The London School of Economics and Political Science (LSE) is a world-leading institution for economics education and research, with its economics programmes consistently ranked among the top in the world. Specifically, its Economics and Econometrics subject is ranked 1st in the UK by QS. Drawing on LSE’s exceptional academic resources in economics, the LSE Economics Challenge is designed and reviewed by LSE economics professors, with a core mission of "bridging high school education and undergraduate economics studies at LSE".

The challenge covers not only foundational theories and qualitative analysis skills in macroeconomics and microeconomics, but also innovatively integrates theoretical and applied mathematics modules, highlighting the central role of mathematics and computational skills in economics. It aims to cultivate interdisciplinary talents who can use mathematical tools to solve economic problems, enabling students to adapt to the global trend of increasing mathematization in economics and advance to the frontier of the discipline. The inaugural 2025–2026 edition has already reached over 20 countries and regions worldwide, establishing an international platform for academic exchange in economics.

LSE is a global leader in economics education and research, with its Economics and Econometrics programme ranked 1st in the UK by QS. It will launch a new "Economics and Data Science" major in the 2026 application cycle.

Economics provides the theoretical framework, while mathematics offers the logical tools and empirical methods that make economics a more scientific, precise discipline. In the big data era, sectors like tech, fintech, investment banking and public policy demand talent with both economic literacy and strong quantitative skills.

The LSESU Economics Society's Economics Challenge reflects this forward-looking vision. Developed and reviewed by LSE economics professors, it bridges high school and undergraduate economics education. Covering macro/microeconomic theory and qualitative analysis, the challenge also integrates TMUA-aligned theoretical and applied mathematics modules, emphasizing the role of math and computing in economics. It aims to nurture interdisciplinary talents who can solve economic problems with mathematical tools, preparing students for the increasingly quantitative global economics landscape.

1.

If the consumer price index was 75 in the base year and 130 in the following year, then the inflation rate was

a.57%

b.58%

c.73%

d.42%

Explanation:

Inflation rate = percentage change of CPI = ((130/75)-1)x100%

2.

Assume the MPC = 0.75 and considering only the multiplier effect, if government taxation increases by $60 billion, then national income will

a.Decrease 45 billion.

b.Decrease 240 billion.

c.Increase 240 billion.

d.Decrease 180 billion.

Explanation:

multiplier = 1/(1-MPC) = 1/ (1-0.75) =4.

Potential change in national change income = multiplier x tax change x MPC = 4x60x0.75=180

3.

Ms. Jane resigned from her job with a $60,000 annual salary to open a coffee shop in her apartment. Her coffee shop’s annual revenue is $80,000, and her costs for coffee beans, facility maintenance, water, and electricity amount to $30,000 per year. Should Ms. Jane be satisfied with her coffee shop’s annual profit?

a.Yes, because her accounting profit is $50,000

b.Yes, because her economic profit is $50,000

c.No, because her economic loss is $20,000

d.No, because her economic loss is $10,000

Explanation:

Economic profit = Accounting profit – Implicit cost = $80,000 - $30,000 - $60,000 = -$10,000.

4.

Dawn, Inc. produces and sells notebook in a perfectly competitive market at the price of $3 per unit and hires all the workers it needs at the wage rate of $23. Assume worker is the only variable input, and the firm’s production schedule is provided in table.

Number of workers	Quantity of Notebook
0	0
1	10
2	21
3	28
4	33

Determine the profit-maximizing number of workers the firm should hire.

a.1

b.2

c.3

d.4

Explanation:

The firm maximizes profit where the value of the additional worker’s contribution (Marginal revenue) is just equal to or greater than the wage(Marginal cost). Hiring a third worker would add only $21 of revenue while costing $23, leading to a loss. Thus, the profit-maximizing number of workers is 2.

5.

Researcher Keynes is doing a field experiment.He discovers a random variable X that takes: ● X =2 with probability 0.4 ● X =10 with probability 0.6 What is E[X]and Var[X]?

A.15.36,6.80

B.5.20,15.36

C.5.20,6.80

D.6.80,15.36 √

Explanation:

The expected value of a discrete random variable is calculated as the sum of each possible value multiplied by its probability.For random variable X,which takes the value 2 with probability 0.4 and 10 with probability 0.6,E [X]=(20.4)+(100 .6)=0.8 +6=6.80.The variance of a discrete random variable is calculated as E[X²]-(E[X])². First, calculate E[X²]:E[X²]=(2²0.4)+(10²0.6)=(40 .4)+(1000 .6)=1.6 +60 =61.6.Then, Var[X]=61.6 -(6 .80)²=61.6 -46.24 =15.36.

6.

A researcher has a null hypothesis that study hours have no effect on exam scores.Using data, the researcher obtains an estimate of the effect of 2.5 with a standard error of 0.5.What is the value of the t-statistic in this context?

A.0.20

B.1.25

C.2.50

D.5.00 √

Explanation:

The t-statistic measures the ratio of the magnitude of an estimate to its standard error.It is calculated as the estimate divided by the standard error.Substituting these values into the t-statistic formula gives 2.5 /0.5 =5.00.

7.

How many solutions are there to (1 + 3 cos 3 θ )2 = 4 in the interval 0° ≤ θ ≤ 180° ?

A.3

B.4

C.5 √

D.6

Explanation:

We have (1 + 3cos3θ)2 = 4 if and only if 1 + 3cos3θ = ±2. We consider each possibility separately.
We have1 +3cos3θ = 2
if and only if 3cos3θ = 1
if and only if cos3θ = 1/3.
Since 0° ≤ θ ≤ 180° , we have 0° ≤ 3θ ≤ 540° , and there are 3 values of 3θ which have cos3θ = 1/3 in this interval. (One is
between 0° and 90° , one is between 270° and 360° , and one is between 360° and 450° , by considering the graph of y =
cosx.)
Now considering the other possibility, we have1 +3cos3θ = − 2
if and only if 3cos3θ = − 3
if and only if cos3θ = − 1.
Again, 0° ≤ 3θ ≤ 540° , but this time there are only 2 values of 3θ which satisfy the equation: 3θ = 180 and 3θ = 540° .
Neither of these values of 3θ overlap with the values of 3θ found earlier, so in total there are 3 +2 = 5 values of 3θ in the
interval 0° ≤ 3θ ≤ 540° , and hence 5 solutions to the original
equation in the given interval. The correct answer is option C.

8.

Let x be a real number.
Which one of the following statements is a sufficient condition for exactly three of the other four statements?

A. x ≥ 0

B. x = 1

C. x = 0 or x = 1 √

D. x ≥ 0 or x ≤ 1

E. x ≥ 0 and x ≤ 1

Explanation:

We work through them sequentially:
A If x ≥ 0, then B may be false, C may be false, D may be false and E may be false
B If x=1, then A is true, C is true, D is true and E is true
C If x=0 or x=1, then A is true, B may be false, D is true and E is true
D If x ≥ 0 or x ≤ 1, then A may be false (for example if x = − 1), B may be false, C may be false and E may be
false
E If x ≥ 0 and x ≤ 1, then A is true, B may be false, C may be false and D is true
The correct option is therefore C, which is sufficient for exactly three of the other four statements.

Registration Deadline: 2026.12.27

Competition Date: 2027.1.9*

Introduction

LSESU Economics Society

Consultant Professor

Dr. Judith Shapiro

Supporting Professor

LSESU Economics

ranked 1 in the QS UK ranking

Economics X Mathematics

Academic Syllabus

Sample Questions

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Rule