Economics A · Edexcel 9EC0 · Paper 1: Markets and business behaviour · June 2018
Calculate the original and the new opportunity cost of producing 50 capital goods. You are advised to show your working.
(2)
Which one of the following was the most likely cause of the movement in the production possibility frontier from XY to XZ ?
(1)
Explain one characteristic of the economy at position W.
(2)
The number of individual weekly ticket sales from UK National Lottery games operated by Camelot was 73 million in the financial year 2015–2016.
The sale price of each lottery ticket was £2. This figure included 24 pence of tax revenue on each ticket sold.
Calculate the weekly revenue received by Camelot after paying the tax to the government. You are advised to show your working.
(2)
Research conducted for HMRC estimated the cross elasticity of demand for using gaming machines to be 1.28 in response to changes in the price of national lottery tickets.
(Source: https://www.gov.uk/government/uploads/system/uploads/ attachment_data/file/322845/report313.pdf)
In October 2013 Camelot increased the price of a national lottery ticket from £1 to £2.
Explain the likely impact of the price increase of national lottery tickets on the demand for using gaming machines.
(2)
In 2016 a coastal flood defence scheme was completed at Broomhill Sands in Kent, protecting people, homes and businesses. A £30 million grant from the National Lottery paid for the scheme.
(Source: https://www.gov.uk/government/news/30-million-project-set-to-reduce-flood-risk-in-kent)
The most likely reason for this grant is to ensure the:
(1)
The average fee charged by high-street estate agents to homeowners for selling property is 1.3% of the final sale price.
(Source: http://www.which.co.uk/money/mortgages-and-property/home-movers/guides/selling-a-house/estate-agent-fees-and-contracts)
Assume the selling fee is 1.3%. Calculate the payment received by an estate agent on a property sold for £489 000. You are advised to show your working.
(2)
In August 2016 the Office for National Statistics reported that the average house price in London was £489 000, whereas in the North East of England it was £127 000.
The ratio of the average house price in London to the average house price in the North East of England is:
(1)
Explain one likely reason for the difference in average house prices between London and the North East of England.
(2)
Emily owns and operates a nail ink salon. The diagram shows the cost and revenue curves for treatments at her nail ink salon. Initially, Emily sets her price to maximise profits.
Costs, Revenue
Calculate the change in total supernormal profit if Emily changes her objective from profit maximisation to revenue maximisation. You are advised to show your working.
(4)
Emily now decides to change her objective from revenue maximisation to sales maximisation. This change will lead to:
(1)
The following graph shows the global sales of personal computers (PCs) between 2011 and 2015.
(Source: adapted from IDC and reported in The Times, 14th January 2016)
The percentage decrease in sales of PCs between 2011 and 2015 is:
(1)
Explain one likely reason for the decrease in sales of PCs.
(2)
The following table shows global sales of PCs by company in 2015.
| Company | Sales of PCs (million) |
| Lenovo | 57 182 |
| HP | 53 534 |
| Dell | 39 049 |
| Apple | 20 794 |
| Acer Group | 19 680 |
| Others | 86 461 |
| Total | 276 700 |
(Source: IDC, reported in The Times, 14th January 2016)
Calculate the five-firm concentration ratio. You are advised to show your working.
(2)
With reference to Figure 1, explain one likely reason for the overall trend in the real price of gas and electricity.
(5)
With reference to Extract A, discuss the likely effectiveness of ‘measures to open up and increase competition’ in the UK energy market.
(12)
With reference to Extract B, assess how the regulation of energy suppliers’ profits is likely to affect consumers and suppliers in the energy market.
(10)
The price elasticity of demand for electricity in the UK is estimated to be –0.35 in the short run and –0.85 in the long run.
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.
(8)
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.
(15)
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
(25)
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.
Write your answer here:
(25)
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