Edexcel A-Level Economics — Past Paper Questions

With reference to Extract A, explain the likely reasons for the change in price of electronic devices. Include a supply and demand diagram in your answer.

1.2.6 Price Determination

Examine two factors which might influence the supply of labour in the electronics industry.

3.5.2 Supply of Labour

Assess whether firms in the electronics industry benefit from economies of scale.

3.3.3 Economies of Scale

Discuss the likely concerns of the competition authorities regarding the proposed merger of the two companies referred to in Extract C.

3.1.2 Business Growth · 3.6.1 Government Intervention

With reference to Extract D, discuss possible methods of government intervention to reduce electronic waste.

1.3.2 Externalities · 1.4.1 Government Intervention in Markets

A small hotel in Scarborough has seen its energy bills increase from £2 000 to £8 000 per month. Small businesses do not have the energy management teams of larger companies to negotiate better deals. (Source adapted from: https://www.ft.com/content/d07797e7-2eb7-4240-b15d-692b39510def) Evaluate the microeconomic effects of rising energy bills on the hotel industry or an industry of your choice.

One of two options in Section C — candidates answered this or the other.

3.3.2 Costs · 3.3.4 Profits and Losses

Bytedance, which owns TikTok, has launched its own fragrance ‘Emotif’. The Beijing-based social media giant has already entered the food and drink markets. (Source adapted from: https://www.businessoffashion.com/news/china/tiktoks-parent-company-enters-chinas-perfume-market/) Evaluate the level of contestability in the fragrance industry or another industry of your choice.

One of two options in Section C — candidates answered this or the other.

3.4.7 Contestability

With reference to Figure 4 and your own knowledge, explain the distinction between a progressive and a regressive tax.

4.5.2 Taxation

With reference to Figure 4 and Extract A, examine the likely impact of the ‘freeze in income tax thresholds’ (Extract A line 1) on aggregate demand.

2.2.1 Aggregate Demand · 4.5.2 Taxation

Assess whether a fiscal deficit and national debt should be a cause for concern for the UK government.

4.5.3 Public Sector Finances

With reference to Extract B, discuss the use of quantitative easing in preventing deflation.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Discuss supply-side policies the UK government could introduce to stimulate economic growth.

2.6.3 Supply-Side Policies

In 2021 Brazil’s current account deficit on the balance of payments was US$46.12 billion. The Central Bank of Brazil intervened to sell its own currency, the real, on September 23rd 2022. This was the first time it has intervened in foreign currency markets since December 2021. (Source adapted from: https://www.statista.com/statistics and https://www.centralbanking.com/central-banks/reserves/foreign-exchange/7953193/brazil-makes-first-fx-intervention-of-the-year) Evaluate macroeconomic policies that could be used to reduce a current account deficit. Refer to a country of your choice in your answer.

One of two options in Section C — candidates answered this or the other.

4.1.7 Balance of Payments

In 2020, exports as a share of world GDP were 12% higher than in 2000, almost twice as high as 50 years ago. (Source adapted from: https://www.dhl.com/content/dam/dhl/global/dhl-spotlight/documents/pdf/2021-gci-update-report.pdf) Evaluate the possible factors contributing to globalisation.

One of two options in Section C — candidates answered this or the other.

4.1.1 Globalisation

With reference to Figure 1 and Extract A, explain what is meant by ‘price inelastic demand’ (line 8).

1.2.3 Elasticities of Demand

Examine one likely externality that arises when a producer generates electricity by burning gas. Use a diagram to show the external costs of production.

1.3.2 Externalities

With reference to Figure 2 and Extract B, discuss the possible constraints on business growth for firms supplying energy to households in the UK.

3.1.2 Business Growth

Evaluate the microeconomic and macroeconomic factors that explain gender-based wage differences in the UK oil and gas industry.

One of two options in Section A — candidates answered this or the other.

3.5.3 Wage Determination

Evaluate the microeconomic and macroeconomic advantages for a country specialising in energy production using gas.

One of two options in Section A — candidates answered this or the other.

4.1.2 Specialisation and Trade

Explain one reason why a country might operate a managed exchange rate. Refer to Extract D in your answer.

4.1.8 Exchange Rates

With reference to the second paragraph of Extract E, examine two likely problems for the expansion of the chocolate industry in Ghana.

4.3.2 Factors Influencing Growth

Discuss factors influencing the level of aggregate demand in Ghana. Use an aggregate demand and aggregate supply diagram in your answer.

2.2.1 Aggregate Demand

Evaluate the microeconomic and macroeconomic effects of high interest rates in Ghana, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Evaluate the microeconomic and macroeconomic effects of Ghana joining the African Continental Free Trade Agreement (Extract F).

One of two options in Section B — candidates answered this or the other.

4.1.5 Trading Blocs and the WTO

With reference to Figure 1, explain the market structure that best describes the market for UK online streaming services.

3.4.4 Oligopoly

With reference to the information provided, assess whether Netflix subscribers behave rationally.

1.2.10 Alternative Views of Consumer Behaviour · 1.2.1 Rational Decision Making

With reference to the information provided, examine the likely numerical value of the cross elasticity of demand between UK online streaming services.

