Component 1: Economic Principles · A520U10-1
Eduqas A-level Component 1, June 2025
All 8 written questions and 20 multiple choice questions from Eduqas A-level Component 1 (June 2025), Component 1: Economic Principles. Each question shows its marks and topic, and opens the question paper and mark scheme at the right page.
Section A
Q1
Which of the following is the best example of expansionary fiscal policy?
- ACentral Bank purchases of existing government bonds from financial markets
- BA cut in base interest rate
- CAn increase in corporation tax rate
- DA cut in the personal income tax allowance
- EAn increase in public sector road building
Show the answer
The answer is E.
TopicThe financial sectorMacroeconomic objectives and policyGovernment intervention in markets
Q2
A commodity was priced at $200 per kilo in 2023 and this formed the base year of a price index for this commodity (index in base year = 100). By 2025 the commodity was priced at $320 per kilo. What is the price index for the commodity in 2025?
- A60
- B120
- C137.5
- D160
- E220
Show the answer
The answer is D.
Q3
If demand rises for a profit maximising firm operating under conditions of monopolistic competition, which of the following effects for the firm are most likely in the short run?
- ATotal revenue: Rises; Total costs: Rises; Total profit: Rises
- BTotal revenue: Rises; Total costs: Rises; Total profit: No change
- CTotal revenue: No change; Total costs: No change; Total profit: No change
- DTotal revenue: Rises; Total costs: Falls; Total profit: Falls
- ETotal revenue: Falls; Total costs: Falls; Total profit: Falls
Show the answer
The answer is A.
TopicCosts, revenues and profitDemand, supply and elasticityMarket structures
Q4
If a central bank engages in a policy of reversing quantitative easing, also known as quantitative tightening, this is most likely to:
- ARaise long-term interest rates
- BDecrease bond yields
- CIncrease the money supply
- DLower short-term interest rates
- EDecrease the national debt Questions 5 and 6 refer to the diagram below. The diagram below shows a firm's revenue and cost curves. £ AC AR MR 0 Output 0 10 20 30 40 50 60 70 80 90 100
Show the answer
The answer is A.
TopicMacroeconomic objectives and policyCosts, revenues and profitThe financial sector
Q5
Questions 5 and 6 use a diagram in the question paper showing a firm's AC, AR and MR curves (output 0 to 100). What is the level of abnormal profit at the firm's allocatively efficient output?
- A£0
- B£160
- C£250
- D£330
- E£720
Show the answer
The answer is B.
Q6
Questions 5 and 6 use a diagram in the question paper showing a firm's AC, AR and MR curves (output 0 to 100). What are the firm's total costs at the profit maximising output?
- A£150
- B£250
- C£275
- D£350
- E£600
Show the answer
The answer is D.
Q7
The table below gives information on two products, X and Y. Product X: selling price £20, demand 1000 per week. Product Y: selling price £15, demand 1500 per week. The cross price elasticity of demand for Y with product X is -1.5. If the price of product X fell to £18, the change in the weekly demand for product Y would be:
- AA decrease of 225 units
- BA decrease of 150 units
- CAn increase of 45 units
- DAn increase of 150 units
- EAn increase of 225 units
Show the answer
The answer is E.
Q8
The diagram in the question paper shows a firm's total costs at different output levels (output 0 to 90, costs £0 to £70 000). Which of the following is true?
- AThe average fixed cost of producing 50 units is £10 000
- BThe average variable cost of producing 50 units is £800
- CThe average fixed cost of producing 20 units is £200
- DThe average total cost of producing 20 units is £600
- EThe average variable cost of producing 20 units is £800
Show the answer
The answer is B.
Q9
Factors which will affect the elasticity of demand for labour include all the following except:
- ALabour costs as a % of total costs
- BIncome elasticity of demand for the final product
- CEase and cost of factor substitution
- DThe time period under consideration
- EPrice elasticity of demand for the final product
Show the answer
The answer is B.
TopicDemand, supply and elasticityCosts, revenues and profitThe labour market
Q10
The table below shows the market shares of seven firms in a certain industry. Firm A 30% Firm B 20% Firm C 15% Firm D 15% Firm E 10% Firm F 5% Firm G 5% If Firm B merged with Firm C, then the four firm concentration ratio in the industry would:
- ARise by 15 percentage points
- BFall by 5 percentage points
- CRise by 10 percentage points
- DFall by 15 percentage points
- ERemain unchanged
Show the answer
The answer is C.
TopicMarket structures
Q11
A firm would definitely make normal profit if:
- AMC = MR
- BMC = AR
- CMC = AC
- DAC = MR
- EAC = AR
Show the answer
The answer is E.
Q12
The chart in the question paper shows the rate of change of consumer prices and average hourly earnings (% increase on a year earlier) in the United States in 2021 and early 2022. It can be concluded that:
- ANominal wages fell over the period
- BReal wages fell every month
- CReal wages fell in the second half of 2021
- DNominal wages fell in the second half of 2021
- EReal wages fell in the first two months of 2021
Show the answer
The answer is C.
