Scarcity, Choice and Potential Conflicts | Edexcel A-Level Economics B (9EB0)
Scarcity, Choice and Potential Conflicts
- 91 questions
- 6 subtopics
- Theme 1: markets, consumers and firms
- Paper 1 and Paper 3
Scarcity, Choice and Potential Conflicts is examined in Paper 1, Markets and how they work, and in Paper 3, The economic environment and business.
It covers scarcity and the economic problem, choice, trade-offs and opportunity cost, profit maximisation, sales maximisation and satisficing, survival, market share and other business objectives, stakeholders and their objectives and stakeholder conflicts and corporate social responsibility.
Sample questions from Scarcity, Choice and Potential Conflicts
Answer each one closed book first, then open the answer.
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Scarcity and the economic problem
Are economic resources the same thing as money?
Show the answer
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?
Show the answer
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.
Show the answer
The cash tied up in unsold stock could have earned a return elsewhere, for example in new equipment or in an interest-bearing account. -
Choice, trade-offs and opportunity cost
Why does opportunity cost matter to a producer choosing between two investment projects?
Show the answer
Because capital committed to one project cannot fund the other, so the returns forgone on the rejected project are the true cost of the decision. -
Profit maximisation, sales maximisation and satisficing
Why might a manager prefer sales maximisation to profit maximisation?
Show the answer
Because pay, status and job security are often tied to the size of the firm rather than to the profit it makes. -
Profit maximisation, sales maximisation and satisficing
What is the principal-agent problem?
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It is the conflict that arises when agents such as managers take decisions on behalf of principals such as shareholders but pursue their own objectives instead. -
Survival, market share and other business objectives
How can a firm pursuing cost efficiency still lose customers?
Show the answer
Cutting costs can reduce quality or service, so consumers switch to rivals even though the price has fallen. -
Survival, market share and other business objectives
How might a firm measure customer satisfaction?
Show the answer
It can track repeat purchase rates, complaint numbers, product returns and survey scores.
The 6 subtopics
One subtopic is one session. Work down the list.
| Subtopic | What it covers | Questions |
|---|---|---|
| Scarcity and the economic problem | Scarcity as the fundamental economic problem, the three questions every economy must answer, wants against needs, economic resources, free and economic goods, scarcity for a single firm, population growth and economic growth, finite and renewable resources, and rationing. | 14 |
| Choice, trade-offs and opportunity cost | Opportunity cost and the next best alternative, trade-offs and how they differ from opportunity cost, the opportunity cost of choices by students, firms and government, the consumer's budget constraint, price against quality and wages against profit, spare capacity, and accounting cost against economic cost. | 17 |
| Profit maximisation, sales maximisation and satisficing | Profit maximisation and its marginal condition, why firms pursue it, sales maximisation and why managers or new entrants prefer it, revenue against sales volume maximisation, satisficing, the divorce of ownership from control, the principal-agent problem and asymmetric information, and the risks of chasing sales. | 16 |
| Survival, market share and other business objectives | Survival as a start-up objective, market share and calculating it, cost efficiency, return on investment and calculating it, employee welfare, customer satisfaction, social objectives and social enterprises, and why objectives change as a firm grows. | 16 |
| Stakeholders and their objectives | Stakeholders and the main groups, internal against external stakeholders, the objectives of shareholders, employees, customers, suppliers, local communities, government and banks, the stakeholder view against the shareholder view, managers as a separate group, stakeholder mapping, and unequal influence. | 14 |
| Stakeholder conflicts and corporate social responsibility | Stakeholder conflict over wages, prices, supplier payment terms, moving production abroad, the local community and short-run profit against long-run investment, ways to reduce conflict, corporate social responsibility in practice, its effect on long-run profit, the shareholder criticism, greenwashing, and competitive pressure. | 14 |
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.
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Step 1 · Closed book
Cover the answers. Work through one subtopic and write down what you can. Leave blanks where you have nothing.
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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.
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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.
Nearby topics
Edexcel A-Level Economics B Active Recall Guide
Every topic, not just this one. 2,933 questions with their answers.