AQA GCSE Economics 2027 Predicted Practice Paper — Paper 1

Answer ALL questions. Write your answers in the spaces provided. You must write down all the stages in your working.

Section A

Ten multiple choice questions followed by calculation, short and extended responses. Answer all questions.

• 1

  Question SECTION-A1 (1 mark)

  Which of the following is the best definition of the economic problem of scarcity?

  A. There is not enough money in the economy to buy all goodsB. Wants are unlimited but resources to satisfy them are finiteC. Governments cannot decide how to spend their budgetsD. Firms are unable to make a profit in a recession

  (Total for Question SECTION-A1 is 1 mark)
• 2

  Question SECTION-A2 (1 mark)

  A bakery decides to use an oven to bake bread rather than to bake cakes. The value of the cakes it gives up is best described as the:

  A. fixed costB. opportunity costC. marginal revenueD. sunk cost

  (Total for Question SECTION-A2 is 1 mark)
• 3

  Question SECTION-A3 (1 mark)

  The demand curve for a normal good will most likely shift to the right following:

  A. a fall in consumer incomesB. a rise in the price of the good itselfC. a rise in consumer incomesD. an improvement in production technology

  (Total for Question SECTION-A3 is 1 mark)
• 4

  Question SECTION-A4 (1 mark)

  Which of the following would cause the supply curve for coffee to shift to the left?

  A. A fall in the wages of coffee farm workersB. A poor harvest that reduces the coffee bean cropC. A subsidy paid to coffee producersD. New machinery that lowers production costs

  (Total for Question SECTION-A4 is 1 mark)
• 5

  Question SECTION-A5 (1 mark)

  The price elasticity of demand for a good is measured as -0.4. This good is best described as:

  A. price elasticB. price inelasticC. perfectly elasticD. of unitary elasticity

  (Total for Question SECTION-A5 is 1 mark)
• 6

  Question SECTION-A6 (1 mark)

  A market where there are very many small firms selling identical products, with freedom of entry and exit, is best described as:

  A. a monopolyB. an oligopolyC. a highly competitive marketD. a monopsony

  (Total for Question SECTION-A6 is 1 mark)
• 7

  Question SECTION-A7 (1 mark)

  Which of the following is most likely to be a negative externality of production?

  A. The profit earned by a factory ownerB. Air pollution from a factory that harms nearby residentsC. The wages paid to a factory's workersD. The higher price a consumer pays for a good

  (Total for Question SECTION-A7 is 1 mark)
• 8

  Question SECTION-A8 (1 mark)

  Which of the following is the main objective of the Bank of England when it changes interest rates?

  A. To maximise the profits of commercial banksB. To keep inflation low and stable around its targetC. To fix the exchange rate against the US dollarD. To guarantee full employment at all times

  (Total for Question SECTION-A8 is 1 mark)
• 9

  Question SECTION-A9 (1 mark)

  The government places an indirect tax on sugary drinks. This is most likely intended to:

  A. increase consumption of sugary drinksB. reduce consumption of a good with negative externalitiesC. reduce the price paid by consumersD. increase the supply of sugary drinks

  (Total for Question SECTION-A9 is 1 mark)
• 10

  Question SECTION-A10 (1 mark)

  If the UK pound rises in value against the euro, this will most likely cause:

  A. UK exports to the eurozone to become cheaperB. UK imports from the eurozone to become more expensiveC. UK imports from the eurozone to become cheaperD. no change to the price of UK exports or imports

  (Total for Question SECTION-A10 is 1 mark)
• 11

  Question SECTION-A11 (4 marks)

  A shop sells 250 units of a product at a price of GBP 8 each. Calculate the shop's total revenue from these sales, and state the formula you used.

  (Total for Question SECTION-A11 is 4 marks)
• 12

  Question SECTION-A12 (4 marks)

  A basket of goods cost GBP 400 last year and costs GBP 420 this year. Calculate the rate of inflation for this basket over the year, showing your working. Give your answer as a percentage.

  (Total for Question SECTION-A12 is 4 marks)
• 13

  Question SECTION-A13 (4 marks)

  Explain one reason why the demand for petrol tends to be price inelastic.

  (Total for Question SECTION-A13 is 4 marks)
• 14

  Question SECTION-A14 (5 marks)

  Using a demand and supply diagram, explain the likely effect on the equilibrium price and quantity of new homes if the government relaxes planning rules, making it easier for builders to construct houses.

  (Total for Question SECTION-A14 is 5 marks)
• 15

  Question SECTION-A15 (4 marks)

  A worker's gross weekly wage rises from GBP 500 to GBP 540. Over the same period the general price level rises by 4%. Calculate the approximate change in the worker's real wage, and state whether the worker is better or worse off. Show your working.

  (Total for Question SECTION-A15 is 4 marks)
• 16

  Question SECTION-A16 (5 marks)

  Explain how a minimum wage set above the market equilibrium wage could lead to unemployment in a labour market.

  (Total for Question SECTION-A16 is 5 marks)
• 17

  Question SECTION-A17 (4 marks)

  Explain one benefit to consumers of increased competition in a market.

  (Total for Question SECTION-A17 is 4 marks)

Section B

Five questions involving calculations, short and extended responses. Answer all questions.

• 1

  Question SECTION-B1 (6 marks)

  A coastal town relies heavily on tourism. Last summer 60,000 visitors each spent an average of GBP 45 in the town. This summer, following a marketing campaign, visitor numbers rose to 72,000 while average spend per visitor stayed at GBP 45. (a) Calculate the total visitor spending in the town this summer. (b) Calculate the percentage increase in total visitor spending compared with last summer. Show all your working.

  (Total for Question SECTION-B1 is 6 marks)
• 2

  Question SECTION-B2 (8 marks)

  Analyse how a rise in interest rates by the central bank is likely to affect consumer spending and business investment in an economy.

  (Total for Question SECTION-B2 is 8 marks)
• 3

  Question SECTION-B3 (8 marks)

  A car manufacturer produces vehicles whose exhaust fumes cause air pollution in nearby towns. Analyse why this pollution is an example of market failure, and analyse one way the government could correct it.

  (Total for Question SECTION-B3 is 8 marks)
• 4

  Question SECTION-B4 (9 marks)

  The table below shows an economy's exports and imports for two years (all figures in GBP billion): Year 1: exports 320, imports 350. Year 2: exports 360, imports 372. (a) Calculate the trade balance (exports minus imports) for each year and state whether each is a surplus or deficit. (b) Discuss whether an improvement in the trade balance is always good for an economy. Show your working for part (a).

  (Total for Question SECTION-B4 is 9 marks)
• 5

  Question SECTION-B5 (9 marks)

  Evaluate whether cutting income tax is the best way for a government to increase economic growth. Use economic reasoning to support your answer.

  (Total for Question SECTION-B5 is 9 marks)