Edexcel A-Level Economics B sample questions and answers (9EB0)
Guide overview All 23 topics Sample questions Papers and weighting Look inside Questions and answers
69 sample questions and answers
Taken from every topic of Edexcel A-Level Economics B, specification 9EB0. The full guide has 2,933.
Paper 1, Paper 3
Scarcity, Choice and Potential Conflicts
91 questions in the guide, across 6 subtopics. More from this topic
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Scarcity and the economic problem
Are economic resources the same thing as money?
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No, economic resources are the land, labour, capital and enterprise actually used to produce goods and services, whereas money is only a claim on them. -
Scarcity and the economic problem
What is meant by finite resources?
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Finite resources are those available only in limited quantity at any one time, such as land, oil reserves and skilled labour hours. -
Choice, trade-offs and opportunity cost
Explain the opportunity cost to a firm of holding a large stock of finished goods.
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The cash tied up in unsold stock could have earned a return elsewhere, for example in new equipment or in an interest-bearing account.
Paper 1, Paper 3
Enterprise, Business and the Economy
90 questions in the guide, across 6 subtopics. More from this topic
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The entrepreneur and creative destruction
What is the main cost of creative destruction to workers?
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Workers in declining industries lose their jobs and can face long-term structural unemployment where their skills do not transfer. -
The entrepreneur and creative destruction
Why might an entrepreneur expand into a new region rather than raise output at one site?
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A single site eventually reaches its capacity limit and saturates the local market, so a new region offers fresh demand. -
Adding value
Give three ways a firm can add value to a basic product.
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It can brand the product, improve its design or quality, and provide services such as delivery, fitting or a warranty.
Paper 1, Paper 3
Introducing the Market
195 questions in the guide, across 14 subtopics. More from this topic
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Consumer objectives and the demand curve
State the law of demand.
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Other things being equal, as the price of a good rises the quantity demanded falls. -
Movements along and shifts of the demand curve
How does a rise in real incomes affect the demand curve for foreign holidays?
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Demand shifts to the right, because holidays are a normal good that households buy more of as they become better off. -
Movements along and shifts of the supply curve
Define an indirect tax.
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An indirect tax is a tax on spending that is collected by the seller and paid to the government, such as VAT or excise duty.
Paper 1, Paper 3
The Role of Credit in the Economy
121 questions in the guide, across 8 subtopics. More from this topic
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Banks and the channelling of savings into investment
What is meant by risk transformation by a bank?
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The bank absorbs the risk of individual loans by spreading its lending across many borrowers, so a saver's deposit is far safer than any single loan would be. -
Bank lending, interest rates and collateral
Why does offering collateral usually lower the interest rate a firm is charged?
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Collateral reduces the lender's loss in the event of default, so a smaller risk premium is needed and the loan can be priced more cheaply. -
Risk in business decision-making
What is meant by financial risk?
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Financial risk is the danger that a firm cannot meet its debts or interest payments, and it rises as the firm takes on more borrowing.
Paper 1, Paper 3
Market Failure and Government Intervention
91 questions in the guide, across 6 subtopics. More from this topic
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Private, external and social costs
Who is the third party when a factory discharges waste into a river?
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The anglers, water companies and residents downstream, who bear the cost of the pollution without taking any part in the factory's transactions. -
Private, external and social costs
Define welfare loss.
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Welfare loss is the loss of net benefit to society that results from producing at the free-market level of output rather than at the socially optimal level. -
Private, external and social benefits
Give two external benefits created when a firm trains its workforce.
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Other employers gain skilled staff when trained workers move on, and higher productivity raises output and tax revenue across the whole economy.
Paper 1, Paper 3
Revenue, Costs, Profits and Cash
131 questions in the guide, across 9 subtopics. More from this topic
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Sales volume and sales revenue
A firm's sales revenue is £81,000 and its selling price is £18 per unit. Calculate its sales volume.
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Sales volume is 4,500 units. -
Fixed, variable, total and average costs
A firm with fixed costs of £24,000 and a variable cost of £6 per unit produces 5,000 units. Calculate its average cost.
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Average cost is £10.80 per unit. -
Percentage change in revenue, costs and profit
A firm's sales volume of 12,000 units rises by 15%. Calculate the new sales volume.
