Cambridge AS & A Level Economics 9708/12 is the May/June 2026 Paper 1 (AS Level Multiple Choice), variant 2. It is an AS component with 30 questions worth one mark each, and it lasts 1 hour. Every question is compulsory and the paper covers all of the AS content. The biggest single area was the macroeconomy, with 10 of the 30 questions, and four questions needed a calculation. This guide gives the official answer for every question, the topic it tested and the working for each calculation. The paper and its mark scheme are free on the Tutopiya Learning Portal.

For an overview of all four 9708 papers from this series, see A Level Economics 9708 May/June 2026 past papers: what came up and how it was marked.

9708/12 at a glance

Syllabus area	Questions	Number of questions
The basic economic problem	1–5	5
The price system and the microeconomy	6–10	5
Government microeconomic intervention	11–15	5
The macroeconomy and macroeconomic policy	16–25	10
International economic issues	26–30	5
Total		30

Each correct answer scores one mark, so the total is 30. Answers go on a multiple choice answer sheet in soft pencil.

Answer key and topic for every question

Question	What it tested	Answer
1	Classifying free polio vaccination	C
2	Statement that is not true at the PPC boundary	A
3	Cause of an inward pivot of the PPC on the manufactured goods axis	A
4	Most likely problem with government provision of public goods	C
5	Statement about economics that is not correct	D
6	Change in quantity supplied from PES and a price rise	C
7	Cause of an outward shift in the supply of televisions	D
8	Housing market diagram with rising demand and new firms	A
9	Consumer and producer surplus with perfectly elastic demand	C
10	PED for pizza from a price rise	A
11	Direct government provision of goods and services	D
12	What a transfer payment is	B
13	Total cost of a subsidy on a merit good, read from a diagram	C
14	Measures that reduce inequality of income and wealth most	C
15	Direct action to provide health services for everyone	D
16	Why GDP may not be a useful measure of output	B
17	GDP at market prices to GDP at basic prices	C
18	Injections into the circular flow	A
19	What falls when employment falls	B
20	New AD/AS equilibrium after higher productivity	C
21	Main objective of supply-side policies	D
22	Effects of a cut in direct taxes	D
23	Government spending from a budget surplus and tax revenue	B
24	Part of an expansionary policy	D
25	Not included in G when calculating AD	D
26	Likely cause of a US dollar appreciation	B
27	Least likely outcome of a move towards free trade	B
28	Measure that would reduce protectionism	C
29	Policy that cuts the volume of imports	C
30	Cause of a fall in demand for and a rise in supply of the pound	A

What the paper tested, topic by topic

The basic economic problem (Questions 1–5)

• Classifying goods (Question 1): free polio vaccination is a merit good. It is rival and excludable, so it is not a public good, and it is not a free good because it uses scarce resources.
• Production possibility curves (Questions 2 and 3): at the boundary, all resources are fully employed, but the economy need not produce both goods: it could be at either end of the curve. So “always producing both” was the statement that was not correct. In Question 3, the curve stays anchored at J on the agricultural axis but pivots inwards from K to L on the manufactured goods axis. Only manufacturing capacity has fallen, which a fall in output per worker in manufacturing explains. A fall in demand or a rise in unemployment moves the economy inside the curve rather than shifting it, and better technology would pivot it outwards.
• Public goods (Question 4): the most likely problem with government provision is that scarce resources may not be allocated in the most desirable way. Non-rivalry rules out A and B.
• Economic thinking (Question 5): valuing a good or service involves subjective judgement, so the claim that it is purely objective was the incorrect statement.

The price system and the microeconomy (Questions 6–10)

• PES (Question 6): % change in quantity supplied = PES × % change in price = 3 × 10% = 30%. PES above 1 means supply is elastic, so the quantity change must be bigger than the 10% price change.
• PED (Question 10): the price rises from $8 to $10, a 25% increase. PED = 12.5% ÷ 25% = 0.5. Putting the price change on top gives 2.0, which is option D.
• Supply shift (Question 7): a bigger working population increases the supply of labour, which lowers costs or raises capacity, so supply shifts to the right. Higher incomes and complement prices affect demand, and dearer raw materials shift supply left.
• Housing (Question 8): rising real incomes shift demand right and new construction firms shift supply right. Diagram A is the one with both curves shifting to the right.
• Surpluses (Question 9): with perfectly elastic (horizontal) demand, consumers pay exactly what every unit is worth to them, so consumer surplus is zero. A unit elastic supply curve slopes upwards from the origin, so producer surplus is a finite positive area: between zero and infinity.

Government microeconomic intervention (Questions 11–15)

• Cost of a subsidy (Question 13): with the subsidy, the market trades 40 units. At 40 units the original supply curve S is at $100 and the subsidised curve S1 at $80, so the subsidy is $20 per unit. Total cost = 20 × 40 = $800. Multiplying by the original quantity of 20 gives $400, option B.
• Direct provision (Question 11): a government takeover of a bus service means the state supplies the service itself. Grants, subsidies and regulation influence private firms instead.
• Transfer payments (Question 12): food vouchers for low-income households transfer income without any output in return. A nurse’s salary is payment for work.
• Inequality (Question 14): a more progressive income tax, a lower inheritance tax threshold (so more estates pay) and a higher minimum wage all narrow the gap.
• Health for all (Question 15): nationalising the private clinics and removing charges is the direct action that makes provision independent of ability to pay. Low-fee government clinics still charge.

