AQA A-Level Economics sample questions and answers (7136)
Guide overview All 14 topics Sample questions Papers and weighting Look inside Questions and answers
70 sample questions and answers
Taken from every topic of AQA A-Level Economics, specification 7136. The full guide has 2,344.
Paper 1, Paper 3
Economic Methodology and the Economic Problem
31 questions in the guide, across 3 subtopics. More from this topic
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Economics as a social science, and positive and normative statements
What is a positive statement in economics?
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A positive statement is an objective, factual claim that can be tested and verified or refuted with evidence. -
Economics as a social science, and positive and normative statements
Give an example of a normative economic statement.
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'The government should reduce unemployment' – this is based on a value judgement about what ought to happen. -
The economic problem, factors of production and opportunity cost
What does 'land' refer to as a factor of production?
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Land includes all natural resources used in production. -
The economic problem, factors of production and opportunity cost
How is the environment classified in economics?
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The environment is classified as a scarce resource. -
Production possibility diagrams
If an economy moves from one point to another along its production possibility boundary, what economic concept does this movement demonstrate?
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It demonstrates opportunity cost, as producing more of one good requires sacrificing some quantity of the other good.
Paper 1, Paper 3
Individual Economic Decision Making
70 questions in the guide, across 4 subtopics. More from this topic
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Consumer behaviour and utility
How does diminishing marginal utility explain the downward slope of a demand curve?
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Consumers are only willing to pay less for additional units because each successive unit yields progressively smaller increases in satisfaction. -
Consumer behaviour and utility
What might happen if a consumer lacks accurate information about product quality?
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They may make suboptimal choices that do not maximise their utility. -
Imperfect information
Explain why imperfect information is considered a potential source of market failure.
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It prevents the efficient allocation of resources that would occur under perfect information, leading to misallocation and market failure. -
Imperfect information
How might the government be affected by imperfect information?
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The government may lack complete information about market conditions or the effects of policies, leading to poorly designed interventions. -
Aspects of behavioural economic theory
Why might using heuristics lead to poor economic decisions?
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Because while they simplify complex decisions, they can produce systematic biases that result in choices that do not maximise utility.
Paper 1, Paper 3
Price Determination in a Competitive Market
170 questions in the guide, across 10 subtopics. More from this topic
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Demand, the demand curve, income and wealth
Explain the relationship between price and quantity demanded, ceteris paribus.
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As price rises, quantity demanded falls, and vice versa, ceteris paribus. This is the inverse relationship shown by the demand curve. -
Substitutes, complements and consumer preferences
How do changes in the prices of complementary goods cause the demand curve to shift?
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A rise in the price of a complement reduces demand for the related good (leftward shift); a fall in the price of a complement increases demand (rightward shift). -
Price elasticity of demand and total revenue
Define unit elastic demand in terms of PED.
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Demand is unit elastic when the absolute value of PED equals 1, meaning the percentage change in quantity demanded equals the percentage change in price. -
The determinants of price elasticity of demand
How does whether a good is a necessity or luxury affect its price elasticity of demand?
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Necessities tend to have inelastic demand while luxuries tend to have elastic demand. -
Income and cross elasticity of demand
How might the income elasticity of demand for a particular good change as consumer income levels rise?
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A good may be a luxury at low incomes but become a necessity at higher incomes.
Paper 1, Paper 3
Production, Costs and Revenue
106 questions in the guide, across 6 subtopics. More from this topic
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Production, productivity and specialisation
Define specialisation in an economic context.
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Specialisation occurs when individuals, firms or countries concentrate on producing a limited range of goods or services. -
Production, productivity and specialisation
How does specialisation create time savings in production?
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Workers do not need to switch between different tasks, eliminating the time lost in changing tools, locations or mental focus. -
Costs of production in the short and long run
What does average cost represent?
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Average cost is total cost divided by the quantity of output produced, showing the cost per unit. -
Costs of production in the short and long run
Why does the marginal cost curve cut the average cost curve at its lowest point?
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When marginal cost is below average cost it pulls the average down, and when it is above it pulls the average up, so the two are equal where average cost is at its minimum. -
Economies and diseconomies of scale
If a new technology cluster develops and attracts many software companies to one region, what type of cost advantage might individual firms experience?
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External economies of scale, as the concentration of firms leads to benefits such as a skilled local workforce, specialist suppliers, and shared knowledge that reduce costs for all firms in the cluster.
Paper 1, Paper 3
Perfect Competition, Imperfectly Competitive Markets and Monopoly
381 questions in the guide, across 25 subtopics. More from this topic
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The characteristics of the four market structures
In monopolistic competition, what is meant by there being many firms?
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A large number of firms operate in the market, each holding a small market share, so no single firm dominates. -
The objectives of firms
Define market share as a firm objective.
