1 · Scarcity and economic choices
scarcity · opportunity cost
U1-Q1 · 2 marks
What is the opportunity cost of opening the studio?
Answer and reasoning
The useful study time from the rejected study room.
U1-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: A school has one empty room. It can become a music studio or a quiet study room. The choice costs the benefit of the best rejected use, even when no money changes hands.
Answer and reasoning
The school values the study room at 50 useful study hours a week and the studio at 30 rehearsal hours. Choosing the studio sacrifices the study room: its opportunity cost is the 50 study hours, not the sum of both outcomes.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
Do not call every expense an opportunity cost. Identify the next-best alternative and its benefit. / A point inside a boundary may show unemployment or inefficient use, rather than fewer resources.
2 · Markets and elasticity
elasticity · equilibrium
U2-Q1 · 2 marks
Which description fits the café data if other factors stay unchanged?
Answer and reasoning
Demand is price elastic over this change; total revenue falls.
U2-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: A café raises the price of a drink from 10 to 11 yuan and sales fall from 100 to 80 cups. Did customers move along demand, or did their preferences change?
Answer and reasoning
Using initial values, percentage price change is 10% and percentage quantity change is −20%. PED = percentage quantity change percentage price change = −20/10 = −2. Revenue falls from 1,000 to 880 yuan.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
State the percentage-change convention and interpret the magnitude. A negative sign describes the usual inverse relationship. / Do not claim the whole curve has one elasticity, or confuse a change in quantity demanded with a demand shift.
3 · Externalities and intervention
externality · subsidy
U3-Q1 · 2 marks
Why can the delivery market produce too many night journeys?
Answer and reasoning
The firm does not face the full external noise cost in its private decision.
U3-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: A delivery firm saves fuel costs by using noisy scooters late at night. Neighbours lose sleep. The firm's accounts omit a cost borne by people outside the transaction.
Answer and reasoning
A per-journey charge can make the firm face part of the noise cost and reduce night deliveries. A time restriction targets the noise more directly, but may reduce access for customers and needs enforcement.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
A tax does not remove every external cost. Its effect depends on responsiveness, measurement and evasion. / Compare policies against the actual problem, not a claim that all government action succeeds.
4 · Production, costs and growth
productivity · profit
U4-Q1 · 2 marks
What is average total cost at 100 loaves?
Answer and reasoning
5 yuan per loaf.
U4-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: Two bakeries make the same bread, but one trains each worker for a specialist task. Higher output per worker can lower cost, while repetitive work can harm motivation.
Answer and reasoning
A bakery has fixed costs of 200 yuan and variable cost of 3 yuan per loaf. At 100 loaves, total cost = 200 + 3 × 100 = 500 yuan. At 8 yuan per loaf, revenue = 8 × 100 = 800 yuan and profit = 800 − 500 = 300 yuan.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
Economies of scale lower long-run average cost as scale increases; they are not simply a higher total profit. / Coordination problems and slow communication can cause diseconomies in a large business.
5 · Competition and labour
monopoly · labour demand
U5-Q1 · 2 marks
What tends to happen when labour demand rises and labour supply is unchanged?
Answer and reasoning
The market wage tends to rise.
U5-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: A town has one broadband supplier but ten food stalls. Customers' alternatives change each firm's ability to raise its price.
Answer and reasoning
A new employer raises demand for local electricians. With unchanged supply, their wage tends to rise. A training programme can later increase skilled labour supply and reduce shortages.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
A large firm is not automatically a monopoly, and monopoly does not guarantee high profit. / A wage comparison must consider skills, working conditions, hours and institutions, not one cause alone.
6 · Government objectives and policies
inflation · fiscal policy
U6-Q1 · 2 marks
What does a fall in inflation from 8% to 3% usually mean?
Answer and reasoning
The general price level is still rising, but more slowly.
U6-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: Household prices rise while some workers lose jobs. A policy that raises spending may help employment but add pressure to prices.
Answer and reasoning
If nominal GDP rises by 8% while prices rise by 5%, real growth is about 3%. Lower interest rates may raise investment and consumption, but borrowers must be willing and able to respond.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
Slower inflation means prices rise more slowly, not that prices fall. / Judge a policy by time lags, spare capacity, public finances and the source of inflation.
7 · Trade and exchange rates
exchange rate · tariff
U7-Q1 · 2 marks
Which change has occurred in the book example?
Answer and reasoning
The yuan depreciates and the yuan price of the dollar-priced book rises.
U7-Q2 · 4 marks
Explain the mechanism or reasoning in this original case: A student buys a book priced at 20 dollars. The exchange rate changes from 7 to 8 yuan per dollar. The same foreign price now costs more in yuan.
Answer and reasoning
The book cost is 20 × 7 = 140 yuan before, and 20 × 8 = 160 yuan after. The yuan has depreciated against the dollar under this quotation; imported goods become more expensive in yuan.
- Accurate relevant concept (1)
- Specific evidence from the case (1)
- Connected reasoning (2)
Always state the quotation before calling a currency stronger. / Export competitiveness also depends on imported inputs, demand, quality and contracts, so depreciation is not a guaranteed solution.