Unit 1: Introduction to Economic Principles · 2520U10-1
WJEC AS Unit 1, June 2025
All 9 written questions and 15 multiple choice questions from WJEC AS Unit 1 (June 2025), Introduction to Economic Principles. Each question shows its marks and topic, with an examiner insight on 2, and opens the question paper and mark scheme at the right page.
Section A
Q1
Complete the following statement: A straight line PPF indicates that...
- Aas consumers buy more agricultural goods, they experience the law of diminishing marginal utility.
- Bthere is imperfect factor substitution.
- Cthe ratio of manufactured goods to agricultural goods is 1:1.
- Dthe opportunity cost of increasing the number of manufactured goods is constant.
- Eit takes the same number of resources to make 1 agricultural good as it does to make 1 manufactured good.
Show the answer
The answer is D.
TopicThe economic problem and resource allocationDemand, supply and elasticity
Q2
If the country decides to specialise completely in the production of manufactured goods, calculate the maximum number of manufactured goods that could be made. A 40 E Impossible to tell
Show the answer
The answer is D. Open the question paper to read the options.
Q3
Identify the correct term that completes the following statement. 'Air is often cited as an example of a(n)... because it is generally abundant and individuals can breathe it without incurring any cost.'
- Acomplementary good
- Beconomic good
- Cfree good
- Ddemerit good
- Ecapital good
Show the answer
The answer is C.
TopicThe economic problem and resource allocationDemand, supply and elasticityMarket failure
Q4
The demand for a service rises and, at the same time, the supply falls. Ceteris paribus, what is the impact on the equilibrium price and quantity? Price Quantity
- ARise Rise
- BFall Fall
- CRise Fall
- DFall Rise
- ERise Impossible to tell
Show the answer
The answer is E.
TopicDemand, supply and elasticityThe economic problem and resource allocation
Q5
According to the International Energy Agency (IEA), global demand for coal reached a record high at the start of 2023. The quantity demanded had increased by 1.4% in the previous 12 months. The global coal price fell significantly from $400 per tonne to just $145 per tonne in the same time period. Using the data, calculate the PED value to 2 decimal places.
- A–0.01
- B–0.02
- C–0.22
- D–4.54
- E–45.54
Show the answer
The answer is B.
Q6
According to academic research in Turkey, the income elasticity of demand for coal has been estimated at +4.8. Assuming that the demand for coal in Turkey rose by 1.4%, calculate the % change in income to 2 decimal places.
- A+0.29%
- B+2.92%
- C+3.42%
- D+6.72%
- E–2.92%
Show the answer
The answer is A.
Q7
'Its consumption provides benefits to society beyond those recognised by the individual consumer, leading to underconsumption in the free market.' What economic concept is being described here?
- AAn absence of private property rights
- BIncome inequality
- CThe benefits system
- DMerit goods
- EGovernment failure
Show the answer
The answer is D.
TopicPoverty and inequalityAggregate demandMarket failure
Q8
In the circular flow of income model, what are the three injections?
- AGovernment expenditure, investment and exports
- BGovernment expenditure, income and exports
- CGovernment expenditure, income and imports
- DSavings, investments and imports
- EIncome, investments and imports
Show the answer
The answer is A.
TopicAggregate demandInternational trade and exchange ratesNational income and the circular flow
Q9
Consider the following statements. Statement A Government spending on routine maintenance and day-to-day operations is called capital expenditure. Statement B Indirect taxes are taxes levied on individuals or firms, and the burden cannot be shifted to someone else. Statement A Statement B
- ATrue True
- BTrue False
- CFalse True
- DFalse False
- ETrue Impossible to tell
Show the answer
The answer is D.
TopicAggregate demandGovernment intervention in marketsMacroeconomic objectives and policy
Q10
Which of the following is an approximate figure for the UK government's annual tax revenue received?
- A£1 100 000 (£1.1 m)
- B£110 000000 (£110 m)
- C£11 000 000 000 (£11 bn)
- D£1 100 000 000 000 (£1.1 trn)
- E£110 000 000 000 000 (£110 trn)
Show the answer
The answer is D.
Q11
The chart below shows the unemployment rate for Greece between October 2021 and October 2023. 14% Unemployment rate 13% 12% 11% 10% 9% Ju O Ja Ap Ju O Ja Ap O ct ct ct l2 n l2 n r2 r2 Month Which of the following statements can be concluded from the data?
- AGreece experienced negative economic growth throughout the time period.
- BThe unemployment rate was at its highest in January 2022, during this period.
- CThe inflation rate was falling between October 2021 and October 2023.
- DFewer Greeks were in work in October 2023 compared to October 2021.
- ENone of the above.
Show the answer
The answer is B.
TopicMeasuring economic performanceEconomic growth and the economic cycle
Q12
The chart below shows the value of exports for Korea between October 2021 and September 2023 in US$ millions. Export value for Korea in US$ millions Ju O Ja Ap Ju O Ja Ap Se ct ct l n l2 n r2 r2 pt Month Which of the following statements can be concluded from the data?
- AKorea experienced positive economic growth throughout the time period.