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Increasing market share means a firm aims to capture a larger proportion of total sales in its market, which may be pursued alongside or instead of profit maximisation. -
Price taking, entry and exit, and long-run equilibrium
How does the entry of new firms affect market supply and price in perfect competition?
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Entry shifts the market supply curve to the right, which reduces the market price. -
Monopolistic competition in the long run
How does the exit of firms affect the demand curve facing remaining firms in monopolistic competition?
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Demand for remaining firms increases, shifting their demand curves rightward. -
Collusion, cartels and price leadership
What is a cartel?
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A formal collusive agreement between firms to coordinate prices, output levels or market shares to maximise joint profits.
Paper 1, Paper 3
The Labour Market
144 questions in the guide, across 7 subtopics. More from this topic
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The demand for labour and marginal productivity theory
Calculate the marginal revenue product of labour when marginal physical product of labour = 30 units, marginal revenue = £24.
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Marginal revenue product of labour = 30 × 24 = £720. -
The demand for labour and marginal productivity theory
How might a fall in the price of capital machinery affect the demand for labour?
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If capital is a substitute for labour, cheaper capital shifts the demand for labour to the left as firms substitute capital for workers. If capital is complementary, it could shift labour demand to the right. -
The supply of labour
How can changes in the size of the working population affect the labour supply curve for an occupation?
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An increase in the working population shifts the labour supply curve to the right; a decrease shifts it to the left. -
The supply of labour
What is the principle of comparative advantage?
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A country or individual has a comparative advantage in producing a good if they can produce it at a lower opportunity cost than another country or individual. -
Wage determination in competitive labour markets
State the formula for the marginal cost of labour in a perfectly competitive labour market.
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MCₗ = W, where MCₗ is the marginal cost of labour and W is the wage rate.
Paper 1, Paper 3
The Distribution of Income and Wealth: Poverty and Inequality
128 questions in the guide, across 8 subtopics. More from this topic
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Income, wealth and the causes of their distribution
How do wage and salary differentials influence the distribution of income?
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Differences in wages and salaries between workers create variations in income levels, contributing to income inequality. -
Equality, equity, the Lorenz curve and the Gini coefficient
What is the Gini coefficient and how is it derived?
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The Gini coefficient is a numerical measure of inequality calculated as the ratio of the area between the Lorenz curve and the line of equality to the total area under the line of equality. -
The arguments about inequality
What potential efficiency losses could result from a more equal distribution?
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Reduced incentives to work, save, invest, and innovate may lead to lower productivity and economic efficiency. -
The problem of poverty
Explain how low wages can cause poverty even when a person is employed.
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Earnings may be insufficient to cover basic living costs despite being in employment, leaving workers unable to afford necessities. -
Progressive taxation and transfer payments
Give an example of how progressive taxation is structured in practice.
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Income tax with multiple bands, where each successive band of income is taxed at a higher rate.
Paper 1, Paper 3
The Market Mechanism, Market Failure and Government Intervention
249 questions in the guide, across 14 subtopics. More from this topic
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How markets and prices allocate resources
What role does the price mechanism play in coordinating economic activity?
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The price mechanism coordinates the independent decisions of buyers and sellers in a market economy without the need for central planning. -
The meaning of market failure
What happens to the consumption of merit goods in a free market?
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Merit goods are underconsumed because consumers undervalue their private benefits. -
Positive and negative externalities
What is a negative externality in production?
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A negative externality in production occurs when the production process imposes costs on third parties not involved in the transaction. -
Merit and demerit goods
On a demand and supply diagram for a merit good, how does the free market equilibrium quantity compare to the socially optimal quantity?
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The free market equilibrium quantity is below the socially optimal quantity, showing under-consumption and misallocation of resources. -
An inequitable distribution of income and wealth
How does an inequitable distribution of income and wealth affect where resources are directed in the economy?
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Resources are allocated towards goods demanded by the wealthy rather than where they may be most needed in society.
Paper 2, Paper 3
The Measurement of Macroeconomic Performance
51 questions in the guide, across 3 subtopics. More from this topic
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The objectives of government economic policy
What is the fourth main macroeconomic policy objective relating to international trade and financial flows?
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A current account that stays in balance. -
The objectives of government economic policy
Besides the four main objectives, what fiscal objective might a government also pursue regarding its spending and revenue?
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Balancing the budget. -
Macroeconomic indicators and index numbers
Define an index number.
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An index number expresses a value relative to a base year, which is assigned a value of 100. -
Macroeconomic indicators and index numbers
What is one key use of index numbers in macroeconomics?
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Index numbers are used to measure changes in the price level over time. -
Uses of national income data
How do negative externalities limit GDP as a measure of welfare?
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GDP counts output that causes pollution and environmental damage as positive, without deducting the loss of welfare these externalities cause.