Q13
The diagram below shows the circular flow of income in an economy, with flows 1 to 5 between households, firms, saving, tax, government spending and investment. 1, 2, 3, 4 and 5 are flows in the circular flow of income. They are most likely to be: (The diagram is in the question paper.)
- A1: Exports; 2: Imports; 3: Goods and services; 4: Factor incomes; 5: Factors of production
- B1: Exports; 2: Imports; 3: Factors of production; 4: Goods and services; 5: Factor incomes
- C1: Imports; 2: Exports; 3: Goods and services; 4: Factors of production; 5: Factor incomes
- D1: Imports; 2: Exports; 3: Factors of production; 4: Goods and services; 5: Factor incomes
- E1: Imports; 2: Exports; 3: Goods and services; 4: Factor incomes; 5: Factors of production
Show the answer
The answer is C.
TopicInternational trade and exchange ratesNational income and the circular flowAggregate demand
Q14
Which one of the following is currently included in the construction of the Human Development Index (HDI)?
- AAdult literacy rates
- BLife expectancy at birth
- CGDP per capita (PPP$)
- DThe infant mortality rate
- EThe primary education enrolment rate
Show the answer
The answer is B.
TopicGrowth and developmentMeasuring economic performance
Q15
A government announces a significant cut in the rate of value added tax (VAT). Which of the following AD/AS diagrams shows the most likely initial effects of this cut? (Options A to E are diagrams: see the question paper.)
Show the answer
The answer is C. Open the question paper to read the options.
TopicMeasuring economic performanceAggregate supplyGovernment intervention in markets
Q16
The chart in the question paper shows the contribution of energy, food, goods and services to the annual inflation rate in the United States and the euro area in June 2023 (percentage points). It can be concluded that:
- AFood price inflation was higher in the United States than in the euro area
- BEnergy prices helped to reduce inflation in both the United States and the euro area
- CGoods price inflation was higher in the United States than in the euro area
- DFood prices were lower in the United States than in the euro area
- EService price inflation was a higher proportion of overall inflation in the euro area than it was in the United States
Show the answer
The answer is B.
Q17
To increase the number of cars sold each week from 20 cars to 21 cars, a firm cuts the price of a car from £30 000 to £27 000. The firm's weekly marginal revenue (MR) from this decision is:
- A£567 000
- B£27 000
- C£3000
- D–£33 000
- E–£63 000
Show the answer
The answer is D.
Q18
The grid below shows the expected profits for two firms considering starting advertising campaigns (Firm X first). Both advertise: £50m, £70m. X advertises and Y does not: £30m, £30m. X does not advertise and Y does: £60m, £40m. Neither advertises: £40m, £35m. The Nash equilibrium in this case is:
- AFirm X: No Nash equilibrium in this case
- BFirm X: Advertise; Firm Y: Don't Advertise
- CFirm X: Advertise; Firm Y: Advertise
- DFirm X: Don't Advertise; Firm Y: Don't Advertise
- EFirm X: Don't Advertise; Firm Y: Advertise
Show the answer
The answer is E.
Q19
The diagram in the question paper shows an economy's actual and potential GDP over time, with points 1 to 6 marked. Which movement shows an increase in an economy's negative output gap?
- A1 to 2
- B2 to 3
- C3 to 4
- D4 to 5
- E5 to 6
Show the answer
The answer is C.
TopicMeasuring economic performanceNational income and the circular flow
Q20
The table below shows the output of fruit and vegetables in two countries that have used half of their factors of production in the production of each good. Country 1: 200 fruit and 400 vegetables. Country 2: 600 fruit and 800 vegetables. If each country specialised in producing the good in which they had a comparative advantage, the change in total output of each good would be:
- AFruit: -400; Vegetables: +400
- BFruit: +200; Vegetables: -400
- CFruit: +400; Vegetables: -400
- DFruit: +400; Vegetables: +400
- EFruit: +400; Vegetables: +600
Show the answer
The answer is C.
TopicThe economic problem and resource allocationInternational trade and exchange rates
Section B
Q21(a)
The diagram below shows a market in which a government has imposed a tariff on imported goods. Briefly explain what is represented by area W in the diagram.
Q21(b)
The diagram below shows a market in which a government has imposed a tariff on imported goods. Briefly explain what is represented by area X+Z in the diagram.
Q21(c)
The diagram below shows a market in which a government has imposed a tariff on imported goods. Briefly explain what is represented by area Y in the diagram.
Q22
Using the information in the image, outline two necessary conditions for price discrimination to be used by a firm when selling a product or service.
Mark splitApplication 2Analysis 2
TopicMarket structures
Q23
Explain why the total revenue curve for the firm is shaped as shown in the diagram.
TopicDemand, supply and elasticityCosts, revenues and profit
Q24
Using the data, discuss whether compulsory food labels are likely to correct market failure in Jamaica in this case.
TopicMarket failure
Q25
Discuss whether the data suggests that Türkiye's GNI per person will eventually be greater than the UK's.
Q26
Discuss the extent to which the UK government should have been concerned by the data shown in the charts.
TopicThe financial sectorMeasuring economic performancePublic finances and the role of the state
Question text is quoted from the question papers, © WJEC CBAC Ltd (Eduqas), for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.