1.2.3 Elasticities of Demand

With reference to Extract C, discuss the likely private and external benefits of viewing educational websites and TV programmes.

1.3.2 Externalities

Using examples from Figure 2 or Extract B, discuss the likely impact of price discrimination on a firm’s profits. Use a relevant diagram to support your answer.

3.4.5 Monopoly · 3.3.1 Revenue

The average UK household energy bill (gas and electric combined) rose 80% from £1 971 in 2021 to £3 549 in 2022. (Source adapted from: https://www.telegraph.co.uk/money/consumer-affairs/energy-price-cap-rise-october-2022-what-happen-household-bills/) Evaluate possible methods of government intervention to control household energy bills in the UK.

One of two options in Section C — candidates answered this or the other.

1.4.1 Government Intervention in Markets · 3.6.1 Government Intervention

Using 2021 estimates of carbon emissions, it is estimated that a petrol car journey from London to Glasgow emits approximately 3.3 times more carbon dioxide per passenger than the equivalent journey by train. (Source adapted from: https://www.gov.uk/government/statistics/transport-and-environment-statistics-autumn-2021/transport-and-environment-statistics-autumn-2021) Evaluate possible methods of government intervention to reduce carbon emissions caused by road transport in the UK.

One of two options in Section C — candidates answered this or the other.

1.3.2 Externalities · 1.4.1 Government Intervention in Markets

With reference to Extract A, explain what is meant by a ‘regional trade agreement’ (Extract A, line 7).

4.1.5 Trading Blocs and the WTO

With reference to Extract A, examine two causes of the high cost of transporting goods between African countries.

4.3.2 Factors Influencing Growth

Discuss the impact of improved transport links between African countries on economic growth rates.

4.3.2 Factors Influencing Growth · 2.5.1 Causes of Growth

Assess two likely benefits of debt relief to Angola. Refer to Extract B in your answer.

4.3.3 Development Strategies

Discuss market-orientated strategies the Angolan government could use to improve development.

4.3.3 Development Strategies

In 2022 the value of UK exports fell by 14% compared with 2020. In contrast, the global average increase in exports was 8.2% over the same time period. The UK’s competitiveness also fell, dropping five places from 18th in 2021 to 23rd in 2022 in the world competitiveness rankings. (Sources: adapted from https://www.ft.com/content/021c629d-5853-4111-9600-ab5f0eb65a35 and https://www.imd.org/centers/world-competitiveness-center/rankings/world-competitiveness) Evaluate macroeconomic policies that could be used to increase international competitiveness in the UK’s export markets.

One of two options in Section C — candidates answered this or the other.

4.1.9 International Competitiveness

UK inflation, as measured by the CPI, rose to 10.1% in the 12 months to July 2022, compared to 2.0% in the 12 months to July 2021. (Source: adapted from https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2022) Evaluate macroeconomic policies, apart from monetary policy, the UK government could use to reduce inflation.

One of two options in Section C — candidates answered this or the other.

2.1.2 Inflation · 2.6.2 Demand-Side Policies

Explain the difference between a positive and a normative statement, using an example of each from Extract A.

1.1.2 Positive and Normative Statements

Examine two reasons for the rise in inflation in the UK. Refer to the information provided in your answer.

2.1.2 Inflation

Discuss the likely impact of a rise in gas prices on a firm that uses a large amount of gas in its production process. Use a cost and revenue diagram to support your answer.

3.3.2 Costs

Evaluate microeconomic and macroeconomic policies that could be used to reduce inequality in the UK.

One of two options in Section A — candidates answered this or the other.

4.2.2 Inequality

Evaluate the likely microeconomic and macroeconomic effects of tax cuts in the UK.

One of two options in Section A — candidates answered this or the other.

4.5.2 Taxation · 2.6.2 Demand-Side Policies

Using the data provided in Extract D, explain one role of financial markets.

4.4.1 Role of Financial Markets

Examine two reasons why retailers on the high street tend to remain small.

3.1.1 Sizes and Types of Firms

Discuss possible methods of price and non‑price competition that firms could use to increase the value of sales on the high street.

3.4.4 Oligopoly · 3.3.1 Revenue

Evaluate the microeconomic and macroeconomic effects of falling house prices.

One of two options in Section B — candidates answered this or the other.

2.2.2 Consumption · 4.4.1 Role of Financial Markets

Evaluate the microeconomic and macroeconomic effects of labour shortages in the UK, or a developed economy of your choice.

One of two options in Section B — candidates answered this or the other.

3.5.2 Supply of Labour · 2.1.3 Employment and Unemployment

With reference to Figure 1, calculate the three-firm concentration ratio for branded coffee shop chains.

3.4.4 Oligopoly

With reference to Figure 2 and your understanding of price elasticity, examine two factors that may cause significant changes in the international price of coffee beans.

1.2.5 Price Elasticity of Supply · 1.2.6 Price Determination

Profit maximisation is assumed to be the business objective of most firms. With reference to Extract A, assess whether this is the case for coffee shop owners.