The macroeconomy and macroeconomic policy (Questions 16–25)

• Government spending from a surplus (Question 23): the surplus is 2% of $500 billion = $10 billion. Tax revenue minus government spending = 10, so G = 80 − 10 = $70 billion. Adding the surplus instead gives $90 billion.
• National income (Questions 16, 17 and 18): GDP is a weak measure of output where environmental damage goes unmeasured. To go from market prices to basic prices, deduct indirect taxes and add subsidies. The injections are government spending, investment and exports.
• Employment (Question 19): lower employment cuts actual output. The labour force, productive capacity and potential output do not fall just because fewer people are working.
• AD/AS (Question 20): higher productivity shifts AS to the right, so the new equilibrium is further along the AD curve at a lower price level and higher real GDP: point C.
• Policy (Questions 21, 22 and 24): supply-side policy aims to raise potential output. Lower direct taxes raise disposable income and post-tax profits, so consumption, investment and national output all increase. Cutting interest rates is the expansionary choice; the other three options contract the economy.
• Transfer payments and G (Question 25): transfer payments are not spending on output, so they are left out of G when AD is calculated.

International economic issues (Questions 26–30)

• Exchange rates (Question 26): a higher US interest rate attracts capital inflows, raising demand for dollars and causing appreciation.
• Free trade (Questions 27 and 28): free trade brings more choice, specialisation and higher living standards, but a more equal income distribution is the least likely outcome. Raising the level of import quotas lets more imports in, so it reduces protection.
• Imports (Question 29): a higher import tariff raises import prices and cuts the volume imported. Income tax and interest rate cuts raise spending, including on imports.
• The pound (Question 30): demand for pounds falls and supply rises. If price levels abroad fall, UK goods become relatively dearer, so foreigners buy fewer UK exports (less demand for pounds) and UK residents buy more imports (more pounds supplied). A rise in UK interest rates would do the opposite to demand.

Where the marks are on 9708/12

• The macroeconomy carried 10 of the 30 marks, a third of the paper. National income accounting, AD/AS and fiscal policy all featured.
• The other four areas were worth 5 marks each. Questions 1 to 15 were microeconomics and Questions 16 to 30 macroeconomics and international issues, an even 15/15 split.
• Four questions needed a calculation: 6, 10, 13 and 23. Each has a trap in the base or the quantity used.
• Seven questions turned on a diagram: the two PPCs (2 and 3), the television supply shift (7), the housing market (8), the subsidy (13), the AD/AS point (20) and the foreign exchange market (30).
• Four questions were framed as negatives: “not correct” in Questions 2 and 5, “not included” in Question 25 and “least likely” in Question 27. Underline the negative before you choose.

How to self-mark 9708/12

1. Check each answer against the key above or the official mark scheme. Count one mark per correct letter.
2. Tag every wrong answer by topic, using the at-a-glance table, to see which area is costing the most.
3. Tag it by reason too: knowledge (for example, the market price to basic price adjustment), misread (missing the “not” in Questions 2, 5 and 25, or “least likely” in Question 27) or calculation (the wrong base for the PED percentage, or the wrong quantity for the subsidy).
4. Redo every calculation you got wrong with the formula written first, then the substitution.
5. Redraw the diagrams you misread (the PPC pivot, the surpluses and the currency market) and label which curve moved and why.

Sit 9708/12 as a timed mock

You have 60 minutes for 30 questions, two minutes each. Use two passes: answer the recall questions first, mark the calculations and diagrams, then come back to them.

Block	Questions	Time
The basic economic problem	1–5	9 minutes
The price system	6–10	10 minutes
Government microeconomic intervention	11–15	10 minutes
The macroeconomy	16–25	18 minutes
International economic issues	26–30	8 minutes
Second pass and check the answer sheet	–	5 minutes

The price system and intervention blocks get extra time because they hold three of the four calculations.

Other May/June 2026 9708 papers

• 9708 Paper 22 (AS Level Data Response and Essays)
• 9708 Paper 32 (A Level Multiple Choice)
• 9708 Paper 42 (A Level Data Response and Essays)

Practise and download

• Download 9708/12 and its mark scheme on the Learning Portal →
• All 9708 May/June 2026 papers: overview and marking patterns
• Try a free A Level Economics quiz

Need help with a 9708 topic? Book a free trial lesson with an A Level Economics tutor →

Frequently asked questions

What topics were on 9708 Paper 12 May/June 2026? +

The whole AS syllabus. The basic economic problem, the price system and government microeconomic intervention had 5 questions each, the macroeconomy had 10, and international economic issues had 5, ending with shifts in the demand and supply of the pound sterling.

How many marks is 9708/12 and how long is it? +

It has 30 multiple choice questions, one mark each, for a total of 30 marks. You have 1 hour and you may use a calculator.

Is 9708/12 an AS or A Level paper? +

It is Paper 1, the AS Level multiple choice paper. AS candidates sit it with Paper 2, and full A Level candidates sit it as well as Papers 3 and 4.

What was the answer to the subsidy question on 9708/12? +

C, $800. With the subsidy, 40 units are traded, and at that quantity the gap between the original supply curve (price $100) and the new one ($80) is $20 per unit. 20 × 40 = $800.

How many questions on 9708/12 2026 needed a calculation? +

Four: Question 6 (price elasticity of supply), Question 10 (price elasticity of demand for pizza), Question 13 (the cost of a subsidy read from a diagram) and Question 23 (government spending from a budget surplus).

Where can I download 9708/12 May/June 2026 and its mark scheme? +

Both are free to download and print on the Tutopiya Learning Portal, on the Cambridge AS & A Level Economics 9708 past papers page.

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