Look inside the Edexcel A-Level Economics B guide (9EB0)

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Edexcel · A-Level · 9EB0
Economics B
Active Recall Guide
2,933 questions
Economics BContents
Contents
23 topics, 206 subtopics
  1. Scarcity, Choice and Potential Conflicts91
  2. Enterprise, Business and the Economy90
  3. Introducing the Market195
  4. The Role of Credit in the Economy121
  5. Market Failure and Government Intervention91
  6. Revenue, Costs, Profits and Cash131
  7. Business Growth and Competitive Advantage182
  8. Firms, Consumers and Elasticities of Demand139
  9. Productive Efficiency90
  10. Life in a Global Economy155
  11. The Economic Cycle190
  12. Introduction to Macroeconomic Policy104
  13. and 11 more
ii
Enterprise, Business and the EconomyQuestions
Enterprise, Business and the Economy
The entrepreneur and creative destruction
  1. Define an entrepreneur.
  2. What is meant by creative destruction?
  3. Which economist is associated with the idea of creative destruction?
  4. Give an example of creative destruction in a consumer market.
  5. Why can creative destruction raise living standards even though established firms fail?
  6. What is the main cost of creative destruction to workers?
  7. State three risks an entrepreneur takes when setting up a business.
  8. What does it mean to say the entrepreneur is a residual claimant?
  9. Give three decisions an entrepreneur must make when starting a business.
12
Enterprise, Business and the EconomyAnswers
Answers
The entrepreneur and creative destruction
  1. An entrepreneur is the person who organises the other factors of production into a business and bears the risk of the venture.
  2. Creative destruction is the process by which innovation creates new products and methods that destroy the market position of established firms and the older ways of producing.
  3. Joseph Schumpeter is associated with creative destruction.
  4. Streaming services displaced high-street film and DVD rental, destroying that business model while creating a new one.
  5. The resources released by failing firms are redeployed into more productive uses, and consumers gain better or cheaper products.
  6. Workers in declining industries lose their jobs and can face long-term structural unemployment where their skills do not transfer.
  7. The entrepreneur risks losing the capital invested, forgoing the income of paid employment and damaging their personal reputation.
  8. It means the entrepreneur receives whatever is left of revenue once every other factor has been paid, so the reward is uncertain.
  9. They must decide what to produce, how to raise the finance and where to locate the business.
13
Life in a Global EconomyQuestions
Life in a Global Economy
Causes of globalisation over the last fifty years
  1. What is trade liberalisation?
  2. Name the international body that oversees the rules of world trade and settles trade disputes.
  3. How does a fall in average tariff rates encourage globalisation?
  4. What is capital market liberalisation?
  5. Explain how the removal of exchange controls contributed to globalisation.
  6. Why was the opening up of China from the late 1970s so significant for globalisation?
  7. How did the collapse of the Soviet Union affect the world economy?
  8. Which shipping innovation of the 1950s and 1960s sharply reduced the cost of moving goods internationally?
  9. Explain how falling transport costs increase the geographical size of a market.
34
Life in a Global EconomyAnswers
Answers
Causes of globalisation over the last fifty years
  1. Trade liberalisation is the removal or reduction of barriers to international trade such as tariffs, quotas and other restrictions.
  2. The World Trade Organisation.
  3. Lower tariffs cut the price of imported goods in the destination market, so more trade becomes profitable and firms are willing to sell and source further afield.
  4. Capital market liberalisation is the removal of controls on the movement of money and financial capital across borders, allowing residents to invest abroad and foreigners to invest at home.
  5. Once firms and investors could freely convert and move currency, they were able to finance overseas plants and buy foreign assets, so investment flows between countries grew rapidly.
  6. It added a very large, low-cost labour force to the world trading system and turned China into the largest exporter of manufactured goods in the world.
  7. It brought a group of centrally planned economies into the market system, opening their resources, workers and consumers to international trade and foreign investment.
  8. Containerisation, the use of a standard steel shipping container that allowed cargo to be loaded, moved and unloaded mechanically.
  9. Transport is part of the cost of delivering a good, so when it falls a distant producer can undercut a local one, widening the area over which firms compete.
35
Inequality and Re-DistributionQuestions
Inequality and Re-Distribution
Absolute and relative poverty and how they are measured
  1. Define absolute poverty.
  2. Define relative poverty.
  3. Why can a country almost eliminate absolute poverty and still have widespread relative poverty?
  4. What happens to measured relative poverty if every household's income doubles?
  5. In a recession, median income falls faster than the incomes of the poorest households. What happens to measured relative poverty, and why is that misleading?
  6. State the usual national definition of a household in relative low income.
  7. What does equivalised income mean, and why is it used?
  8. How is absolute low income measured in the UK?
  9. What is the international extreme poverty line?
56
Inequality and Re-DistributionAnswers
Answers
Absolute and relative poverty and how they are measured
  1. Absolute poverty is a situation in which a household cannot afford the basic necessities of life such as food, clean water, shelter, clothing and health care.
  2. Relative poverty is having an income so far below the average of the society a household lives in that it cannot take part in the normal life of that community.
  3. Growth can lift everyone above subsistence while incomes at the bottom remain far below the median, so those households are still excluded from ordinary living standards.
  4. It does not change, because the median doubles as well and each household's position relative to the poverty line is unchanged.
  5. Measured relative poverty falls because the poverty line moves down with the median, even though the poorest households are no better off in real terms.
  6. A household whose equivalised disposable income is below 60% of the contemporary median household income.
  7. Equivalised income is income adjusted for the size and composition of the household, so that households with different numbers of adults and children can be compared fairly.
  8. As income below 60% of the median in a fixed base year, uprated for inflation, so the threshold does not move with current incomes.
  9. It is a World Bank threshold of income per person per day measured at purchasing power parity, rebased periodically and now set at around $3 a day, having previously been $1.90 and $2.15.
57
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2,933 questions
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  3. Step 3 · Closed book again

    Same questions, same order, from memory. The gap between pass one and pass three is the session result.

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