3.2.1 Business Objectives

Using a cost and revenue diagram, discuss the likely impact of ‘rising costs’ for coffee shops on their profitability (Extract A, line 2).

3.3.2 Costs · 3.3.4 Profits and Losses

With reference to the information provided, discuss whether the coffee shop market is contestable.

3.4.7 Contestability

Tesla held an 82% market share of the electric vehicle market in the United States during the first half of 2020. (Source: adapted from https://electrek.co/2020/08/21/tesla-holds-us-ev-market-losing-federal-tax-credit/) Evaluate whether a monopoly is likely to operate efficiently. Refer to at least one monopoly of your choice.

One of two options in Section C — candidates answered this or the other.

3.4.5 Monopoly · 3.4.1 Efficiency

Some occupations in the UK are facing large labour shortages. Hard-to-fill vacancies include qualified chefs, software engineers, construction workers and qualified nurses. (Source: adapted from https://www.ft.com/content/36baacce-ddd0-11e8-9f04-38d397e6661c) Evaluate the factors that might influence the supply of labour in an occupation of your choice.

One of two options in Section C — candidates answered this or the other.

3.5.2 Supply of Labour

Using a Lorenz curve diagram, explain how income inequality is measured using the Gini coefficient. Refer to Extract A in your answer.

4.2.2 Inequality

With reference to Figure 1 and Extract A, examine two likely causes of income inequality within the UK.

4.2.2 Inequality

With reference to Figure 2, assess whether an increase in real income improves subjective happiness within the UK.

2.1.1 Measuring Economic Growth · 2.5.4 The Impact of Economic Growth

With reference to Extract C and your own knowledge, discuss methods the UK government could use to increase tax revenue.

4.5.2 Taxation

With reference to Extract B, discuss the benefits of an increase in infrastructure spending on the UK economy. Use an aggregate demand and aggregate supply diagram to support your answer.

2.2.4 Government Expenditure · 2.6.3 Supply-Side Policies

Both China and the United States have been gradually increasing the tariffs imposed on each other’s exports as their trade dispute continues. The IMF estimated that the trade dispute between China and the United States would reduce global GDP growth by 0.8 percentage points by the end of 2020. (Source: adapted from https://www.theguardian.com/business/2019/oct/15/imf-recession-world-growth-forecast-central-banks) Evaluate the likely impact of an increase in protectionism on the global economy.

One of two options in Section C — candidates answered this or the other.

4.1.6 Restrictions on Free Trade

With global economic growth slowing and inequality rising, the case against globalisation is strengthening. But there are also many benefits to globalisation. Global trade and international trade agreements allow countries to focus on their strengths and share expertise, as well as reducing risk through diversification. (Source: adapted from https://www.ft.com/content/7b365844-9b75-11ea-adb1-529f96d8a00b) Evaluate the likely impact of globalisation on the global economy.

One of two options in Section C — candidates answered this or the other.

4.1.1 Globalisation

Using the information provided, explain one externality that arises in the food delivery market.

1.3.2 Externalities

With reference to Extract B, examine whether the demand for delivered food is price inelastic and income elastic.

1.2.3 Elasticities of Demand

With reference to Extract C, discuss the likely effects of increasing integration within the food delivery market.

3.1.2 Business Growth

Evaluate the microeconomic and macroeconomic effects of a depreciation of the pound. Refer to restaurants or other food delivery services in your answer.

One of two options in Section A — candidates answered this or the other.

4.1.8 Exchange Rates

Evaluate the microeconomic and macroeconomic effects of significant increases in the minimum wage. Refer to restaurants or other food delivery services in your answer.

One of two options in Section A — candidates answered this or the other.

3.5.3 Wage Determination · 3.6.1 Government Intervention

Explain what is meant by the Lewis model. Refer to Extract D in your answer.

4.3.2 Factors Influencing Growth

Examine two demographic factors influencing development in Kenya.

4.3.2 Factors Influencing Growth

Using the example of cut flowers (Extract F), discuss how the concept of absolute advantage may lead to growth in Kenya. Use numerical or diagrammatic analysis in your answer.

4.1.2 Specialisation and Trade

Evaluate the microeconomic and macroeconomic effects of decreasing interest rates in Kenya, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Evaluate the microeconomic and macroeconomic strategies that could be used to promote development in Kenya, or another developing country of your choice.

One of two options in Section B — candidates answered this or the other.

4.3.3 Development Strategies

Explain the likely impact of diminishing marginal productivity of labour on cabin crew staffing levels. Refer to Extract A in your answer.

3.5.1 Demand for Labour · 3.3.2 Costs

Examine the likely impact of Thomas Cook’s plan ‘to reduce their airline emissions’ (Extract B, line 6) on the social optimum position. Use an appropriate externalities diagram in your answer.

1.3.2 Externalities

With reference to Extract C, assess whether Thomas Cook’s failure was caused by the principal-agent problem.

3.2.1 Business Objectives · 1.3.4 Information Gaps

With reference to Extract C, discuss the proposed government subsidy to prevent Thomas Cook from reaching its shut-down point.

