 mark: it studies human behaviour in society, which is less predictable, and laboratory experiments are rarely possible.
Q27Money · Core · Paper 2 style · 8 marks
A household in a country with 30 % annual inflation keeps Rs 100,000 in cash at home for one year. It earns no interest (invented data).
(a)State four functions of money.[2]
(b)Calculate the real value of the household's savings after one year, in Year 0 prices. Give your answer to the nearest rupee.[2]
(c)Explain how very high inflation weakens two functions of money.[4]
Show answer
(a) Medium of exchange, unit of account, store of value, standard of deferred payment.
2 marks for all four; 1 mark for two or three.
(b) Rs 76,923
100,000 ÷ 1.30 (M1) = Rs 76,923 (A1).
(c) Store of value: money loses purchasing power. Standard of deferred payment / unit of account: future amounts and prices become unreliable.
2 marks each: store of value – each rupee buys less over time, so people switch to gold, property or foreign currency; unit of account – prices change so often that comparisons are hard; standard of deferred payment – lenders are repaid in money worth less, so they become unwilling to lend; medium of exchange – in extreme cases people turn to barter or foreign currency.
Q28Money · Challenge · Paper 2 style · 8 marks
(a)Explain the characteristics that an item needs in order to function well as money, and consider whether balances held in mobile phone wallets have these characteristics.[8]
Show answer
(a) Acceptability, durability, portability, divisibility, limited supply, homogeneity; mobile wallets have most of them but depend on trust, technology and access.
Knowledge (3): list and explain characteristics – generally acceptable, durable, portable, divisible, scarce/limited in supply, uniform/recognisable. Analysis (3): mobile wallet balances are easily divisible and portable, do not wear out, are units of the national currency so uniform and scarce; widely accepted where merchants have agreed. Evaluation (2): acceptability depends on network coverage, phone ownership and trust in the provider; not usable during power or network failures; may be part of broad rather than narrow money; justified conclusion.
Q29Scarcity, choice and opportunity cost · Core · Paper 2 style · 5 marks
Ayesha lives in Karachi. She has been offered a job at a bank paying Rs 65,000 a month. Instead, she chooses a two-year full-time diploma costing Rs 300,000 a year in fees (invented data).
(a)State the opportunity cost of Ayesha's decision.[1]
(b)Calculate the total economic cost to Ayesha of the two-year diploma (the fees plus the earnings she gives up).[2]
(c)Explain why Ayesha may still have made a rational choice.[2]
Show answer
(a) The job at the bank (the next best alternative), including the income it would have paid.
1 mark: the next best alternative forgone – the bank job.
(c) She expects the future benefits (higher earnings, satisfaction) to exceed the opportunity cost.
1 mark: rational choice compares costs and benefits. 1 mark: the diploma may raise lifetime earnings or job satisfaction by more than Rs 2.16 million.
Q30Scarcity, choice and opportunity cost · Standard · Paper 2 style · 8 marks
(a)Explain why the basic economic problem of scarcity exists in all economies, and consider whether scarcity is less of a problem for high-income countries than for low-income countries.[8]
Show answer
(a) Wants are unlimited while resources are finite, so all economies must choose; richer countries face scarcity too, though basic needs are less affected.
Knowledge (3): scarcity = unlimited wants vs limited resources; need for choice; opportunity cost; the three questions what/how/for whom. Analysis (3): resources (land, labour, capital, enterprise) are finite everywhere; as incomes rise new wants appear (health care, environment, leisure); even rich countries face trade-offs (e.g. health vs defence, ageing populations). Evaluation (2): in low-income countries scarcity affects basic needs (food, clean water), so its human cost is greater; in high-income countries it concerns more optional wants; absolute scarcity is universal but relative severity differs; justified conclusion.
Similar questions
Questions that test the same subtopic in different years, grouped so you can work on one skill at a time.
References only: find each question in its paper (official link where available, otherwise through your school).
Production possibility curvesBanker18 questions · 9/9 sessions
