Edexcel A Level Economics A Paper 1: Markets and business behaviour June 2019 question paper 9EC0/01

Between 2016 and 2017 the average price of new build houses in the UK rose by an estimated 5.4%.

(Source: http://www.telegraph.co.uk/business/2017/05/25/number-new-homes-built-hits-highest-level-since-financial-crisis/)

With reference to the data provided, calculate the price elasticity of supply for new house builds between 2016 and 2017. You are advised to show your workings.

A 2.5% increase in new build house prices in one region of the UK causes a 10% increase in the number of houses built. Ceteris paribus, this suggests that supply of new house builds is:

Explain one factor that is likely to determine the price elasticity of supply of new house builds.

In August 2017 Hurricane Harvey caused the closure of nearly a quarter of the oil production capacity in the United States.

Draw a supply and demand diagram to show the likely microeconomic effects of the hurricane on the US oil market.

According to the Royal Mail, more hair and beauty salons opened on UK high streets last year than any other type of independent business, with a net increase of 10%, representing 626 new salons.

(Source: adapted from https://www.theguardian.com/small-business-network/2016/nov/18/ beauty-boom-or-bust-uk-too-many-salons)

The UK hair and beauty industry is an example of monopolistic competition because:

Draw a cost and revenue diagram to show the long-run equilibrium of a firm in monopolistic competition.

In 2016, the insurance group Esure undertook a demerger with its GoCompare price comparison website.

The most likely reason for this demerger was to:

Following the demerger, GoCompare announced in 2017 a profit of £17.5 million, up 21.5% on 2016. Total revenue in 2017 was £75.8 million, up 4.1% on 2016.

(Source: adapted from https://www.insuranceage.co.uk/insurer/3107496/ profits-up-at-go-compare)

Calculate, using the information provided, the total costs of GoCompare in 2016.

Free market economics is being challenged. The arguments for and against are being increasingly discussed within many countries.

Explain how resources are allocated in a free market economy.

Which one of the following statements is true?

inefficient firms

of allocating resources

Adam Smith described the benefits of specialisation and the division of labour.

Explain one advantage to a firm of using division of labour when organising its production process.

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

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

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

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.

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

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.

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.