3.3.4 Profits and Losses · 1.2.9 Indirect Taxes and Subsidies

With reference to the information provided, discuss the decision by Jet2 to increase its package holiday prices.

3.3.1 Revenue · 1.2.3 Elasticities of Demand

The national living wage, the minimum wage for 25-year-olds and over, is expected to rise to more than £10.50 an hour in 2024 compared with £8.72 in 2020. The wage does not apply to the UK’s self-employed and ‘gig economy’ workers. Some economists said the increase was ambitious. Business groups warned that employers in sectors such as social care could be hit hard. In large parts of the north of England the living wage has already reached two-thirds of local median earnings, said Professor Shackleton. (Source adapted from: https://www.theguardian.com/uk-news/2020/mar/11/budget-2020-national-living-wage-national-insurance) Evaluate the disadvantages of a significant increase in the national living wage on a specific labour market, such as that for social care workers.

One of two options in Section C — candidates answered this or the other.

3.5.3 Wage Determination · 3.6.1 Government Intervention

In many industries, such as banking, health insurance, internet search engines, pharmaceuticals, social media and telecommunications, there have been increases in market concentration. Evaluate the possible consequences for business decision making of increased market concentration. Refer to industries of your choice in your answer.

One of two options in Section C — candidates answered this or the other.

3.4.4 Oligopoly

Using the data in Figures 1 and 2, calculate the change in the level of total aid funding to Rwanda between 2011 and 2012.

4.3.3 Development Strategies

With reference to the information provided, examine two likely benefits for the Rwandan economy of the growth in the country’s population.

4.3.2 Factors Influencing Growth

With reference to the information provided, assess the likely impact on the Rwandan economy of the change in aid received between 2017 and 2018.

4.3.3 Development Strategies

Discuss the likely impact on Rwandan consumers and clothing manufacturers of the increase in the tariff on imports of second-hand clothes. Use an appropriate diagram to support your answer.

4.1.6 Restrictions on Free Trade

Discuss policies, other than import tariffs, that the Rwandan government could use to develop its manufacturing industries.

4.3.3 Development Strategies

The European Central Bank introduced a new round of quantitative easing (QE) in March 2020, purchasing up to €750 billion of assets. The objective of this QE was to reduce the serious risks to the effectiveness of monetary policy resulting from a significant recession. The European Central Bank’s target for inflation remains at ‘below but close to 2%’. (Source adapted from: https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200318_1~3949d6f266.en.html) Evaluate the effectiveness of quantitative easing during ‘a significant recession’.

One of two options in Section C — candidates answered this or the other.

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

It has been estimated that if climate change led to the world’s temperature rising 2.5 °C compared to the temperature in 2010, then global GDP per capita would be 15% lower by 2100. If temperatures rise by 4 °C compared to the temperature in 2010, then by 2100 global GDP per capita would decline by more than 30%. (Source adapted from: https://www.nature.com/articles/s41586-018-0071-9) Evaluate the potential trade-offs between environmental protection and other macroeconomic objectives.

One of two options in Section C — candidates answered this or the other.

2.6.4 Conflicts Between Objectives · 2.5.4 The Impact of Economic Growth

Using the information provided, explain the market structure that best describes the hand car wash (HCW) industry in the UK.

3.4.3 Monopolistic Competition

Examine two reasons why the demand for HCWs increases during a period when consumer ‘incomes fail to keep up with inflation’ (Extract A line 8).

1.2.3 Elasticities of Demand

Discuss the likely effects of changes in the level of migration on firms such as HCWs in the UK. Use a labour market diagram and the information provided to support your answer.

3.5.2 Supply of Labour

Evaluate the microeconomic and macroeconomic factors which determine the number of firms in an industry. Refer to HCWs or another industry of your choice.

One of two options in Section A — candidates answered this or the other.

3.4.7 Contestability · 3.1.1 Sizes and Types of Firms

Evaluate the microeconomic and macroeconomic effects of increased government intervention in an industry. Refer to HCWs or another industry of your choice.

One of two options in Section A — candidates answered this or the other.

3.6.1 Government Intervention

Explain one reason why a country such as Germany wants to avoid an increase in the national debt relative to GDP (Figure 2).

4.5.3 Public Sector Finances

Examine two likely effects of the forecast change in the rate of unemployment between 2019 to 2020, on firms in Germany. Refer to Figure 4 in your answer.

2.1.3 Employment and Unemployment

Discuss the likely impact of investment in new technology on the profitability of firms in Germany, as described in Extract C line 20. Use a cost and revenue diagram to support your answer.

2.2.3 Investment · 3.3.2 Costs

Evaluate the microeconomic and macroeconomic factors which are likely to determine the rate of economic growth in Germany relative to other developed economies.

One of two options in Section B — candidates answered this or the other.

2.5.1 Causes of Growth

Evaluate the microeconomic and macroeconomic impacts of ‘a much more expansionary fiscal policy’ (Extract C line 23) on the German economy.

One of two options in Section B — candidates answered this or the other.