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The new sales volume is 13,800 units.
Paper 2, Paper 3
Business Growth and Competitive Advantage
182 questions in the guide, across 14 subtopics. More from this topic
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Objectives of business growth
Why is brand recognition valuable to a growing business?
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A recognised brand reduces the effort consumers spend searching, builds loyalty and lowers the cost of winning each new customer. -
Internal and external economies of scale
Define minimum efficient scale.
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Minimum efficient scale is the lowest output at which a firm has exhausted its economies of scale and reaches its lowest long-run average cost. -
Corporate culture in a growing business
What is meant by a risk-taking culture?
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A risk-taking culture encourages staff to try new ideas and accepts that some will fail, which suits firms competing through innovation.
Paper 2, Paper 3
Firms, Consumers and Elasticities of Demand
139 questions in the guide, across 10 subtopics. More from this topic
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Calculating and interpreting price elasticity of demand
What does a price elasticity of demand of −0.3 tell a firm about the response to a price rise?
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Demand is highly inelastic, because a 1% rise in price reduces quantity demanded by only 0.3%. -
Factors influencing price elasticity of demand
How does the passage of time affect the price elasticity of demand for a good?
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Demand becomes more elastic over time as consumers find alternatives and change habits and equipment, so the long-run elasticity is larger than the short-run one. -
Price elasticity of demand and total revenue
A firm raises its price from £5 to £6 and monthly sales fall from 2,000 to 1,900 units. Calculate the change in total revenue.
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Total revenue rises from £10,000 to £11,400, an increase of £1,400.
Paper 2, Paper 3
Productive Efficiency
90 questions in the guide, across 6 subtopics. More from this topic
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Productivity, wages and competitiveness
Name three factors that influence labour productivity.
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The skills and training of the workforce, the quantity and quality of capital equipment, and worker motivation all influence labour productivity. -
Productivity, wages and competitiveness
Why can higher productivity allow a firm to pay higher wages without losing competitiveness?
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Each worker produces more, so the extra output covers the extra pay and the cost of each unit does not rise. -
Labour intensive and capital intensive production
State two advantages of capital intensive production.
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Output is consistent in quality, and machinery can run continuously without breaks or wages.
Paper 2, Paper 3
Life in a Global Economy
155 questions in the guide, across 11 subtopics. More from this topic
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Characteristics of globalisation
Why has world trade grown faster than world output over the last fifty years?
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Falling trade barriers and transport costs have made buying abroad cheaper, and firms have split production into global supply chains so components cross borders several times before the finished good is sold. -
Causes of globalisation over the last fifty years
Why was the opening up of China from the late 1970s so significant for globalisation?
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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. -
Growth in the UK and the BRIC economies
Why did growth in Brazil and Russia slow sharply in the middle of the 2010s?
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Both depend heavily on exporting commodities, so the fall in oil and other commodity prices from 2014 cut their export earnings and pushed them into recession.
Paper 2, Paper 3
The Economic Cycle
190 questions in the guide, across 13 subtopics. More from this topic
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The economic cycle: boom, slowdown, recession and recovery
What is a negative output gap?
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A negative output gap exists when actual output is below productive potential, leaving spare capacity and unemployed resources. -
Implications of the economic cycle for firms
Explain how the economic cycle affects a firm's investment decisions.
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Investment depends on expected future demand and on the cost and availability of finance, and both improve in a boom and deteriorate in a recession. -
Aggregate demand and its components
Explain how a rise in house prices affects consumption.
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Homeowners feel wealthier and can borrow against the higher value of their property, so they save less and spend more out of current income, which is the wealth effect.
Paper 2, Paper 3
Introduction to Macroeconomic Policy
104 questions in the guide, across 7 subtopics. More from this topic
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The main macroeconomic objectives
What is meant by full employment?
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Full employment is the situation in which everyone willing and able to work at the going wage has a job, so only frictional and some structural unemployment remains. -
The main macroeconomic objectives
What does a current account deficit mean?
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The country is spending more on imports and other outflows than it earns from exports and inflows, so the difference must be financed by borrowing or by selling assets abroad. -
Fiscal policy
Name two direct and two indirect taxes used in the UK.
