CAIE A ECONOMICS BOARD QUESTIONS - Lessons 30 to 40 ​

Hodder Lessons 14 to 23 Microeconomics

MICROECONOMICS

2025
May June 2025 paper 41 Section B: Answer one question. EITHER 2

With the help of a diagram, evaluate the use of indifference curve analysis to explain
the relationship between a change in the price of a product and the change in an
individual consumer’s demand for this product. [20]

OR 3 The growth of a firm using a takeover is desirable because it enables consumers

to benefit from lower prices and the firm to gain additional profits. Evaluate this
statement. [20]

Paper 42

Section B
Answer one question.
EITHER
2 Monopolies restrict output to raise prices to exploit consumers.
With the help of a diagram, assess the extent to which a government should intervene
in monopoly markets. [20]

OR
3 With the help of a diagram, assess whether the impact of an increase in labour
productivity on the wages and employment of a firm is likely to be greater in a perfectly
competitive labour market than in an imperfectly competitive labour market. [20]

1
Paper 43

Section B: Answer one question. EITHER

2 With the help of a diagram, evaluate the use of indifference curve analysis to explain
the relationship between a change in the price of a product and the change in an
individual consumer’s demand
for this product. [20]

OR
3 The growth of a firm using a takeover is desirable because it enables consumers to
benefit from lower prices and the firm to gain additional profits.
Evaluate this statement. [20]

9708/42 Paper 4 A Level Data Response and Essays February/March 2025 2

hours

Section B: Answer one question. EITHER

2. Oligopolies are able to avoid price competition while maintaining supernormal
profits in the long run. Evaluate this statement. [20]

OR 3 With the help of a diagram, evaluate the consequences of imposing an

effective minimum wage on the employment level and the wage level in a
monopsony labour market. [20]

2
2024

9708/41 Paper 4 A Level Data Response and Essays

October/November 2024 2 hours

Section B: Answer one question. EITHER

2 Governments in many countries are promoting policies that reduce the impact
of the negative externalities. Evaluate, using appropriate diagram(s), the extent
to which two policies used to reduce negative externalities can also improve
allocative efficiency. [20]

OR 3 Evaluate the consequences for the price and output of a firm if it changes
its objective from profit maximisation to sales maximisation as a response to the
principal-agent problem. [20]

9708/42 Paper 4 A Level Data Response and Essays

October/November 2024 2 hours

Section B: Answer one question. EITHER

2. Evaluate whether marginal utility theory can fully explain the link between the
changing price of a good and the quantity demanded of that good. [20]

OR
3 Privatisation is often required by the International Monetary Fund (IMF) and
the World Bank before they are prepared to offer support to countries requiring
loans, grants, debt relief, and debt cancellation programs. Evaluate the view that
privatisation will always improve the allocation of resources in a country. [20]

3
9708/43 Paper 4 A Level Data Response and Essays
October/November 2024 2 hours

Section B: Answer one question. EITHER

2. Negative externalities of production cause market failure. With the help of a

diagram, assess the extent to which the introduction of indirect taxation is likely to
address this cause of market failure. [20] ​
OR

3 Wages in a perfectly competitive labour market will always be higher than

wages in a monopsony labour market. With the help of a diagram, evaluate this
statement. [20]

1 May June 2024 Paper 41

Section B: Answer one question.

EITHER
2 The long-term equilibrium position in perfect competition is frequently used to
illustrate efficient resource allocation in a free market economy. Explain why this
is so and consider what prevents efficiency from being achieved. [20] lesson 18

OR 3 With the help of an indifference curve diagram, assess the extent to which
a price rise would affect the demand for a normal good differently from the
demand for a Giffen good. [20]
Lesson 31

4
2 May June 2024 Paper 42​

Section B: Answer one question. EITHER

2 Market failure exists in all economies. Evaluate, with the aid of a diagram(s),
the meaning of market failure and two policies a government may use to correct
market failure. [20]
Lesson 32/15

OR 3 Evaluate, with the aid of a diagram(s), whether excess profit (supernormal

profit) is always necessary for the continued existence of firms in perfect
competition and monopoly. [20] Lesson no 18

