The nature of the basic economic problem
1.1What the syllabus asks of you
- Finite resources and infinite wants: definition of the basic economic problem
- Finite resources and infinite wants: the concept of scarcity
- Finite resources and infinite wants: examples of the basic economic problem in the context of: consumers; workers; producers/firms; governments
- Resource allocation decisions The three basic economic questions which determine resource allocation: what to produce
- Resource allocation decisions The three basic economic questions which determine resource allocation: how to produce
- Resource allocation decisions The three basic economic questions which determine resource allocation: who to produce for
- Economic goods and free goods: the difference between economic goods and free goods
Read the notes first
Chapter 1: The nature of the basic economic problem
Drill this topic
Every question on The nature of the basic economic problem, untimed, marked as you go.
Make a worksheet
Choose the years and how many questions, then print it with the answers on separate pages.
26 questions
1May / June 2026 · Paper 11 · Q1Show mark scheme →
Abanning the import of raw materials
Bborrowing money to purchase more defence equipment
Cintroducing maximum prices for essential goods
Dsubsidising firms to discover more natural resources
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2May / June 2026 · Paper 12 · Q1Show mark scheme →
AHeadphones given away with a new mobile phone.
BMachinery bought with a 0% interest bank loan.
CSunshine that powers a solar energy farm.
DWater that has been purified and bottled.
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3Oct / Nov 2025 · Paper 12 · Q1Show mark scheme →
APeople in the country cannot afford healthcare.
BPeople in the country would go abroad for healthcare.
CThe government cannot agree how big the hospital should be.
DThe government does not have enough money.
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4Oct / Nov 2025 · Paper 12 · Q4Show mark scheme →
Amacroeconomics: study of demand for a product; microeconomics: study of price of a product
Bmacroeconomics: study of behaviour of firms; microeconomics: study of individual behaviour
Cmacroeconomics: study of the economy as a whole; microeconomics: study of specific markets
Dmacroeconomics: study of the international economy; microeconomics: study of the national economy
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5Oct / Nov 2024 · Paper 12 · Q1Show mark scheme →
AFor whom will we produce?
BHow will we produce?
CWhat will we produce?
DWhen will we produce?
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6Oct / Nov 2024 · Paper 13 · Q1Show mark scheme →
AConsumer wants for gold are limited.
BGold is a limited resource.
COnly governments can sell gold.
DThere is an unlimited supply of gold.
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7May / June 2024 · Paper 11 · Q1Show mark scheme →
Afree samples of a new product
Bhealth services provided by the state
Csecond-hand clothing
Dsunlight
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8May / June 2024 · Paper 12 · Q1Show mark scheme →
AThere are high costs of production.
BThere are low levels of education.
CThere are unlimited resources.
DThere are unlimited wants.
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9Oct / Nov 2023 · Paper 12 · Q1Show mark scheme →
AEconomic goods are not scarce.
BEconomic goods have no opportunity cost.
CFree goods are scarce.
DFree goods have no opportunity cost.
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10Oct / Nov 2023 · Paper 12 · Q27Show mark scheme →
Ato improve the balance of payments in the following year
Bto increase current government income
Cto maintain future living standards
Dto raise the level of employment in the oil industry
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11May / June 2023 · Paper 11 · Q1Show mark scheme →
Ahigh employment levels
Bhigh investment levels
Cunlimited resources
Dunlimited wants
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12May / June 2023 · Paper 12 · Q1Show mark scheme →
Ahigh levels of taxation
Blow levels of investment
Cunequal distribution of income
Dunlimited consumer wants
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13May / June 2022 · Paper 12 · Q1Show mark scheme →
Adefence
Beducation
Chealth services
Dsunshine
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14Oct / Nov 2021 · Paper 12 · Q1Show mark scheme →
AOil is a limited resource.
BOil is expensive.
CThe exploration involves demand and supply.
DThere are external costs involved in production.
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15Oct / Nov 2021 · Paper 13 · Q1Show mark scheme →
AOil is a limited resource.
BOil is expensive.
CThe exploration involves demand and supply.
DThere are external costs involved in production.
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16Oct / Nov 2020 · Paper 12 · Q1Show mark scheme →
Alimited needs and wants
Bthe existence of finite resources
Cthe existence of free goods
Dthe market mechanism
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17Oct / Nov 2020 · Paper 13 · Q1Show mark scheme →
AAdvertising encourages consumer spending.
BConsumers have unlimited incomes.
CConsumer wants cannot all be satisfied with their income.
DNot all products will be attractive to consumers.
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18May / June 2020 · Paper 11 · Q1Show mark scheme →
AA farm owner buys a television.
BA farm owner buys additional land.
CA farm owner buys fertiliser for their crops.
DA farm owner buys some farming equipment.
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19May / June 2020 · Paper 12 · Q4Show mark scheme →
Acosts and revenues of a firm
Bindividual consumer behaviour
Cpolicies for economic growth
Dwages for different occupations
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20Oct / Nov 2019 · Paper 13 · Q1Show mark scheme →
AThe resource does not renew itself.
BThe supply of the resource is greater than demand.
CThere is no opportunity cost for the resource.
DThere is unlimited supply of the resource.
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21Oct / Nov 2018 · Paper 12 · Q2Show mark scheme →
Aequal balance between public and private sectors
Bequal reward for equal effort
Cincreased competition in the use of resources
Doptimum allocation of finite resources
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22Oct / Nov 2018 · Paper 13 · Q2Show mark scheme →
Aexternal cost
Bmarket system
Cperfectly inelastic supply
Dscarcity
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23May / June 2018 · Paper 11 · Q3Show mark scheme →
Aclimate change and global warming
Bsignificant quantities of unemployed resources
Cuneven distribution of income and wealth
Dunlimited wants in relation to limited resources
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24May / June 2018 · Paper 12 · Q1Show mark scheme →
ASunlight is a gift of nature.
BSunlight is a renewable resource.
CThere is no opportunity cost of using sunlight.
DUnlimited amounts of sunlight can be consumed.
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25May / June 2017 · Paper 11 · Q1Show mark scheme →
Abigger families, less food, starvation
Bfalling supply, rising demand, shortage
Chigher population, fewer jobs, unemployment
Dlimited resources, unlimited wants, scarcity
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26May / June 2016 · Paper 12 · Q3Show mark scheme →
AA government provides accommodation for all those who are homeless.
BA police force has a lengthening list of unsolved crimes.
CJanitha hands her homework in at the last permitted deadline.
DMusa completes his journey without putting petrol in his car.
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