- BKorea's exports were greater than its imports throughout the time period.
- CKorea's inflation rate was rising between October 2021 and September 2023.
- DThe value of Korea's currency (the won) appreciated against the US$ throughout this time period.
- ENone of the above.
Show the answer
The answer is E.
TopicInternational trade and exchange ratesMeasuring economic performanceEconomic growth and the economic cycle
Q13
The Laffer curve shows the relationship between which two variables?
- AReal GDP and price level
- BUnemployment rate and inflation rate
- CTax rate and tax revenue
- DCumulative percentage of the population and cumulative percentage of income
- EPrice and quantity
Show the answer
The answer is C.
TopicMeasuring economic performancePublic finances and the role of the stateMacroeconomic objectives and policy
Q14
The Nigerian naira (NGN) lost 70% of its value against the US dollar (USD) over the five-year period 2019 to 2024. Which one of the charts opposite accurately reflects this description? A B NGN per NGN per USD USD 0.0028 70% 0.00084 Time Time C D USD per USD per NGN NGN 0.0028 100 0.00084 Time Time USD per E NGN 0.0028 0.00084 Time
Show the answer
The answer is E. Open the question paper to read the options.
Q15
The table below shows the monthly average GBP sterling effective exchange rate index. Jan 2005 = 100 (base). Month/year Value Oct 2022 76.96 Nov 2022 78.11 Dec 2022 79.02 Jan 2023 78.27 Feb 2023 77.79 Mar 2023 78.26 Apr 2023 79.30 May 2023 80.10 Jun 2023 81.68 Jul 2023 82.55 Aug 2023 82.30 Sep 2023 82.40 Over the period shown, in which single pair of consecutive months did the GBP index experience a depreciation?
- AOct 2022 – Nov 2022
- BDec 2022 – Jan 2023
- CFeb 2023 – Mar 2023
- DJun 2023 – Jul 2023
- EAug 2023 – Sep 2023 ON THIS PAGE
Show the answer
The answer is B.
TopicInternational trade and exchange ratesMeasuring economic performance
Section B
Q16(a)
Explain why supply curves will normally slope upwards from left to right.
Mark splitKnowledge 2
Q16(b)
Calculate the value of consumer surplus at the new equilibrium price of £3.20.
Mark splitApplication 2
Q16(c)
With reference to both the income effect and the substitution effect, explain how consumers of grapes are likely to respond to a price increase.
Mark splitKnowledge 2Application 2
Q17
Using the data and your own knowledge, discuss the advantages of a regional minimum wage for Wales.
Mark splitApplication 2Analysis 4Evaluation 4
TopicThe labour market
Examiner insight
- What to cover
- The question is about a regional minimum wage, not the national one. Use the tables to show why a different rate would suit different parts of Wales, for example Mid Wales with the highest unemployment and the lowest average wages, and compare Wales with England.
- Diagram
- Minimum wage in the labour market, a wage floor above equilibrium, used to show the effect on employment and the incentive to work. Not asked for, but it adds value.
- Evaluation
- Weigh the advantages against the cost to firms in low wage regions, the administrative complexity, the risk of firms relocating between regions, and whether a lower regional rate would depress incomes.
- Watch out
- A generic answer about the national minimum wage was capped at 4 out of 10 even with data. Read the question, then keep the word regional in front of you as you write.
- How it went in the exam
- Examiners called this question an excellent example of why questions must be read carefully. Poor answers were generic, misread the data, or were simply too short.
Q18(a)
Calculate the values for G and I.
Mark splitApplication 2
TopicAggregate demandInternational trade and exchange rates
Q18(b)
Explain how both wealth and expectations can affect the level of consumption in an economy.
Mark splitKnowledge 2Analysis 2
TopicAggregate demand
Q18(c)
Using an AD/AS diagram, explain how contractionary fiscal policy can lead to a fall in economic growth.
TopicEconomic growth and the economic cycleMacroeconomic objectives and policy
Q19(a)
Outline what is meant by the Bank of England's status as a lender of last resort.
Mark splitKnowledge 2
Q19(b)
Discuss whether the Bank of England's MPC should only consider the current inflation rate when setting the base interest rate.
Mark splitKnowledge 1Analysis 3Evaluation 4
TopicMacroeconomic objectives and policyMeasuring economic performanceMarket failure
Examiner insight
- What to cover
- First explain why current inflation matters, following the transmission mechanism from the base rate through consumption and investment to the price level and to household purchasing power.
- Evaluation
- Then argue why it should not be the only consideration: the time lag in the transmission mechanism, which makes current inflation a poor guide, past inflation as feedback on earlier decisions, rate rises being weak against cost push inflation, and other factors such as unemployment, growth, wage growth and house prices.
- Watch out
- Tie each other factor back to the question with a hypothetical, for example if the base rate rose, this is what would happen to unemployment. Superficial evaluation, often from running out of time, was common on this final question.
- How it went in the exam
- Q17 and Q19 were the harder questions in Section B in 2025, while Q18 was answered comparably better.
Question text is quoted from the question papers, © WJEC CBAC Ltd, 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.