3 May June 2024 Paper 43

Section B: Answer one question. EITHER

2 The long-term equilibrium position in perfect competition is frequently used to

illustrate efficient resource allocation in a free market economy. Explain why this
is so and consider what prevents efficiency from being achieved. [20]

OR 3 With the help of an indifference curve diagram, assess the extent to which
a rise in price would affect the demand for a normal good differently from the
demand for a Giffen good. [20] lesson 31

4 Feb March 2024 paper 42 Section B: Answer one question. EITHER

2 With the help of a diagram, assess the effectiveness of a government’s

intervention in the price mechanism to address the causes of climate change.
[20] lesson 38
OR
3 The introduction of a trade union into a perfectly competitive labor market will
always lead to higher wage levels and a higher level of unemployment. With the
help of a diagram, evaluate this statement. [20] lesson 23 345 -346 PC in the
LM /TUs 347 ff Hodder

5
 2023
5 Oct Nov 2023 Paper 41

Section B: Answer one question. EITHER

2 The provision of health care by the public sector is inefficient and therefore, all
health care should be provided by firms operating in the private sector. Evaluate
this comment. [20]
Lesson 38

OR
3 A government allows the merger of two large firms in the same industry. With
the help of a diagram, evaluate the view that this merger should not have been
allowed. [20]

6 Oct Nov 2023 Paper 42

Section B: Answer one question.

2. Evaluate the use of indifference curve analysis to derive the demand curve for
a normal good and the demand curve for an inferior good. [20]
OR
3 The model of perfect competition is the ideal form of market structure because
it is the most efficient. With the help of diagrams, evaluate this statement. [20]

7 Oct Nov 2023 paper 43 Section B: Answer one question. EITHER 2

2 Pollution is caused when consumers or producers make decisions based on
self-interest. This is a sign of market failure. With the help of a diagram, evaluate
the extent to which government policies should rely upon market forces to
address this market failure. [20]

OR 3 Evaluate the view that monopolistically competitive firms will always charge
lower prices and operate more efficiently than a monopoly firm. [20]

6
8 May June 2023 paper 41

Section B: Answer one question.

EITHER 2 To improve allocative efficiency, economists frequently advise

governments to remove existing subsidies to the private sector providers of
education. With the help of a diagram, evaluate this advice. [20]

OR 3 Some firms frequently use price discrimination. Assess the view that when
this occurs, price discrimination will always benefit the producer at the expense of
the consumer and society. [20]
​
9 May June 2023 Paper 42

Section B
Answer one question. EITHER
2 The increased use of electric vehicles (EVs) is encouraged as part of the
government’s climate change policies because they create fewer negative
externalities than diesel and petrol (gas) vehicles. Evaluate, with the help of a
diagram(s), two policies that a government may use to encourage the use of
EVs. [20]

OR
3 Evaluate, with the help of a diagram(s), how total market demand and
minimum efficient scale may determine the form of market structure in an
industry. [20]

10 May June 2023 paper 43

7
Section B: Answer one question.
EITHER 2
To improve allocative efficiency, economists frequently advise governments to
remove existing subsidies to the private sector providers of education. With the
help of a diagram, evaluate this advice. [20]

OR 3 Some firms frequently use price discrimination. Assess the view that when
this occurs, price discrimination will always benefit the producer at the expense of
the consumer and society. [20]

11 Feb March 2023 paper 42

Section B: Answer one question. EITHER

2 The use of air travel leads to a market failure caused by negative externalities.
With the help of a diagram, assess the extent to which a government can
intervene to correct this market failure. [20]
OR

3 Some firms in oligopoly markets choose to collude rather than engage in price
competition. This will lead to higher prices and a less efficient allocation of
resources. Evaluate this statement. [20]

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Pages 1 to 4 - Micro Economics Questions course book, Lessons 30 to 40

From Hodder 14 to 23, Micro 24 to 32, Macro

8
CAIE A ECONOMICS BOARD QUESTIONS - Susan Grant Lessons 41 to 53
Hodder: 24 to 32

MACROECONOMICS

2025
May June 2025 paper 41

Section C: Answer one question. EITHER

4 A country is experiencing stagflation when there is a high rate of inflation at the

same time as a negative output gap. With the help of a diagram, evaluate the
effectiveness of using fiscal policy to solve this problem. [20]