Paper 2, Paper 3
How the Macroeconomy Works
176 questions in the guide, across 9 subtopics. More from this topic
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The circular flow of income
What are withdrawals (leakages) in the circular flow model?
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Withdrawals are income that leaves the circular flow and is not spent on domestic goods and services. -
The aggregate demand and aggregate supply curves
What happens to the AD curve when government spending rises?
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Higher government spending shifts the AD curve rightward. -
What shifts short-run and long-run aggregate supply
How do subsidies affect the short-run aggregate supply curve?
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Subsidies reduce production costs for firms, shifting the SRAS curve rightward. -
Macroeconomic equilibrium and economic shocks
What is stagflation, and how is it caused in the AD/AS model?
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Stagflation is a situation of lower real output combined with a higher price level. It is caused by a negative supply-side shock that shifts the SRAS curve leftward. -
Consumption and investment
Explain how interest rates influence consumption.
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Higher interest rates increase the reward for saving and the cost of borrowing, reducing consumption; lower interest rates encourage borrowing and spending.
Paper 2, Paper 3
Economic Performance
222 questions in the guide, across 11 subtopics. More from this topic
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Short-run and long-run economic growth
How does government spending influence short-run economic growth from the demand side?
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Increased government spending raises aggregate demand, boosting real GDP in the short run. -
The economic cycle and output gaps
How does unemployment typically behave across the economic cycle?
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Unemployment typically falls during expansion and rises during contraction. -
Demand-side and supply-side shocks
What are the effects of a negative supply-side shock on the economy?
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It shifts SRAS leftward, reducing real GDP and increasing inflation, potentially causing stagflation. -
Measuring unemployment and the types of unemployment
How does investment influence employment levels in the economy?
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Increased investment raises aggregate demand and creates jobs in capital goods industries and related sectors; reduced investment lowers employment. -
The determinants of employment and policies to reduce unemployment
How can globalisation and increased foreign competition cause structural unemployment in the UK?
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Industries may decline and jobs may move overseas as UK firms become less competitive, leaving workers with skills that no longer match available jobs.
Paper 2, Paper 3
Financial Markets and Monetary Policy
204 questions in the guide, across 15 subtopics. More from this topic
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The characteristics and functions of money
Why must money possess acceptability?
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Acceptability means money must be widely recognised and accepted by people as a means of payment for goods and services. -
Financial markets and their role
How do financial markets provide liquidity?
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Financial markets provide liquidity by allowing assets to be converted into cash quickly and at low cost. -
Commercial banks, investment banks and the balance sheet
What is one of the main functions of a commercial bank relating to customers' money holdings?
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Accepting deposits from customers. -
Liquidity, profitability, security and credit creation
What happens to the portion of a deposit that a bank does not hold as reserves?
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The bank lends out the remainder to borrowers. -
How bank rate changes affect the economy
What is the overall effect of a rise in bank rate on aggregate demand?
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Aggregate demand falls due to reduced consumption and investment.
Paper 2, Paper 3
Fiscal Policy and Supply-Side Policies
140 questions in the guide, across 9 subtopics. More from this topic
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Fiscal policy and aggregate demand
How does increased government spending affect aggregate demand under expansionary fiscal policy?
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Increased government spending raises aggregate demand directly, as government expenditure is a component of AD. -
Types of tax
What is income tax in the UK?
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Income tax is a main direct tax in the UK levied on earnings from employment and self-employment. -
The budget balance and the national debt
What is the national debt?
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The national debt is the total accumulated stock of government borrowing over time. -
The purposes of public expenditure and taxation
What is capital expenditure in the context of public spending?
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Investment in infrastructure and assets. -
The principles of taxation
Define a regressive tax.
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A tax that takes a larger proportion of income from lower earners than from higher earners, so the average rate of tax falls as income rises.
Paper 2, Paper 3
The International Economy
272 questions in the guide, across 22 subtopics. More from this topic
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The causes and characteristics of globalisation
Why does the growth of multinational corporations drive globalisation?
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Multinationals seek new markets, lower production costs, and economies of scale, leading them to expand operations across multiple countries and integrate global economic activity. -
Multinational corporations
How can multinational corporations influence government policy?
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They can exert significant bargaining power over governments, potentially influencing regulations and policies in their favour. -
Tariffs, quotas and the tariff diagram
On a tariff diagram, what happens to the world supply curve when a tariff is imposed?
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The world supply curve shifts upward by the amount of the tariff. -
Trading blocs and the World Trade Organisation
What monitoring function does the WTO perform?
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The WTO monitors national trade policies to ensure members comply with agreed rules and commitments. -
Correcting imbalances and their consequences
How does contractionary fiscal policy work as an expenditure-reducing policy?
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Higher taxes and lower government spending reduce aggregate demand, decreasing overall spending including on imports.
AQA A-Level Economics Active Recall Guide
The other 2,274 questions, with the answers printed after each section.