2.6.2 Demand-Side Policies

Refer to Figure 1. Explain the likely effect of the change in subsidy levels between 2017 and 2018 on rail fares. Include a supply and demand diagram in your answer.

1.2.9 Indirect Taxes and Subsidies

With reference to Figure 2, examine two possible factors which may have influenced demand for rail travel since 2008.

1.2.2 Demand

Assess whether complete nationalisation of the rail industry might protect employees.

3.6.1 Government Intervention

With reference to Extract A, paragraph 3, discuss whether the rail network can be considered to be a natural monopoly.

3.4.5 Monopoly

Discuss the likely benefits of price discrimination to rail passengers. Use a diagram to support your answer.

3.4.5 Monopoly · 3.3.1 Revenue

The International Energy Agency has predicted that oil use by cars will peak in 2025 because of the increasing number of drivers switching to electric vehicles. (Source adapted from: https://www.thetimes.co.uk) Evaluate the likely microeconomic consequences of consumers shifting from vehicles powered by fuel obtained from oil to electric‑powered vehicles.

One of two options in Section C — candidates answered this or the other.

1.2.6 Price Determination · 1.3.2 Externalities

‘Amazon.com, the giant online retailer, has too much power.’ It uses its market power to put a squeeze on publishers, in effect driving down the prices it pays for books. If a publisher refuses, Amazon may take action by ‘delaying their delivery, raising their prices, and steering customers to other publishers’. (Source adapted from: https://www.nytimes.com) Evaluate the likely costs of a monopsony operating in a market such as book retailing.

One of two options in Section C — candidates answered this or the other.

3.4.6 Monopsony

With reference to Figure 1 and Extract A, explain the likely impact of a Fairtrade scheme on agricultural communities.

4.3.3 Development Strategies

Examine two ways, apart from Fairtrade schemes, in which cocoa farmers could boost their incomes despite the falling price of cocoa.

4.3.3 Development Strategies · 1.2.5 Price Elasticity of Supply

Discuss the problems for the Ivory Coast of dependency on cocoa for a large proportion of their exports. Refer to Figure 2 in your answer.

4.1.3 Pattern of Trade · 4.3.2 Factors Influencing Growth

Nigeria is considering joining the African Continental Free Trade Agreement. Assess policies the Nigerian government could use in response to the concerns of the country’s ‘manufacturers and trade unions’ (Extract B paragraph 3) if they join this trading bloc.

4.1.5 Trading Blocs and the WTO

Discuss the likely benefits of increased economic integration for sub‑Saharan African countries.

4.1.5 Trading Blocs and the WTO · 4.3.3 Development Strategies

In 2018, the United States Government cut the corporation tax rate (tax on company profits) from 35% to 21%. Income tax rates for US citizens were also reduced: for example, the top rate of income tax was cut from 39.6% to 37%. (Source adapted from: https://www.nytimes.com/) Evaluate the likely impact of cutting tax rates as a policy to increase economic growth.

One of two options in Section C — candidates answered this or the other.

4.5.2 Taxation · 2.6.3 Supply-Side Policies

In terms of income distribution and wealth distribution Brazil is one of the most unequal countries in the world. Its income Gini coefficient is 0.449 and it is ranked number 2 in the world for its wealth inequality. Evaluate possible economic causes of income and wealth inequalities within a country such as Brazil. (Source: https://www.gfmag.com/)

One of two options in Section C — candidates answered this or the other.

4.2.2 Inequality

Explain how the Turkish central bank intervenes in the currency market to prevent ‘excessive appreciation or depreciation of the Turkish lira’ (Extract A, lines 7–8).

4.1.8 Exchange Rates · 4.4.3 Role of Central Banks

Examine two reasons why the Turkish government may want to avoid a significant fall in the exchange rate of the Turkish lira.

4.1.8 Exchange Rates

Discuss the likely success of policies to reduce the consumption of single‑use plastic bags in cities such as Istanbul.

1.4.1 Government Intervention in Markets · 1.3.2 Externalities

Evaluate the likely microeconomic and macroeconomic effects of a rise in interest rates in Turkey.

One of two options in Section A — candidates answered this or the other.

2.6.2 Demand-Side Policies

Evaluate the microeconomic and macroeconomic impact of large infrastructure projects such as the building of a third airport in Istanbul.

One of two options in Section A — candidates answered this or the other.

2.2.4 Government Expenditure · 2.6.3 Supply-Side Policies

With specific reference to Figure 3, explain why productivity is measured by ‘GDP per hour worked, nominal values at PPPs’.

2.1.1 Measuring Economic Growth

Apart from literacy and numeracy skills in young workers, examine one reason for the trend in productivity in the UK, over the period shown in Figure 4.

2.6.3 Supply-Side Policies · 4.1.9 International Competitiveness

Discuss factors that are causing many high street retailers in the UK to close some branches or shut down completely. Use a cost and revenue diagram to support your answer.

3.3.2 Costs · 3.3.4 Profits and Losses

Evaluate possible microeconomic and macroeconomic policies which could be used to improve UK competitiveness.

One of two options in Section B — candidates answered this or the other.