OR 5 A free trade area gains all the benefits associated with being a member of
a customs union while avoiding all the costs associated with being a member of a
customs union. Evaluate this statement. [20]

Paper 42
Section C
Answer one question. EITHER
4 With the help of an injection and withdrawal graph, assess the impact of a
decrease in interest rates on the level of employment in an economy. [20]
OR
5 Globalisation will have an equally beneficial effect on the standard of living in
both high-income and low-income countries. Evaluate this statement. [20]

Paper 43

Section C: Answer one question. EITHER

9
4 A country is experiencing stagflation when there is a high rate of inflation at the
same time as a negative output gap. With the help of a diagram, evaluate the
effectiveness of using fiscal policy to solve this problem. [20]
OR
5 A free trade area gains all the benefits associated with being a member of a
customs union while avoiding all the costs associated with being a member of a
customs union. Evaluate this statement. [20]

9708/42 Paper 4 A Level Data Response and Essays February/March 2025 2

hours

Section C: Answer one question. EITHER

4 With the help of a diagram, assess the effectiveness of government policies

that might be used to reduce demand-pull inflation. [20]

OR 5 With the help of a diagram, evaluate the effectiveness of the use of

expenditure-switching policies to reduce a current account deficit on the balance
of payments. [20]

2024 Macro

9708/41 Paper 4 A Level Data Response and Essays October/November

2024 2 hours

10
Section C: Answer one question. EITHER
4 In periods of rising and persistent inflation, consumers and workers change
their expectations of the future rate of inflation. Evaluate, with the help of a
diagram(s), the consequences of these changes of expectations for fiscal policy.
[20]
OR
5 In recent years many countries have joined or established a free trade area
(FTA). Evaluate, with the help of a diagram(s), whether membership of an FTA is
always beneficial to a country. [20]

9708/42 Paper 4 A Level Data Response and Essays October/November

2024 2 hours

Section C: Answer one question. EITHER

4 The table below contains some key economic data for Mexico in 2020.

Evaluate the use of these statistics in assessing the standard of living in Mexico
in 2020. [20]
OR

5 Between 2010 and 2020, very low interest rates encouraged low-income
countries to borrow money from foreign investors and governments to finance
long-term economic growth. Evaluate this approach to promoting long-term
economic growth. [20]

11
9708/43 Paper 4 A Level Data Response and Essays October/November
2024 2 hours

Section C: Answer one question. EITHER

4 Central banks can control the money supply. An increase in the money supply
will cause inflation; therefore, central banks can control inflation. Evaluate this
statement. [20]

OR 5 Some high-income countries have introduced a policy of high tariffs on

some imports to reduce the negative effects of globalisation on their economies.
With the help of a diagram, evaluate this policy. [20]

1 May June 2024 Paper 41 Q 4 and Q 5

Section C: Answer one question. EITHER

4 In many countries increased government spending is regarded as a cause of

economic growth. It is sensible, therefore, for a government to spend more to
increase economic growth as it is good for its country. To what extent do you
agree with this argument? [20]

OR 5

National income statistics are often used as a measure of the standard of living.
Consider to what extent national income statistics can be used to compare the
standard of living between low-income countries and high-income countries. [20]

2 May June 2024 Paper 42 Q 4 and Q 5

12
Section C: Answer one question. EITHER
4 In 2022, many countries experienced a high rate of inflation caused by
disruptions to the supply of goods and services arising from the COVID-19
pandemic and the conflict between Russia and Ukraine. In one country, the
government cut taxes and the central bank raised interest rates.
Evaluate the likely impact of these policies on the government’s ability to
control inflation. [20]
OR
5 Evaluate the likely impact of globalisation on a low-income country’s standard
of living. [20]

