Economics 9708 · AS & A Level
Behavioural economics
100 practice questions on Behavioural economics, with worked solutions and instant marking.
What is one example of market failure?
Feb/March 2016
For what reason would an economy want to achieve economic efficiency?
Feb/March 2016
The present allocation of goods between two people in a two-person economy, given the technology and resources available, is shown at point X. Using the Pareto criterion, which point would certainly show a rise in allocative efficiency?
Feb/March 2016
‘The most effective way to raise economic welfare is to encourage competition in a market system.' Consider whether you agree with this view.
Feb/March 2016
What could assist in achieving allocative efficiency?
Feb/March 2017
What might prevent a market failure?
Feb/March 2017
A society that claims to value efficiency must give up the idea of using a market system to allocate resources. Markets exist only for self-interest and are never efficient. Discuss whether economic analysis supports this view.
Feb/March 2017
What is the main difficulty linked to a government supplying the precise quantity of a public good directly?
Feb/March 2018
Across all market structures, what must firms make equal to ensure allocative efficiency?
Feb/March 2018
What does economic growth per capita in real terms mean?
Feb/March 2018
Explain what is meant by equity, allocative efficiency and Pareto optimality. Consider whether a link exists between them.
Feb/March 2018
The diagram presents a firm’s cost and revenue curves. At what price does allocative efficiency occur?
Feb/March 2019
Why does the government provide national defence?
Feb/March 2021
As time passes, a firm’s average total cost curve falls. What form of efficiency does this show?
Feb/March 2021
Which statement about cartels is correct?
Feb/March 2021
Explain what is meant by ‘a free market organises economic resources for the benefit of everyone’.
Feb/March 2021
‘A firm in a perfectly competitive market can make either a supernormal profit or a loss in the short run but will only make normal profit in the long run.’ Assess whether this statement is true.
Feb/March 2021
At what point is the price mechanism least likely to move resources in response to a shift in consumer preferences?
Feb/March 2022
What can be inferred about an economy in which nobody can be made better off without making another person worse off?
Feb/March 2022
What is usually linked to the principal-agent problem?
Feb/March 2022
The diagram presents the average cost (AC), marginal cost (MC), average revenue (AR) and marginal revenue (MR) curves for a monopoly. At what point is allocative efficiency reached?
Feb/March 2022
When the marginal cost of a good is below its price, allocative efficiency has not been reached. What is likely to correct this?
Feb/March 2023
What is most likely to encourage dynamic efficiency?
Feb/March 2023
A landlord owns a house that is let to tenants. The tenants must pay the electricity and water bills. The landlord must decorate and repair any damage to the house and its gardens. What is not an illustration of the principal-agent problem?
Feb/March 2023
Evaluate the statement below.
Feb/March 2023
What causes the underconsumption of merit goods?
Feb/March 2024
Identify what caused the rise in the electricity prices and explain whether the article shows that the price rise was an example of market failure.
Feb/March 2024
Explain the difference between a public good and a private good (economic good), and assess the extent to which a beach can be regarded as a public good.
Feb/March 2025
Give one example of market failure.
Feb/March 2025
Discuss the assertion that the market system is unable to allocate resources efficiently.
May/June 2005
Large organisations do not face competition. Therefore, there is no choice. Small competitive businesses are a better way of meeting consumers’ needs. Do you agree with this argument?
May/June 2006
Explain the meaning of productive and allocative efficiency.
May/June 2007
Discuss whether this pricing approach can be justified by theory.
May/June 2008
Using a diagram, explain why some goods are produced in quantities that are greater than is socially desirable.
May/June 2010
Which statement about efficiency is correct?
May/June 2010
A market that is competitive changes into a monopoly. What is most likely to occur?
May/June 2010
Which of the following statements about efficiency is correct?
May/June 2010
If a competitive market changes into a monopoly, what is likely to occur?
May/June 2010
Which statement concerning efficiency is correct?