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Income tax and corporation tax are direct taxes; value added tax and fuel duty are indirect taxes.
Paper 2, Paper 3
Globalisation
195 questions in the guide, across 14 subtopics. More from this topic
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The growing economic power of China and India
How do rising Chinese wages affect a Western firm that has manufactured there for twenty years?
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Its unit costs rise, so it must accept a thinner margin, raise prices, automate, or move production to a lower-wage economy such as Vietnam or Bangladesh. -
Africa and other emerging markets
Give two reasons a manufacturer might choose Vietnam over China for a new factory.
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Vietnamese wages are lower than Chinese wages, and producing outside China spreads the firm's political and tariff risk across more than one country. -
Nominal and real values
Nominal sales are £52 million and the price index has risen from 100 to 130 since the base year. Calculate real sales in base-year prices.
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Real sales are £52 million × 100 ÷ 130 = £40 million.
Paper 2, Paper 3
Economic Factors in Business Expansion
125 questions in the guide, across 9 subtopics. More from this topic
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Push factors: saturated markets and competition
Define market penetration.
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Market penetration is the proportion of the potential market that already buys the product, usually expressed as a percentage. -
Pull factors: economies of scale and risk spreading
How does exporting give a firm technical economies of scale?
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A larger total market justifies investing in specialised high-output machinery and dedicated production lines whose high fixed cost is then spread over many more units. -
Offshoring and outsourcing
Give three business activities that are commonly offshored.
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Call centre and customer service work, software development and IT support, and manufacturing assembly.
Paper 2, Paper 3
Impact of Globalisation on Global Companies
80 questions in the guide, across 6 subtopics. More from this topic
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Globalisation and glocalisation
Give two reasons a standardised global product can fail in a particular market.
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Local tastes, diets or climate may make it unsuitable, and local rules on ingredients, safety or labelling may prohibit it as designed. -
Globalisation and glocalisation
Which parts of the marketing mix are usually kept the same worldwide and which are usually adapted?
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The brand name, logo and core product concept are usually kept the same, while price, promotion, distribution and product detail are usually adapted to local conditions. -
Ethnocentric, polycentric and geocentric approaches to global markets
Give two disadvantages of an ethnocentric approach.
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The product may not suit local tastes or regulations, and local managers have little authority, so the firm responds slowly to what customers there actually want.
Paper 2, Paper 3
Impact of Globalisation on Local and National Economies
162 questions in the guide, across 11 subtopics. More from this topic
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Multinational corporations and local labour markets
Why might a multinational's presence worsen working conditions at local competing firms?
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Local firms facing lower-cost competition may try to survive by lengthening hours, using casual contracts or cutting spending on safety. -
Multinational corporations and local firms
What are forward linkages?
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Forward linkages arise when local firms use a firm's output as an input, or distribute, install and service its products. -
Multinationals, the local community and the environment
What two positive effects can a multinational have on a local community?
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It may fund schools, clinics, roads and sports facilities, and the wages it pays raise local demand and the tax receipts that support public services.
Paper 2, Paper 3
Global Labour Markets
84 questions in the guide, across 6 subtopics. More from this topic
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Growth of the global labour force and structural change
Why does an ageing population slow the growth of a country's labour force?
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More workers reach retirement than young people enter employment, so the working-age share of the population falls and the dependency ratio rises. -
Growth of the global labour force and structural change
Why does structural change cause unemployment even when the total number of jobs is unchanged?
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Workers released by declining industries often lack the skills the growing industries need and live far from where the new jobs are, so occupational and geographical immobility leaves them unemployed. -
The demand for and supply of labour
An extra worker adds 40 units a week to output and each unit sells for £6. Should the firm hire at a weekly wage of £220?
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The marginal revenue product is 40 × £6 = £240 a week, which exceeds the £220 wage, so hiring adds £20 a week to profit and the firm should hire.
Paper 2, Paper 3
Inequality and Re-Distribution
82 questions in the guide, across 5 subtopics. More from this topic
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Absolute and relative poverty and how they are measured
State the usual national definition of a household in relative low income.
