Economics 0455 · IGCSE · The nature of the economic problem
The nature of the economic problem — practice question
Space missions beyond Earth confront the same fundamental economic problem as those on Earth. The African Space Agency was set up to strengthen science and technology across Africa. It also seeks to coordinate trade among African countries so as to support technological development. This could improve domestic markets. In 2021, total government spending on this agency exceeded $500 million.
(a)[2]
Define what is meant by the basic economic problem.
(b)[4]
Explain the way in which a market allocates resources.
(c)[6]
Analyse the advantages a country may gain from exporting to and importing from other countries.
(d)[8]
Discuss the extent to which a rise in government spending will benefit an economy.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Scarce resources compared with unlimited wants” …