3 May June 2024 Paper 43 Q 4 and Q 5

Section C: Answer one question. EITHER

4 In many countries increased government spending is regarded as a cause of

economic growth. It is sensible, therefore, for a government to spend more to
increase economic growth as it is good for its country. To what extent do you
agree with this argument? [20]
OR
5 National income statistics are often used as a measure of the standard of living.
Consider to what extent national income statistics can be used to compare the
standard of living between low-income countries and high-income countries. [20]

4 Feb March 2024 paper 42

Section C: Answer one question. EITHER

4 With the help of a diagram, assess the effectiveness of government policies

that might be used to reduce cost-push inflation. [20]

OR 5 Globalisation will help to achieve economic growth in high-income

economies and this will automatically improve living standards. Evaluate this
statement. [20]

13
5 Oct Nov 2023 Paper 41

Section C: Answer one question. EITHER

4 Assess the extent to which monetary policy can be used effectively to solve the
problem of unemployment. [20]

OR
5 To what extent do you agree with the view that globalisation benefits
high-income countries at the expense of low-income countries? [20]

6 Oct Nov 2023 Paper 42

Section C: Answer one question.

4 The presence of multinational corporations (MNCs) in a low-income country

always promotes economic growth in that country. Evaluate this statement. [20]

OR
5 Consider the relative merits of gross national income (GNI) and the
multidimensional poverty index (MPI) as measures of the standard of living. [20]

7 Oct Nov 2023 Paper 43

Section C: Answer one question. EITHER

4 With the help of a diagram, assess the effectiveness of using fiscal policy to
close a negative output gap in an economy [20]

OR

14
5 Assess the impact of international aid on the standard of living in low-income
countries. [20]

8 May June 2023 Paper 41

Section C: Answer one question. EITHER

4 An increase in a government’s budget surplus will increase unemployment in
the short run, but it will make it easier to control a balance of payments deficit on
the current account in the long run. Evaluate this statement. [20]
OR
5 To what extent do you agree that an increase in productivity will lead to a
higher standard of living in low-income countries? [20]

9 May June 2023 Paper 42

Section C: Answer one question. EITHER

4 Consider the extent to which the depreciation of its foreign exchange rate
contributes to the economic growth of a low-income country. [20]
OR
5 Evaluate the effectiveness of using monetary policy to reduce the rate of
inflation and how this policy may affect a government’s ability to achieve its other
macroeconomic aims. [20]

10 May June 2023 Paper 43

Section C: Answer one question. EITHER

4 An increase in a government’s budget surplus will increase unemployment in

the short run but it will make it easier to control a balance of payments deficit on
the current account in the long run. Evaluate this statement. [20]

15
OR 5
To what extent do you agree that an increase in productivity will lead to a higher
standard of living in low-income countries? [20]

11 Feb March 2023 Paper 42

Section C: Answer one question. EITHER

4 Expenditure-reducing policies will reduce a balance of payments deficit but will

also cause significant unemployment. Evaluate this statement. [20]

OR
5 Assess the impact of globalisation on the standard of living in low-income
countries. [20]

October November 2024 A Level Board questions

Paper 41
Section C
Answer one [Link]
4 In periods of rising and persistent inflation, consumers and workers change
their expectations of the future rate of inflation. Evaluate, with the help of a
diagram(s), the consequences of these changes of expectations for fiscal policy.
[20]
OR
5 In recent years, many countries have joined or established a free trade area
(FTA).Evaluate, with the help of a diagram(s), whether membership of an FTA is
always beneficial to a country. [20]

Paper 42 Section C
Answer one [Link]
4 The table below contains some key economic data for Mexico in 2020.

16
Evaluate the use of these statistics in assessing the standard of living in Mexico
in 2020. [20]
OR
5 Between 2010 and 2020, very low interest rates encouraged low-income
countries to borrow
money from foreign investors and governments to finance long-term economic
growth.
Evaluate this approach to promoting long-term economic growth. [20]

Section C
Answer one question.
EITHER
4 Central banks can control the money supply. An increase in the money supply
will cause inflation; therefore, central banks can control inflation. Evaluate this
statement. [20]

OR

17
5 Some high-income countries have introduced a policy of high tariffs on some
imports to reduce the negative effects of globalisation on their economies. With
the help of a diagram, evaluate this policy. [20]

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18