4.1.9 International Competitiveness

Evaluate the microeconomic and macroeconomic effects of a decline in the literacy and numeracy skills of a country’s young workers.

One of two options in Section B — candidates answered this or the other.

2.6.3 Supply-Side Policies · 3.5.1 Demand for Labour

With reference to Extract A, explain the difference between a positive statement and a normative statement.

1.1.2 Positive and Normative Statements

With reference to Extract B, examine the likely benefits to consumers of the integration between BT and EE.

3.1.2 Business Growth

With reference to Extract C, assess possible reasons why many ‘landline-only’ customers do not switch to a cheaper telephone provider.

1.3.4 Information Gaps · 1.2.10 Alternative Views of Consumer Behaviour

Discuss one likely reason for the rise in BT’s profit (Figure 2, Extracts B and C). Use a cost and revenue diagram to support your answer.

3.3.4 Profits and Losses · 3.3.1 Revenue

Discuss methods of government intervention to protect consumers within the utilities markets, such as energy and telecommunications.

3.6.1 Government Intervention

In July 2017 it was announced that only a third of the BBC’s 96 top earning presenters were women and that its seven highest-paid presenters were all men. According to the High Pay Centre, in 2018, UK chief executives can earn 120 times more than the average full-time worker earning £28 758. With reference to an industry of your choice, evaluate why wage differences exist within the UK labour market.

One of two options in Section C — candidates answered this or the other.

3.5.3 Wage Determination

In October 2017 Scania, the Volkswagen-owned truck maker, was fined €880 million (£771 million) by the European Commission for colluding with five other truck manufacturers over a 14-year period. The firms had agreed to coordinate prices after experiencing additional costs of meeting emission regulations. With reference to an industry of your choice, evaluate why some firms engage in collusive behaviour.

One of two options in Section C — candidates answered this or the other.

3.4.4 Oligopoly

With reference to Extract A, explain the role of forward markets in currencies.

4.1.8 Exchange Rates · 4.4.1 Role of Financial Markets

With reference to Extract A and Figure 1, examine the likely impact of the change in the sterling exchange rate on the UK economy.

4.1.8 Exchange Rates

With reference to the last paragraph in Extract C, assess the impact of a fall in real incomes on subjective happiness.

2.1.1 Measuring Economic Growth

With reference to Extract C, discuss the potential conflicts between macroeconomic objectives when the central bank attempts to control inflation.

2.6.4 Conflicts Between Objectives · 2.1.2 Inflation

Discuss whether providing substantial government financial support to banks is the best policy response during a financial crisis.

4.4.2 Market Failure in Finance · 4.4.3 Role of Central Banks

Three of Africa’s main trading blocs have agreed to form the Tripartite Free Trade Agreement (TFTA). This will create one of the world’s largest free trade areas, stretching across 26 countries with a combined GDP of around £1 trillion. (Source: https://uk.reuters.com/article/uk-africa-trade/mega-african-trade-bloc-paves-way-for-continental-commerce-idUKKBN0OR28M20150611) Evaluate the effects of the growth of trading blocs such as the TFTA on global trading patterns.

One of two options in Section C — candidates answered this or the other.

4.1.5 Trading Blocs and the WTO · 4.1.3 Pattern of Trade

Japan’s budget deficit for 2017/18 is expected to be 4.6% of GDP. Its national debt is forecast to increase to above 250% of GDP by 2019. Evaluate the impact of a large fiscal deficit and national debt on a country’s economy.

One of two options in Section C — candidates answered this or the other.

4.5.3 Public Sector Finances

With reference to Figure 1 and Extract A, explain what is meant by a ‘highly concentrated’ market for potato crisps (Extract A, lines 2–3).

3.4.4 Oligopoly

Apart from changes in indirect taxes and subsidies, examine two causes of income inequality within a developed economy such as the UK.

4.2.2 Inequality

In Extract A, lines 15–16, it was suggested that some firms may respond to the advertising ban by cutting the prices of their products. Using game theory and the information provided in Figure 1 and Extract A, discuss the effects on firms of cutting prices in an oligopolistic market.

3.4.4 Oligopoly

Evaluate the microeconomic and macroeconomic effects of increased government spending on education to promote healthy eating in the UK.

One of two options in Section A — candidates answered this or the other.

2.2.4 Government Expenditure · 1.3.2 Externalities

Evaluate the likely microeconomic and macroeconomic effects of imposing a tax on HFSS foods.

One of two options in Section A — candidates answered this or the other.

1.2.9 Indirect Taxes and Subsidies · 1.3.2 Externalities

With reference to Extract D line 21, explain why ‘opportunity cost’ is a problem for governments of developing countries when servicing debt.

1.1.3 The Economic Problem · 4.3.3 Development Strategies

Examine two reasons, apart from access to finance, why 90% of the manufacturing sector in Mozambique ‘is made up of small enterprises’ (Extract E, line 9).

3.1.1 Sizes and Types of Firms · 4.3.2 Factors Influencing Growth

Discuss whether borrowers benefit from microfinance. Make reference to Mozambique in your answer.