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A household whose equivalised disposable income is below 60% of the contemporary median household income. -
Absolute and relative poverty and how they are measured
Give two reasons an income-only measure understates poverty.
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It ignores access to public services, housing quality and health, and it takes no account of wealth, debt or the different costs households face in different regions. -
Measuring inequality: the Lorenz curve and the Gini coefficient
Define the Gini coefficient.
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The Gini coefficient is the area between the line of equality and the Lorenz curve divided by the whole area beneath the line of equality.
Paper 1, Paper 3
Competition and Market Power
159 questions in the guide, across 12 subtopics. More from this topic
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Market structures across the spectrum of competition
What is a pure monopoly?
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A pure monopoly is a market supplied by a single firm, which therefore faces the whole of market demand itself. -
Perfect competition and what the model explains
Explain what freedom of entry and exit means for the way a market adjusts.
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Firms can move resources into a market where profits are high and out of one where they are low, so supply follows demand without long delay. -
Non-price competition and the limitations of perfect competition
What is product differentiation?
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Product differentiation makes a product distinct from its rivals in design, quality, image or service, whether or not the difference is a real one.
Paper 1, Paper 3
Market Power and Market Failure
93 questions in the guide, across 7 subtopics. More from this topic
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Cartels, collusion and restrictive practices
What is bid rigging?
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Bid rigging is where firms tendering for a contract agree in advance who will win and submit deliberately uncompetitive bids to make that bid look cheap. -
Cartels, collusion and restrictive practices
What is a leniency programme, and why does it work against cartels?
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A leniency programme cuts or removes the fine for the first cartel member to confess, which makes every member fear being reported first and destroys the trust the cartel needs. -
Monopsony, natural monopoly and power in the labour market
Why can monopsony power reduce supply in the long run?
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Squeezed margins leave suppliers unable to invest and drive some out of the industry, so future output and quality fall.
Paper 1, Paper 3
Market Failure Across the Economy
76 questions in the guide, across 5 subtopics. More from this topic
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Merit and demerit goods
Explain why information failure lies behind the under-consumption of merit goods.
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People cannot easily judge a benefit that will arrive decades later, so they discount it heavily and spend on immediate wants instead. -
Merit and demerit goods
How does addiction make the market for a demerit good fail?
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Addiction makes demand highly inelastic and the choice no longer fully voluntary, so consumers keep buying even when they understand the harm. -
Factor immobility and information failure
Why is capital sometimes immobile as well as labour?
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Specialised machinery and buildings often have no alternative use, so they lie idle rather than being redeployed when demand shifts.
Paper 1, Paper 3
Macroeconomic Policies and Impact on Firms and Individuals
170 questions in the guide, across 12 subtopics. More from this topic
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Aggregate demand and its components
What counts as investment when measuring aggregate demand?
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Investment is spending by firms on capital goods such as machinery, buildings, vehicles and technology, together with additions to stocks. -
Aggregate supply, full capacity output and the output gap
How does a large rise in the statutory minimum wage affect short-run aggregate supply?
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It raises wage costs for labour-intensive firms, shifting short-run aggregate supply to the left unless productivity rises to offset it. -
Shifts in AD and AS: inflation, unemployment and growth
Why is a leftward shift in aggregate supply especially awkward for policymakers?
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Inflation and unemployment worsen at the same time, so a policy tight enough to control the inflation deepens the fall in output and jobs.
Paper 1, Paper 3
Risk and the Financial Sector
128 questions in the guide, across 9 subtopics. More from this topic
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Risk and uncertainty in business decisions
Define a risk premium.
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A risk premium is the additional return an investor or lender requires in order to accept a riskier project or a less creditworthy borrower. -
Economic shocks and their impact on firms
Why is a firm with a long international supply chain more exposed to shocks?
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There are more separate points at which the chain can break, lead times are long so a disruption cannot be corrected quickly, and stock held between stages is rarely enough to absorb it. -
Exchange rate risk and forward markets
Distinguish between hedging and speculation.
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Hedging removes an exposure the firm already has in order to reduce risk, whereas speculation deliberately takes on an exposure in the hope of profiting from a price movement.
Edexcel A-Level Economics B Active Recall Guide
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