AQA A Level Economics Paper 1: Markets and market failure November 2021 question paper 7136/1

Using the data in Extract A (Figure 1), calculate the mean amount of profit that pharmaceutical companies would have made on a new drug in 2019, given that the average development cost was $2.6bn. Give your answer to the nearest million dollars.

Explain how the data in Extract A (Figure 2) show that greater competition leads to lower prices in the market for generic drugs.

Extract B (lines 9–10) states: ‘After the monopoly’s patent expires, other companies can manufacture and market the same drug under its generic name, usually at a lower price.’

With the help of a diagram, explain why prices of pharmaceutical drugs supplied by a monopoly are likely to be higher than in markets which are more competitive.

Extract C (lines 1–3) states: ‘The market for most generic drugs is oligopolistic, with just two or three manufacturers making each product. This enables significant economies of scale within firms, but also presents the risk of consumer interests being harmed.’

Using the extracts and your knowledge of economics, assess the view that the market structure of the pharmaceutical industry is damaging for consumers.

Using the data in Extract D (Figure 3), calculate how much a worker of Bangladeshi ethnicity earned on average in 2018, given that a White British worker earned £28 677. Give your answer to the nearest pound.

Explain how the data in Extract D (Figure 4) show that the ethnic pay gap is more significant for older ethnic minority employees.

Extract F (lines 18–19) states: the Government ‘could also take steps to recognise foreign qualifications, thus removing obstacles for well-qualified foreign-born workers.’

With the help of a diagram, explain how UK firms not recognising foreign qualifications may lead to some ethnic groups receiving lower pay.

Extract E (lines 3–4) states: ‘significant pay gaps remain, even when education and occupation are taken into account, particularly for those born outside the UK.’

Using the extracts and your knowledge of economics, evaluate possible government policies to reduce the ethnic pay gap.

Explain how perfect competition should lead to outcomes which are both productively and allocatively efficient.

Evaluate the view that technological change tends to bring industries closer to the market structure of perfect competition.

Explain how the concept of cross elasticity of demand can be used to understand the relationship between markets.

Discuss the view that individual economic agents will always act as rational decision makers so as to maximise their utility.

Explain how a firm may benefit from both internal and external economies of scale.

Discuss how the divorce of ownership from control may affect both the conduct and performance of firms.