Pearson Edexcel GCE A Level In Economics A
(9ECO) Paper 01 Markets and Business Behaviour
Question paper and Marking scheme June
2025|100+ (this practice paper contains 110
multiple-choice questions)
PEARSON EDEXCEL GCE A LEVEL
SECTION A: THE NATURE OF ECONOMICS (Qs 1–10)
1. Which of the following is a positive economic statement?
A. The government should reduce income tax for low earners.
B. A rise in interest rates will reduce consumer spending.
C. Inequality is the most serious economic problem.
D. Firms ought to prioritise workers’ welfare over profits.
Answer: B
Rationale: Positive statements are factual and testable. B predicts an effect of interest rates.
A, C, D are normative (value judgments).
2. The fundamental economic problem arises because:
A. Resources are finite and wants are infinite.
B. Technology always reduces scarcity.
C. Markets always fail to allocate efficiently.
D. Governments cannot plan effectively.
,Answer: A
Rationale: Scarcity → limited resources vs unlimited wants → need for choice.
3. Which factor of production earns interest as a reward?
A. Land
B. Labour
C. Capital
D. Enterprise
Answer: C
Rationale: Capital → interest; land → rent; labour → wages; enterprise → profit.
4. A production possibility frontier (PPF) shifts outwards due to:
A. Higher unemployment.
B. Technological improvement in one sector.
C. A fall in the labour force.
D. Inefficient resource allocation.
Answer: B
Rationale: Technological progress increases productive capacity → outward shift.
5. Opportunity cost of producing an additional unit of good X is:
A. The money cost of inputs.
B. The value of the next best alternative foregone.
C. The total cost divided by output.
D. The average fixed cost.
Answer: B
Rationale: Definition of opportunity cost.
6. A command economy relies mainly on:
A. Price signals and profit motives.
B. Central planning and government ownership.
C. Free international trade.
D. Consumer sovereignty.
, Answer: B
Rationale: Command economy → state allocates resources.
7. Ceteris paribus means:
A. After this, therefore because of this.
B. All other things held constant.
C. As one increases, the other decreases.
D. In the long run.
Answer: B
Rationale: Latin for “other things equal”.
8. Which is not a function of money?
A. Medium of exchange
B. Store of value
C. Unit of account
D. Factor of production
Answer: D
Rationale: Factor of production = land, labour, capital, enterprise.
9. Specialisation and trade between countries leads to:
A. Lower total output.
B. Higher average costs.
C. Increased efficiency and output.
D. Reduced interdependence.
Answer: C
Rationale: Comparative advantage → gains from trade.
10. In a free market, resource allocation is determined by:
A. Government quotas.
B. Price mechanism.
C. Trade unions.
D. Central bank policy.
(9ECO) Paper 01 Markets and Business Behaviour
Question paper and Marking scheme June
2025|100+ (this practice paper contains 110
multiple-choice questions)
PEARSON EDEXCEL GCE A LEVEL
SECTION A: THE NATURE OF ECONOMICS (Qs 1–10)
1. Which of the following is a positive economic statement?
A. The government should reduce income tax for low earners.
B. A rise in interest rates will reduce consumer spending.
C. Inequality is the most serious economic problem.
D. Firms ought to prioritise workers’ welfare over profits.
Answer: B
Rationale: Positive statements are factual and testable. B predicts an effect of interest rates.
A, C, D are normative (value judgments).
2. The fundamental economic problem arises because:
A. Resources are finite and wants are infinite.
B. Technology always reduces scarcity.
C. Markets always fail to allocate efficiently.
D. Governments cannot plan effectively.
,Answer: A
Rationale: Scarcity → limited resources vs unlimited wants → need for choice.
3. Which factor of production earns interest as a reward?
A. Land
B. Labour
C. Capital
D. Enterprise
Answer: C
Rationale: Capital → interest; land → rent; labour → wages; enterprise → profit.
4. A production possibility frontier (PPF) shifts outwards due to:
A. Higher unemployment.
B. Technological improvement in one sector.
C. A fall in the labour force.
D. Inefficient resource allocation.
Answer: B
Rationale: Technological progress increases productive capacity → outward shift.
5. Opportunity cost of producing an additional unit of good X is:
A. The money cost of inputs.
B. The value of the next best alternative foregone.
C. The total cost divided by output.
D. The average fixed cost.
Answer: B
Rationale: Definition of opportunity cost.
6. A command economy relies mainly on:
A. Price signals and profit motives.
B. Central planning and government ownership.
C. Free international trade.
D. Consumer sovereignty.
, Answer: B
Rationale: Command economy → state allocates resources.
7. Ceteris paribus means:
A. After this, therefore because of this.
B. All other things held constant.
C. As one increases, the other decreases.
D. In the long run.
Answer: B
Rationale: Latin for “other things equal”.
8. Which is not a function of money?
A. Medium of exchange
B. Store of value
C. Unit of account
D. Factor of production
Answer: D
Rationale: Factor of production = land, labour, capital, enterprise.
9. Specialisation and trade between countries leads to:
A. Lower total output.
B. Higher average costs.
C. Increased efficiency and output.
D. Reduced interdependence.
Answer: C
Rationale: Comparative advantage → gains from trade.
10. In a free market, resource allocation is determined by:
A. Government quotas.
B. Price mechanism.
C. Trade unions.
D. Central bank policy.
