OCR A Level Economics Microeconomics June 2023 question paper H460/01

1 (a) Refer to Fig. 2.

Describe the relationship between Chief Executive remuneration and stock market performance between 2010 and 2019.

Explain why this relationship may exist.

A marginal income tax rate is one example of the marginal principle used by economists.

Explain what is meant by the economic concept of ‘the margin’.

Explain, using an appropriate diagram, the size of economic rent relative to transfer earnings for essential workers such as cleaners. Lines 23–25.

A number of policies have been suggested to affect Chief Executive remuneration including ‘Allowing greater use of ‘say on pay’ which allows a firm’s shareholders to vote on Chief Executive remuneration,’ Lines 16–17.

Evaluate, using evidence from the stimulus material, the extent to which greater use of ‘say on pay’ alone may help reduce the remuneration gap between Chief Executive and

employee in the US.

* Evaluate, using evidence from the stimulus material, whether weaker trade unions is the

main reason for increased wage differentials in the USA.

3* A report for the charity Action on Smoking and Health (ASH) in January 2022 estimated that smoking in England imposed costs on the NHS totalling £2.4 billion and costs on businesses, from lost productivity, of £17.2 billion.

Evaluate, using an appropriate diagram(s), the most effective method of government intervention

to reduce the negative externalities from smoking in England.

5* Aldi, a discount supermarket, entered the UK market for the first time in 1990. Since then it has expanded its operation and, in 2022, its market share was 9.3% making it the fourth largest supermarket in the UK.

Evaluate the importance of economies of scale to a large retailer when deciding whether to

increase the size of its firm.