Section A
Case study
Electric cars create challenges for oil producers
In the extracts: Venezuela, Oman and Saudi Arabia, World Economic Forum, Wealthy Middle East, Middle Eastern, Macrotrends, PA Media, GDP, STV
Q1(a)Calculate2 marks
Using the data in Table 1.1, calculate the percentage change in the average real global price of oil between 2014 and 2020.
TopicThe interaction of demand and supply
Q1(b)Explain2 marks
Explain why the price of oil on the world market fell in 2020.
TopicThe interaction of demand and supply
Q1(c)Explain4 marks
With the help of a diagram, explain why the supply problem referred to may lead to increases in the price of electric cars in the future and consider one policy that may be used to overcome this supply problem.
TopicThe interaction of demand and supply
Q1(d)Explain6 marks
Explain whether unemployment caused by the diversification of petrostates away from oil and gas production is likely to be cyclical or structural and consider which type of unemployment is likely to be more damaging to these economies.
TopicUnemployment
Q1(e)Assess6 marks
Assess whether diversification is likely to be more successful in Venezuela or Saudi Arabia as they reduce their dependence on oil production.
TopicEconomic growth
Section B
Q2(a)OptionalExplain8 marks
With the help of a formula, explain what is meant by the term price elasticity of demand for a product and consider the extent to which it allows an entrepreneur to determine the effect of price changes on the total expenditure on their product.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicPrice elasticity, income elasticity and cross elasticity of demand
Q2(b)OptionalAssess12 marks
Assess whether the concept of price elasticity of supply or cross elasticity of demand will be more useful to a business wanting to increase its total sales in a growing economy.
TopicPrice elasticity, income elasticity and cross elasticity of demand2.3 Price elasticity of supply
Q3(a)OptionalExplain8 marks
With the help of examples, explain the difference between free goods and public goods and consider the view that public goods can never be provided in a market economy.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicClassification of goods and services1.4 Resource allocation in different economic systems
Q3(b)OptionalAssess12 marks
The provision of merit and demerit goods differs from the provision of other private goods. Assess the view that the consequences of imperfect information are more serious in a market economy than in a mixed economy.
TopicResource allocation in different economic systems1.6 Classification of goods and services
Section C
Q4(a)OptionalExplain8 marks
Explain the difference between the terms of trade and the balance of trade in goods and consider whether an economy should be more concerned about its terms of trade than its balance of trade in goods.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicThe reasons for international trade6.3 Current account of the balance of payments
Q4(b)OptionalAssess12 marks
Assess whether a rise or a fall in the terms of trade will benefit the macroeconomic performance of an open economy that is heavily dependent on international trade.
TopicThe reasons for international trade
Q5(a)OptionalExplain8 marks
With the help of a diagram(s), explain one reason for an increase in aggregate demand and one reason for an increase in aggregate supply and consider whether an increase in aggregate demand will always lead to inflation.
Mark splitKnowledge 3Analysis 3Evaluation 2
TopicAggregate demand and aggregate supply analysis
Q5(b)OptionalAssess12 marks
Assess whether the internal effects of inflation are more serious than the external effects of inflation for an economy.
TopicPrice stability
