Economics 2281 · O Level · The nature of the economic problem
The nature of the economic problem — practice question
Bank deposits in Dubai increased by 40% in 2013. An increasing number of financial firms are setting up in Dubai. Expansion in the financial sector is being matched by horizontal mergers among financial companies, and workers are becoming more specialised. The economy is becoming wealthier, yet the economic problem will never be solved in Dubai or anywhere else in the world.
(a)[2]
Why is it impossible for the economic problem ever to be solved?
(b)[4]
Explain two reasons why specialisation by workers can reduce the average cost of production.
(c)[6]
Analyse how greater bank lending can boost economic growth.
(d)[8]
Discuss whether horizontal mergers are beneficial to consumers.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Human wants are endless” …