Paper 3: Microeconomics and Macroeconomics · 9EC0/03
Edexcel A A-level Paper 3, June 2022
All 10 written questions from Edexcel A A-level Paper 3 (June 2022), Microeconomics and Macroeconomics. Case studies: The food delivery industry and Sub‐Saharan Africa – growth and development. Each question shows its marks and topic, with an examiner insight on 9, and opens the question paper and mark scheme at the right page.
Section A
Case study
The food delivery industry
Extracts: A: National Minimum Wage rises are more significant for 23 to 25-year-olds · B: What is the true cost of the food delivery service? · C: Integration in the third‐party food delivery industry
In the extracts: Deliveroo, Amazon, National Minimum Wage, National Living Wage, Drivers, Food, CMA, Uber Eats and Deliveroo, Amazon Restaurants, Uber Eats Others
Q1(a)
Using the information provided, explain one externality that arises in the food delivery market.
Mark splitKnowledge 2Application 2Analysis 1
TopicMarket failure
Q1(b)
With reference to Extract B, examine whether the demand for delivered food is price inelastic and income elastic.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicHow markets work
Examiner insight
- What to cover
- Use Extract B to estimate both elasticities. Price inelastic means a price rise raises total revenue. Income elastic and positive means delivery is a luxury, so demand swings sharply with income.
- Diagram
- Optional: demand curves of different slopes, or a revenue calculation.
- Evaluation
- Comment on the reliability of the data and on whether the values hold over a longer period as habits change.
- Watch out
- Stating the elasticities without using the extract figures to justify them.
Q1(c)
With reference to Extract C, discuss the likely effects of increasing integration within the food delivery market.
Mark splitKnowledge 2Application 2Analysis 4Evaluation 4
TopicGovernment intervention in marketsRevenues, costs and profitsAggregate demand
Examiner insight
- What to cover
- Integration between platforms and restaurants raises concentration. Trace the chain to greater market power, possible higher commission for restaurants and higher prices for consumers, set against economies of scale.
- Diagram
- Oligopoly or monopoly diagram, or the falling LRAC curve showing economies of scale.
- Evaluation
- Weigh lower unit costs and better service against reduced competition, higher prices and the CMA's likely response. Depends on how contestable the market remains.
- Watch out
- Describing types of integration instead of analysing the effects of increasing integration on this market.
Q1(d)
Evaluate the microeconomic and macroeconomic effects of a depreciation of the pound. Refer to restaurants or other food delivery services in your answer.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
Examiner insight
- What to cover
- Cover both sides. Micro: dearer imported food and ingredients raise restaurant costs and prices. Macro: net exports rise, AD rises, imported inflation, effects on the current account.
- Diagram
- AD and AS with AD shifting right and SRAS shifting left, plus an exchange rate diagram.
- Evaluation
- Judge micro and macro. Depends on the Marshall Lerner condition, the J curve in the short run, and the import intensity of the food industry.
- Watch out
- Only covering the trade balance. The microeconomic cost effects on named firms carry equal weight.
Q1(e)
Evaluate the microeconomic and macroeconomic effects of significant increases in the minimum wage. Refer to restaurants or other food delivery services in your answer.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
TopicLabour market
Examiner insight
- What to cover
- Cover both sides. Micro: higher labour costs for restaurants and couriers, possible job losses, substitution towards capital. Macro: higher incomes for the low paid, stronger AD, cost push inflation, lower welfare spending.
- Diagram
- Labour market diagram with the minimum wage above equilibrium showing excess supply of labour.
- Evaluation
- Judge micro and macro. Depends on the elasticity of demand for labour, whether the market is monopsonistic, and the size of the increase.
- Watch out
- Assuming unemployment must follow. Monopsony power means a higher minimum wage can raise both wages and employment.
