AQA AS Paper 1, June 2016

TopicMarket failure and government interventionGovernment failure

TopicMarket failure and government interventionGovernment intervention (micro)

TopicPrice determination in a competitive marketDemand & supply

TopicMarket failure and government interventionPrice controls

TopicMarket structuresPerfect competition

TopicMarket failure and government interventionGovernment failure

TopicMarket failure and government interventionMerit & demerit goods

TopicMarket failure and government interventionMerit & demerit goodsDemand & supply

TopicMarket failure and government interventionMerit & demerit goodsDemand & supply

TopicMarket failure and government interventionMerit & demerit goodsDemand & supply

TopicMarket failure and government interventionIndirect taxes & subsidies

TopicMarket failure and government interventionGovernment intervention (micro)Merit & demerit goods

1. Aconsumers expressing their tastes and preferences in their pattern of spending.
2. Bhouseholds completing business surveys to reveal their preferred products.
3. Cfirms planning their activities to meet production targets set by government.
4. Dentrepreneurs producing their own goods to satisfy their own needs and wants.

TopicEconomic methodology and the economic problemEconomic systems

1. Apoint X is productively efficient and point Y is allocatively efficient.
2. Bpoint Y is productively efficient and point X is allocatively efficient.
3. Cpoints X and Y are allocatively efficient.
4. Dpoints X and Y are productively efficient.

TopicEconomic methodology and the economic problemPPB / PPC

1. Aquantity demanded always increases as price falls.
2. Bchanges in price do not influence supply.
3. Cprice elasticity of demand does not vary along the demand curve.
4. Dfactors affecting demand, other than price, remain constant.

TopicPrice determination in a competitive marketDemand & supply

1. Amay produce a larger output than would be supplied in a competitive market so that they achieve economies of scale.
2. Bmay produce a lower output, less efficiently, than would be supplied by a competitive market.
3. Calways charge high prices and earn high profits.
4. Dhave no incentive to meet consumer demands.

TopicMarket structuresMonopoly & market powerMarket failure (general)

1. Anormal goods.
2. Bsubstitute goods.
3. Cgoods in composite demand.
4. Dcomplementary goods.

TopicPrice determination in a competitive marketCross elasticity

1. Ademand for agricultural products is income inelastic in the long run.
2. Bsupply of agricultural products is price elastic in the long run.
3. Csupply of agricultural products is price inelastic in the short run.
4. Ddemand for agricultural products is price elastic in the short run.

TopicPrice determination in a competitive marketCommodity markets

1. Aincrease to 250 units.
2. Bincrease to 240 units.
3. Cincrease to 360 units.
4. Ddecrease to 160 units.

TopicPrice determination in a competitive marketPrice elasticity of supply

1. Aincreases its share of the market.
2. Bincreases its total revenue by more than its total costs.
3. Cenables it to reduce its average costs.
4. Dleads to a reduction in the price of its inputs.

TopicProduction, costs and revenueRevenue & profitPrice elasticity of demand

1. AATC curve shifts upwards for any given level of output.
2. BATC curve shifts downwards for any given level of output.
3. Cfirm increases its level of output.
4. Dfirm reduces its level of output.

TopicProduction, costs and revenueProductivity & efficiency

1. AOutput falls at a slower rate than the fall in the number of workers employed
2. BOutput falls at a faster rate than the fall in the number of workers employed
3. COutput rises at a slower rate than the rise in the number of workers employed
4. DOutput always rises as the number of workers employed increases

TopicProduction, costs and revenueProductivity & efficiency

1. AThe industry’s concentration ratio
2. BThe elasticity of supply of the industry’s output
3. CThe number of workers employed in the industry
4. DThe total value of the industry’s sales

TopicMarket structuresOligopoly

1. AA Low High
2. BB Low Low
3. CC High High
4. DD High Low

TopicMarket structuresContestability & barriersPerfect competition

1. A(see diagram in paper)
2. B(see diagram in paper)
3. C(see diagram in paper)
4. D(see diagram in paper)

TopicProduction, costs and revenueCosts & economies of scaleMonopoly & market power

1. Apublic goods are of equal benefit to all consumers.
2. Bthere is no opportunity cost in the provision of public goods.
3. Cpeople could consume the good without paying for it.
4. Dthe government should not levy a tax for providing public goods.

TopicMarket failure and government interventionPublic goods

1. Athe shorter the time period under consideration.
2. Bif the good in question has many close substitutes.
3. Cif the good in question is a necessity.
4. Dif complementary goods are required for its consumption.

TopicPrice determination in a competitive marketPrice elasticity of supply

1. ARSTY.
2. BOS multiplied by OW.
3. CRSTU.
4. DRSTY minus WYUV.

TopicMarket structuresMonopoly & market power

1. Amarket failure due to an externality in production.
2. Bgovernment failure to support agricultural markets.
3. Cscarcity caused by high prices.
4. Dthe rationing function of price.

TopicPrice determination in a competitive marketDemand & supply

1. Avertical distance FE2.
2. Bincrease in price P1P2.
3. Cthe diagonal distance E1E2.
4. Dthe horizontal distance GE1.

TopicMarket failure and government interventionIndirect taxes & subsidies

1. Aa merit good.
2. Ba public good.
3. Ca good with negative externalities in production.
4. Da good with positive externalities in production.

TopicMarket failure and government interventionExternalitiesMerit & demerit goods

1. AThe distribution of income is equitable when everyone has the same income
2. B‘The distribution of income is equitable’ is a positive statement
3. CAn unequal distribution of income is, by definition, inequitable
4. DWhether the distribution of income is equitable depends on a value judgement

TopicDistribution of income and wealthInequality & poverty