May/June 2010
Explain what is understood by an efficient market equilibrium.
May/June 2010
Explain why producers are usually the winners while consumers are usually the losers when market failure occurs.
May/June 2010
Explain why producers are usually the winners and consumers are usually the losers when market failure occurs.
May/June 2010
What feature sets a public good apart from private goods?
May/June 2011
Global stocks of cod are now at risk because of over-fishing, while supplies of the less popular Alaskan pollock are abundant. In what way might the price mechanism work to reduce the depletion of fish stocks?
May/June 2011
Which characteristic sets a public good apart from private goods?
May/June 2011
Discuss whether economic efficiency can be improved when governments regulate and provide goods and services in the presence of market failure.
May/June 2011
What is the reason that the government has to fund the production of public goods?
May/June 2012
Why must the government finance the production of public goods?
May/June 2012
What condition has to be satisfied for economic efficiency to be achieved?
May/June 2012
The diagram presents the long-run cost and revenue curves for a monopolist. Which output level meets the condition for an efficient allocation of resources?
May/June 2012
At what point is economic efficiency attained in an economy?
May/June 2012
A product creates external benefits and is made under conditions of imperfect competition. Which statement must be true?
May/June 2012
The diagram illustrates a monopolist’s long-run cost and revenue curves. Which output level meets the requirement for an efficient allocation of resources?
May/June 2012
What condition has to be satisfied for economic efficiency to be achieved?
May/June 2012
Explain the distinction between productive and allocative efficiency and discuss the suggestion that such efficiencies can be achieved only through government intervention.
May/June 2012
Achieving economic efficiency in the use of resources is essential. This can only be achieved if the private sector is expanded. Government intervention in the economy should, therefore, be kept to a minimum. To what extent do you support this view?
May/June 2012
Explain how productive efficiency differs from allocative efficiency, and discuss the claim that such efficiencies can be achieved only through government intervention.
May/June 2012
Improvements in technology are causing several goods that are commonly regarded as public goods, such as television broadcasting, to become private goods. Why could this happen?
May/June 2013
A firm is operating in a perfectly competitive market. Which link between the firm’s cost and revenue shows a situation in which allocative efficiency would improve if the firm cut its current output level?
May/June 2013
The market system is not able to allocate resources efficiently. Discuss this view.
May/June 2013
The diagram illustrates how an industry’s production cost changes when it shifts from perfect competition to monopoly. The demand for the industry’s product stays unchanged. How will this move in market structure affect price, output and consumer surplus in this industry?
May/June 2014
The diagram illustrates the cost and revenue curves for a profit-maximising monopolist. Which area represents the deadweight loss caused by the use of monopoly power?
May/June 2014
Which option is not a policy intended to correct market failure?
May/June 2014
The diagram illustrates the cost and revenue curves for a monopolist maximising profit. Which area shows the deadweight loss caused by the use of monopoly power?
May/June 2014
There are worries about conserving the environment, avoiding waste, and using resources efficiently. Economic theory is clear about how resources should be allocated efficiently in a market, yet in practice this is difficult. Discuss this view.
May/June 2014
People worry about environmental conservation, avoiding waste, and the efficient use of resources. Economic theory is straightforward about how resources should be allocated efficiently in a market, yet in practice this is difficult. Discuss this opinion.
May/June 2014
Using examples, explain the distinction between merit goods and public goods and show why profit can be earned from supplying one of these types of good but not the other.
May/June 2015
To cut milk production, every producer is allocated a quota that restricts the quantity of milk each producer may produce. At first, these quotas are not tradable. What effect would allowing the producers to trade the quotas with one another have on the total amount of milk produced and on the combined profits of milk producers?
May/June 2015
What does not have to create a possible threat to allocative efficiency in a market economy?
May/June 2015
At what point is economic efficiency attained in an economy?