Section B
Case study
Sub‐Saharan Africa – growth and development
Extracts: D: Growth and development in Africa: 'Africa has a massive opportunity as a low‐cost · E: The demography of Kenya – ‘Demography will shape Africa’s future’ · F: Kenya has an absolute advantage in cut flowers · G: Changes in interest rates in sub‐Saharan Africa
In the extracts: Kenya, Africa, Saharan Africa, Netherlands, Kenyans, Robert Matsiko, Demography, Mr Matsiko, Falling, Nairobi
Q2(a)
Explain what is meant by the Lewis model. Refer to Extract D in your answer.
Mark splitKnowledge 2Application 2Analysis 1
TopicEmerging and developing economies
Examiner insight
- What to cover
- The Lewis model describes surplus labour moving from low productivity subsistence agriculture into higher productivity manufacturing, raising output and saving. Link to the structural change described in Extract D.
- Diagram
- Optional: two sector diagram or a PPF shifting outwards.
- Watch out
- Describing rural to urban migration in general without naming the productivity and saving mechanism at the centre of the model.
Q2(b)
Examine two demographic factors influencing development in Kenya.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicInternational economicsMacroeconomic objectives and policy
Examiner insight
- What to cover
- Give two demographic factors and develop each. Options include a high birth rate and young dependency ratio, rapid urbanisation, life expectancy and health, and net migration.
- Evaluation
- Say which factor matters most for Kenya and note that a young population is a burden now but a potential demographic dividend later.
- Watch out
- Drifting into non demographic factors such as corruption or infrastructure. These earn nothing here.
Q2(c)
Using the example of cut flowers (Extract F), discuss how the concept of absolute advantage may lead to growth in Kenya. Use numerical or diagrammatic analysis in your answer.
Mark splitKnowledge 2Application 2Analysis 4Evaluation 4
Examiner insight
- What to cover
- Kenya can produce cut flowers using fewer resources than competitors because of its climate and low labour costs. Show the gain from specialising and trading, using output figures or a PPF.
- Diagram
- PPF for Kenya and a trading partner, or an output table showing total production rising after specialisation.
- Evaluation
- Weigh export earnings and employment against primary product dependency, volatile world prices, the Prebisch Singer effect and environmental cost. Depends on diversification.
- Watch out
- The question names absolute advantage. Writing about comparative advantage and opportunity cost ratios misses the concept asked for.
Q2(d)
Evaluate the microeconomic and macroeconomic effects of decreasing interest rates in Kenya, or another developing country of your choice.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
TopicMacroeconomic objectives and policyEmerging and developing economies
Examiner insight
- What to cover
- Cover both sides. Micro: cheaper borrowing for farmers and small firms, more investment. Macro: higher AD, a weaker shilling, imported inflation, faster growth and possible capital outflow.
- Diagram
- AD and AS with AD shifting right, plus an exchange rate diagram showing depreciation.
- Evaluation
- Judge micro and macro. Depends on how developed the banking sector is, the share of the population with bank accounts, and the inflation risk in a developing economy.
- Watch out
- Assuming monetary policy works as it does in the UK. Limited financial inclusion weakens the transmission mechanism in Kenya.
Q2(e)
Evaluate the microeconomic and macroeconomic strategies that could be used to promote development in Kenya, or another developing country of your choice.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
TopicEmerging and developing economies
Examiner insight
- What to cover
- Cover both sides. Micro: education, health, microfinance, property rights, infrastructure. Macro: FDI, aid, debt relief, export diversification, exchange rate policy, industrialisation.
- Diagram
- LRAS or PPF shifting right; a Lewis style structural shift diagram is also acceptable.
- Evaluation
- Judge micro and macro. Rank interventionist against market led strategies and argue which suits Kenya. Depends on institutional quality, corruption and the time period.
- Watch out
- Listing strategies with no judgement. The 25 marks require a ranked and supported conclusion.
Question text is quoted from the question papers, © Pearson Edexcel, for students’ private study. Open the official papers and mark schemes from the links on each question. Examiner insights are written with AI assistance and moderated by Finn.