The Nature of Economics | Edexcel A-Level Economics A (9EC0)

The Nature of Economics

139 questions
11 subtopics
Theme 1: introduction to markets and market failure
Paper 1 and Paper 3

Covers what economics is and the ideas everything else rests on: scarcity and opportunity cost, the production possibility frontier, the gains from specialisation and the functions of money, and the three ways an economy can be organised..

It covers economics as a social science, positive and normative economic statements, the economic problem, what a production possibility frontier shows, shifts in the PPF, and capital against consumer goods, the division of labour and its advantages, specialisation for trade between countries, the four functions of money, free market, command and mixed economies, the advantages and disadvantages of the free market and command and mixed economies assessed.

Sample questions from The Nature of Economics

Answer each one closed book first, then open the answer.

Economics as a social science

What does the Latin term 'ceteris paribus' mean?

Show the answer
'All other things being equal' or 'holding other things constant'.
Positive and normative economic statements

Which key words typically indicate that a statement is positive?

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Words like 'is', 'will', or 'does' — describing how the economy actually works.
The economic problem

Define renewable resources.

Show the answer
Resources that can be replenished naturally over time and are not depleted when used sustainably.
What a production possibility frontier shows

How is opportunity cost represented on a PPF?

Show the answer
By the quantity of one good that must be sacrificed to produce an additional unit of another good.
Shifts in the PPF, and capital against consumer goods

What effect does war or conflict have on the PPF?

Show the answer
It causes an inward shift of the PPF due to destruction of productive capacity.
The division of labour and its advantages

How does repetition of tasks contribute to the advantages of the division of labour?

Show the answer
Workers increase their productivity through repetition and practice of tasks, becoming faster and more efficient at their specific role.
Specialisation for trade between countries

How can specialisation for trade enable economies of scale?

Show the answer
By producing larger quantities for export markets, countries can achieve economies of scale and lower average costs.
The four functions of money

Why is the store of value function of money undermined during periods of high inflation?

Show the answer
High inflation erodes the purchasing power of money over time, meaning saved money will buy fewer goods and services in the future.

The 11 subtopics

One subtopic is one session. Work down the list.

Subtopic	What it covers	Questions
Economics as a social science	Recall questions on why economics is a social science, how economists build and use models, ceteris paribus, and why controlled experiments are so hard to run.	14
Positive and normative economic statements	Recall questions on the difference between a statement of fact and a statement of value, and how value judgements shape policy.	13
The economic problem	Recall questions on scarcity as unlimited wants against finite resources, why scarcity makes choice unavoidable, renewable and non-renewable resources, and opportunity cost as it is faced by consumers, producers and government.	13
What a production possibility frontier shows	Recall questions on what points on, inside and beyond the frontier represent, how opportunity cost is read off the curve, and why a concave PPF implies rising opportunity cost.	12
Shifts in the PPF, and capital against consumer goods	Recall questions on what moves the frontier outward or inward, and on the trade-off between producing capital goods and consumer goods.	15
The division of labour and its advantages	Recall questions on specialisation and the division of labour, Adam Smith's pin factory, the productivity gains it brings and the costs that come with it.	13
Specialisation for trade between countries	Recall questions on what countries gain from specialising for trade, and the vulnerabilities a narrow export base creates.	9
The four functions of money	Recall questions on money as a medium of exchange, a measure of value, a store of value and a method of deferred payment, and what inflation does to each.	17
Free market, command and mixed economies	Recall questions on the three ways of allocating resources, and on Smith, Hayek and Marx on why one is preferable to another.	11
The advantages and disadvantages of the free market	Recall questions on the price mechanism, consumer sovereignty and innovation, set against market failure, inequality and monopoly power.	8
Command and mixed economies assessed	Recall questions on what a command economy can achieve and where it fails, and on the role the state takes in a mixed economy.	14

The Nature of Economics is 139 of the 2,508 questions in the guide.Get the guide, £8

How the guide is worked

Answering a question from memory stores it far better than reading the answer again. The guide runs that as a fixed procedure on one subtopic at a time, about twenty minutes a session.

Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
Step 2 · Open book
Go back to the top. Read each printed answer and write it out in full, including the ones you had right.
Step 3 · Closed book again
Same questions, same order, from memory. The gap between pass one and pass three is the session result.

Read the full method, the return schedule and the research behind it.