May/June 2015
International conferences have taken place to examine the effects of global warming and to persuade governments to agree to improve efficiency in the use of resources by limiting the quantity of harmful gases produced by their country. Explain what is meant by an efficient use of resources and discuss whether efficiency can only be achieved if governments are involved.
May/June 2015
Identify two areas of microeconomic theory that rely on the idea of equilibrium, and explain how equilibrium is reached in each one.
May/June 2015
Which government-provided service could be explained using the concept of public goods?
May/June 2016
Use examples to show the distinction between private goods and public goods, and explain why only private goods will be provided in a free market economy.
May/June 2016
If a business raises its output, under what circumstances will this produce efficiency?
May/June 2016
Joshua and Ruth are the sole inhabitants of a remote island. In the diagram, line XY represents the greatest quantity of goods available to Joshua and Ruth, while line OE shows points of equal distribution of the goods. Relative to the original point I, which point would show a rise in economic welfare under the Pareto Efficiency Criterion?
May/June 2016
Which action taken by a firm is most likely to increase its dynamic efficiency?
May/June 2016
In a two-person economy with the stated technology and resources, the present allocation of goods between the two individuals is at point X. Under the Pareto criterion, which point would certainly show a higher level of allocative efficiency?
May/June 2016
Which statement is not normally linked to the achievement of economic efficiency?
May/June 2016
Do you agree with this statement?
May/June 2016
‘Government economic policy rests on the belief that people cannot be relied on to choose what is beneficial for them, but instead sometimes make choices that are harmful to themselves or damaging to the environment (or both). Therefore a free market cannot allocate resources efficiently.’ Do you agree with this view?
May/June 2016
Private sector developers have identified gas supplies that could be profitable and suggested a new extraction technique that would involve drilling in some areas of natural beauty. They claim that a country's resources ought to be used efficiently. Consider whether they may mean the same thing as economists when they refer to the efficient use of resources, and whether private organisations can in practice achieve this kind of economic efficiency.
May/June 2016
What would stop the market mechanism from carrying out its rationing function?
May/June 2017
From the privatisation of train and bus services, what result would supporters of a nationalised public transport service be most likely to anticipate?
May/June 2017
What is one example of market failure?
May/June 2017
What is one essential condition for achieving productive efficiency?
May/June 2017
In an economy with two people, X earns $100 and Y earns $50. Under the Pareto criterion, which change in income would count as a clear improvement in economic welfare?
May/June 2017
‘Inefficiency in the use of resources does not arise because the market cannot operate. It arises because government intervenes in a system that is better left to its own workings.’ (Source: RSA Journal, Issue 4, 2013) Discuss this opinion.
May/June 2017
Explain the benefits that may arise in a more competitive market than in a monopolised market.
May/June 2017
Firms ought to be free to produce in whatever way they choose, and consumers should be free to buy whatever they think they want. Discuss whether this is the most effective way of securing an efficient use of an economy’s resources.
May/June 2017
Under what conditions does the price mechanism cease to operate as a system for allocating goods?
May/June 2018
A firm switches its aim from profit maximisation to producing at the allocatively efficient output. Under which market structure would this lead to the smallest change in economic welfare?
May/June 2018
What is one example of market failure?
May/June 2018
The diagram illustrates a firm’s long-run cost and revenue curves. At what output level is the firm both allocatively efficient and productively efficient?
May/June 2018
The table presents some of the costs and benefits, in $ millions, linked to a road-building project. A government department and a profit-maximising private firm are both thinking about constructing the road. Which of them would be prepared to build the road?
May/June 2018
What is a key characteristic of the principal-agent problem?
May/June 2018
A dictionary gives efficiency as ‘the power to produce the result intended’. Explain what is meant by reaching economic efficiency and why this achievement is regarded as important.
May/June 2018
Consider how far this statement is accurate.
May/June 2018
What is not likely to happen as the supply of public goods increases?
May/June 2019
At what point can an economy be described as economically inefficient?
May/June 2019