4.3.3 Development Strategies · 4.4.1 Role of Financial Markets

Evaluate the microeconomic and macroeconomic factors, apart from access to credit and banking, influencing growth and development in Mozambique.

One of two options in Section B — candidates answered this or the other.

4.3.2 Factors Influencing Growth

Evaluate the likely microeconomic and macroeconomic effects of relatively high inflation rates in many African countries.

One of two options in Section B — candidates answered this or the other.

2.1.2 Inflation

With reference to Figure 1, explain one likely reason for the overall trend in the real price of gas and electricity.

1.2.6 Price Determination

With reference to Extract A, discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market.

3.6.1 Government Intervention · 3.4.7 Contestability

With reference to Extract B, assess how the regulation of energy suppliers’ profits is likely to affect consumers and suppliers in the energy market.

3.6.1 Government Intervention · 3.6.2 Impact of Intervention

With reference to Extract A and your own knowledge, examine two possible reasons for the change in price elasticity of demand for electricity over time.

1.2.3 Elasticities of Demand

With reference to Extract C and your own knowledge, discuss policies businesses and government might implement to reduce labour immobility to benefit the energy sector.

3.5.2 Supply of Labour

In September 2016 the government approved the building of an £18 billion nuclear power station, Hinkley Point C, which will supply 7% of UK electricity for up to 60 years. The power station is funded by Chinese and French investment. Evaluate the likely private costs and external costs involved in such major power station construction projects. Use an appropriate externalities diagram in your answer.

One of two options in Section C — candidates answered this or the other.

1.3.2 Externalities · 1.3.1 Types of Market Failure

In July 2016 Apple’s share of the UK market for smartphones was 38%. Evaluate whether such a high market share for one company is in the consumer interest. Use appropriate diagrammatic analysis in your answer.

One of two options in Section C — candidates answered this or the other.

3.4.5 Monopoly · 3.4.1 Efficiency

With reference to the information provided, explain the distinction between absolute poverty and relative poverty.

4.2.1 Absolute and Relative Poverty

With reference to the information provided and your own knowledge, examine two factors that might explain the differing rates of decline in absolute poverty in East Asia and Sub-Saharan Africa.

4.3.2 Factors Influencing Growth · 4.2.1 Absolute and Relative Poverty

With reference to Extract A, discuss two macroeconomic policies, apart from protectionism, that a government could use to reduce the negative effects of globalisation.

4.1.1 Globalisation · 4.5.4 Policies in a Global Context

Assess the view that ‘some level of inequality is desirable to maintain an appropriate incentive structure in the economy’ (Extract B, lines 19 and 20).

4.2.2 Inequality

Discuss the role of the financial sector in the growth and development of developing countries.

4.4.1 Role of Financial Markets · 4.3.3 Development Strategies

In 2016 the UK Chancellor of the Exchequer announced that the government would spend an extra £23 billion on innovation and infrastructure over the following five years. Evaluate the likely economic effects of this planned increase in government expenditure.

One of two options in Section C — candidates answered this or the other.

2.2.4 Government Expenditure · 2.4.4 The Multiplier

The British pound fell by over 10% to a 30-year low against the US dollar after the UK voted to leave the European Union. To what extent will this depreciation impact on future economic growth in the UK?

One of two options in Section C — candidates answered this or the other.

4.1.8 Exchange Rates · 2.5.1 Causes of Growth

With reference to Figure 1, briefly explain the market structure that best describes the UK branded coffee shop market.

3.4.3 Monopolistic Competition

With reference to Figure 3 and other information provided, discuss the price and non-price strategies that Starbucks may use to increase profitability.

3.4.4 Oligopoly · 3.3.1 Revenue

Examine the advantages of using an indirect tax as a means of reducing the use of disposable coffee cups.

1.2.9 Indirect Taxes and Subsidies · 1.3.2 Externalities

Evaluate the microeconomic and macroeconomic factors that may influence Starbucks’ decision whether to expand in a particular country.

One of two options in Section A — candidates answered this or the other.

3.1.2 Business Growth · 4.1.1 Globalisation

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of increased UK demand for coffee at branded coffee shops.

One of two options in Section A — candidates answered this or the other.

1.2.2 Demand · 2.2.1 Aggregate Demand

Using the data in Figure 4 and other information provided, explain the likely change to Indonesia’s terms of trade since 2011.

4.1.4 Terms of Trade

Examine the likely effects on the profitability of Indonesian rice farmers of the government’s increased investment in dams (Extract E, lines 43-48). Use a cost and revenue diagram to support your answer.

3.3.2 Costs · 4.3.3 Development Strategies

Discuss the benefits of aid to Indonesia.

4.3.3 Development Strategies

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects on Indonesia of the volatility of prices of commodities such as coal.

One of two options in Section B — candidates answered this or the other.

4.1.3 Pattern of Trade · 1.2.5 Price Elasticity of Supply

Evaluate the likely microeconomic and macroeconomic effects of the supply-side policies recently introduced in Indonesia.

One of two options in Section B — candidates answered this or the other.

