Edexcel A Level Economics A Paper 1: Markets and business behaviour November 2021 question paper 9EC0/01

Statement 1: Since Poland joined the European Union (EU) in 2004, over one million of its workforce have migrated to other countries in the EU.

Statement 2: Many engineers have left Poland for higher paid jobs in other countries in the EU.

(Source: https://www.forbes.com/sites/freylindsay/2019/08/09/polands-emigration-rate-is-falling-but-people-are-still-worried-about-the-brain-drain-bogeyman/#9550525792e6)

Which one of the following best describes the two statements above?

Statement 1 Statement 2

Explain the likely impact of migration on the wage level of engineers in Poland.

Cobalt is a key metal used in the batteries of electric cars. China is the world’s largest producer of electric cars but has recently cut subsidies to its manufacturers.

The Democratic Republic of the Congo (DRC) produces more than 60% of the world’s supply of cobalt, from its small-scale mines. Many new small mines opened in 2018 as a result of improved expectations of profit.

The following graph shows the price of cobalt between June 2018 and June 2019.

With reference to the information provided, draw a supply and demand diagram to show why the price of cobalt fell between June 2018 and June 2019.

Between June 2018 and June 2019 the price of cobalt fell by:

River Island is a clothing retailer. Students are offered a River Island student discount code to benefit from a 10% price reduction as an attempt by the firm to increase profit.

Complete the third-degree price discrimination diagram below. Draw the impact on each sub-market by showing the price and profit.

Which one of the following is necessary for a firm to be able to practise price discrimination?

Patrick Street Productions produces musicals. Its latest production is ‘It’s a Wonderful Life’ and the total cost of this production is $200 000. The ticket price is $40. The theatre has a capacity of 300 seats. The company aims for revenue maximisation. If this is achieved, revenue from ticket sales will cover 30% of total costs. Charitable donations contribute 12.5% towards total cost and a government subsidy ensures the production covers all of its costs.

(Source adapted from: https://www.cbc.ca/news/canada/british-columbia/a-bit-of-a-desperate-time-as-costs-rise-professional-theatre-companies-survive-rather-than-thrive-1.5489733)

Calculate the total revenue from ticket sales for ‘It’s a Wonderful Life’, assuming it is shown only five times, all at full capacity. You are advised to show your working.

Calculate the value of the government subsidy necessary for this production to cover all of its costs.

Which one of the following conditions is necessary for revenue maximisation to occur?

In Sicily, many households can grow lemons of the same quality as each other. Chiara decides to sell lemons at her local market, expecting to make a normal profit. She notices that all of the many lemon sellers are charging exactly the same price.

Draw diagrams showing the equilibrium positions for both the lemon market and a typical firm in the long run.

Which one of the following will exist in the short run if Chiara makes a loss?

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

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.

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

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

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

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.

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.

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