Edexcel A Level Economics A Paper 1: Markets and business behaviour November 2020 question paper 9EC0/01

Fuel duty is an excise tax imposed on the sale of petrol, included in the price paid by consumers, set at 58 pence per litre.

(Source: https://www.gov.uk/tax-on-shopping/fuel-duty)

Draw a supply and demand diagram to show the incidence of a specific petrol tax on consumers and producers.

The indirect tax on fuel is increased in a market in which the price elasticity of demand is −0.1. Which one of the following is the most likely effect on consumer and producer surplus?

The external benefits of higher education include increased tax revenue, faster economic growth, greater innovation and labour market flexibility.

(Source adapted from: https://www.timeshighereducation.com/news/higher-education-its-good-for-you-and-society/2008681.article#survey-answer)

Draw an externalities diagram to show the likely impact of the consumption of higher education.

On average, in the UK, a working-age graduate earns approximately £10 000 more per year than a non-graduate.

(Source adapted from: https://assets.publishing.service.gov.uk/government/uploads/ system/uploads/attachment_data/file/701720/GLMS_2017.pdf)

This suggests a university degree provides a substantial

The EU tradable pollution permits scheme is expected to become more effective by 2020, due to recent reductions in the number of tradable pollution permits.

(Source adapted from: https://ec.europa.eu/clima/policies/ets_en)

Explain one likely effect of reducing the number of tradable pollution permits.

Regulation of firms that pollute is likely to be a problem because it

The following illustrates the daily average cost curve for a doughnut producer:

Explain what happens to total cost at output levels greater than Z.

At output levels greater than Z, which one of the following correctly identifies what will happen to the cost?

Average fixed cost Average variable cost Marginal cost

For a luxury doughnut producer the average selling price is £2. The average variable cost is 40% of the selling price and its fixed cost per day is £300. Calculate total costs per day assuming it produces 400 doughnuts per day.

5 ‘Bettys’ is a luxury café, first opened in Harrogate in 1919 specialising in afternoon tea service. Since then it has opened a further five branches in Yorkshire. It has no plans to increase the number of cafés. The six branches have 2 million customers a year.

(Source adapted from: https://www.forbes.com/sites/sarahturner/2018/03/22/the-famed-yorkshire-cafe-that-blends-nostalgia-with-profits-and-conservation/#7eb50cec7a4e)

Explain one likely reason why this business has remained small.

Explain why the previous expansion of this business could be described as ‘organic growth’.

Assume ‘Bettys’ merges with a major tea leaf supplier. Which one of the following is most likely to be an advantage as a result of this merger?

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.

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

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

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

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

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.

8 ‘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.