2.6.3 Supply-Side Policies · 4.3.3 Development Strategies

With reference to Figure 1 and Extract A, explain one likely reason for the change in the four-firm concentration ratio of the supermarket sector between 2010 and 2015.

3.4.4 Oligopoly

With reference to Figure 2 and Extract A, discuss the possible impact of supermarket monopsony power on both food suppliers and consumers.

3.4.6 Monopsony

Examine measures the government might use to restrict the monopsony power of supermarkets.

3.6.1 Government Intervention · 3.4.6 Monopsony

Assess the extent to which ‘information gaps’ (Extract B, lines 5 and 6) and ‘irrational behaviour’ (Extract B, line 11) are the main causes of food waste in the UK.

1.3.4 Information Gaps · 1.2.10 Alternative Views of Consumer Behaviour

Discuss the likely problems for Sainsbury’s and Morrisons if the suggested merger between them goes ahead. Refer to Figure 1, Extract C and your own knowledge in your answer.

3.1.2 Business Growth · 3.3.3 Economies of Scale

In 2015 a report by Public Health England recommended the imposition of a 20% tax on the sale of soft drinks that contain high levels of sugar. Evaluate the likely microeconomic effects of such a tax.

One of two options in Section C — candidates answered this or the other.

1.2.9 Indirect Taxes and Subsidies · 1.3.2 Externalities · 1.4.1 Government Intervention in Markets

‘Revenue maximisation is a more realistic business objective than profit maximisation for many businesses.’ To what extent do you agree with this statement? Refer to an industry of your choice in your answer.

One of two options in Section C — candidates answered this or the other.

3.2.1 Business Objectives

With reference to Figure 1, calculate the percentage change in the value of the euro in pounds from the start of 2009 to the start of 2015.

4.1.8 Exchange Rates

With reference to the information provided and your own knowledge, examine two factors which might explain the change in the rate of Eurozone inflation as shown in Figure 2.

2.1.2 Inflation

Since mid-2015 the euro has appreciated. Assess the likely impact of an appreciation of the euro on the current account of the balance of payments for Eurozone countries.

4.1.8 Exchange Rates · 4.1.7 Balance of Payments

Discuss the likely success of the ECB’s quantitative easing programme in moving Eurozone inflation closer to ‘the central bank’s ceiling of 2%’ (Extract A, line 17).

2.6.2 Demand-Side Policies · 4.4.3 Role of Central Banks

Discuss ‘looser fiscal policy’ and ‘supply-side reforms’ (Extract A, lines 20 and 21) that may be used by governments of Eurozone countries to increase economic growth.

2.6.2 Demand-Side Policies · 2.6.3 Supply-Side Policies

Since the global financial crisis of 2008 there have been over 5 700 increases in tariffs, quotas and administrative controls on international trade. Evaluate the likely effects of an increase in protectionism on the economy of a developing country of your choice.

One of two options in Section C — candidates answered this or the other.

4.1.6 Restrictions on Free Trade

Global oil prices fell from a 2008 peak of $147 a barrel to $27 in 2016. Evaluate the likely macroeconomic consequences of a significant fall in global oil prices.

One of two options in Section C — candidates answered this or the other.

2.1.2 Inflation · 2.3.2 Short-Run Aggregate Supply

With reference to Figure 2, explain one likely reason for the change in the Chile peso exchange rate between 2013 and 2015.

4.1.8 Exchange Rates

Examine the likely impact of externalities of copper mining on firms and communities within Chile.

1.3.2 Externalities

Apart from externalities, discuss the problems that Chile faces as a result of dependency on copper mining.

4.1.3 Pattern of Trade · 4.3.2 Factors Influencing Growth

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of policies that could be used to stimulate economic growth and development in Chile.

One of two options in Section A — candidates answered this or the other.

4.3.3 Development Strategies · 2.5.1 Causes of Growth

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic impact on Chile’s economy of changes in the level of investment.

One of two options in Section A — candidates answered this or the other.

2.2.3 Investment · 4.3.2 Factors Influencing Growth

With reference to Extract D (line 18), explain the meaning of the term ‘output gap’. Use an aggregate demand and aggregate supply diagram in your answer.

2.5.2 Output Gaps

With reference to Figures 4 and 5 and your own knowledge, examine the relationship between the national debt as a proportion of GDP and the fiscal deficit.

4.5.3 Public Sector Finances

Discuss the likely impact of the National Living Wage on the profitability of firms. Use a cost and revenue diagram in your answer.

3.5.3 Wage Determination · 3.3.4 Profits and Losses

With reference to the information provided and your own knowledge, evaluate the likely microeconomic and macroeconomic influences on the UK’s international competitiveness.

One of two options in Section B — candidates answered this or the other.

4.1.9 International Competitiveness

With reference to the information provided and your own knowledge, evaluate the microeconomic and macroeconomic effects of a government policy of cutting public expenditure rather than raising taxes as a means of reducing a fiscal deficit.

One of two options in Section B — candidates answered this or the other.

4.5.1 Public Expenditure · 2.6.2 Demand-Side Policies