Advanced level 2026 North West mock Economics guide

In a), the PPC is concave to the origin. In order to produce more capital goods, increasing amounts of consumer goods have to be forgone. i.e in order to produce 120 additional capital goods (from point A to B), 20 consumer goods are forgone. To produce the next 105 additional capital goods (from point B to C), 80 consumer goods are forgone. This is because resources are not perfectly substitutable.

Whereas in b), the PPC is convex to the origin. The amount of consumer goods sacrificed to produce more of units of capital goods decreases as a result of efficiencies and specialization improvements.

(4 marks for both diagrams and 6 marks for two differences well explained)

b). Governments promote mobility of labour in order to

• Reduce frictional unemployment

• Improve the standard of living of its citizens(reduce poverty)

• Increase output

• Reduce wage differences in different regions and occupations.

• Create conditions for better utilization of a country’s resources.

• Improve upon BOP situation

• Better employment opportunities

• Greater flexibility as firms quickly adapt to economic changes etc. Up to 10 marks for 5 points well explained.

2 a)

[Diagram showing a Supply and Demand graph. The Price axis has points T, P, and R. The Quantity axis has point Q. The equilibrium point is marked X. Line S is the supply curve, and Line D is the demand curve.]

Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual market price they pay. It is usually the area below the demand curve and above the market price (PTX).

Whereas producer surplus is the difference between the market price producers receive and the minimum price they would accept. It is the area above the supply curve and below the market price (RPX).

(Diagram/explanation=4 marks, difference 4 marks)