Paper 3: Microeconomics and Macroeconomics · 9EC0/03
Edexcel A A-level Paper 3, June 2025
All 10 written questions from Edexcel A A-level Paper 3 (June 2025), Microeconomics and Macroeconomics. Case studies: The cost of living in the UK. 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 cost of living in the UK
Extracts: A: Supermarket restrictions on multibuy deals and advertising · B: Supermarket pay in 2023 · C: Supermarket petrol pricing · D: EU trade relations with the UK
In the extracts: HFSS, Supermarket, Sainsbury and Asda, Supermarkets, Extracts, Booklet, Rules, BOGOF, Tesco, India
Q1(a)
Explain one reason why consumers buy less than the social optimum quantity of healthy food.
Mark splitKnowledge 2Application 2Analysis 1
TopicMarket failure
Q1(b)
With reference to Extract B, examine two likely reasons why wages in supermarkets are above the National Minimum Wage of £10.42.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicLabour market
Examiner insight
- What to cover
- Give two reasons and develop each. Options include competition for workers in a tight labour market, monopsony employers raising pay to attract staff, higher productivity or MRP, and retention or turnover costs.
- Diagram
- Labour market diagram showing the market wage set above the minimum wage by demand and supply.
- Evaluation
- Say which reason dominates in supermarkets and note that pay above the minimum may reflect regional cost of living rather than productivity.
- Watch out
- Explaining what the minimum wage is instead of why market wages sit above it.
Q1(c)
With reference to Figure 1 and Extract C, discuss whether supermarkets charging similar prices for petrol is evidence of collusion. Use game theory to support your answer.
Mark splitKnowledge 2Application 2Analysis 4Evaluation 4
TopicMarket structures
Examiner insight
- What to cover
- Similar prices are consistent with tacit collusion but also with competitive price matching in an oligopoly. Use game theory to show that both firms holding a high price is a stable outcome.
- Diagram
- Payoff matrix for two supermarkets with high and low price strategies, identifying the Nash equilibrium, or a kinked demand curve.
- Evaluation
- Weigh the collusion explanation against a common wholesale cost, price transparency and the kinked demand curve. Depends on evidence of communication, which price similarity alone does not prove.
- Watch out
- Concluding collusion from similar prices alone. Identical costs and price matching produce the same outcome without any agreement.
Q1(d)
Evaluate the microeconomic and macroeconomic effects of high levels of inflation. Refer to the UK or any other developed economy in your answer.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
Examiner insight
- What to cover
- Cover both sides. Micro: menu and shoe leather costs, distorted price signals, real wage erosion, effects on savers and borrowers. Macro: loss of competitiveness, uncertainty, higher interest rates, fiscal drag.
- Diagram
- AD and AS diagram distinguishing demand pull from cost push.
- Evaluation
- Judge micro and macro. Depends on whether inflation is anticipated, on its cause, and on whether wages and pensions are indexed. Compare with the cost of deflation.
- Watch out
- Listing costs of inflation with no named economy. Application marks require the UK or another developed economy.
Q1(e)
Evaluate the microeconomic and macroeconomic effects of a regional trade agreement between the UK and the EU.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
Examiner insight
- What to cover
- Cover both sides. Micro: lower input costs and tougher competition for UK firms, effects on specific sectors. Macro: trade creation, larger export markets, FDI, effects on growth and the current account.
- Diagram
- Tariff removal diagram with imports rising and welfare areas labelled, or a comparative advantage output table.
- Evaluation
- Judge micro and macro. Weigh trade creation against trade diversion, loss of regulatory sovereignty and adjustment costs for uncompetitive sectors. Depends on non tariff barriers.
- Watch out
- Writing a political account of UK and EU relations. The marks are for economic analysis of the agreement.
Section B
Q2(a)
Using a demand and supply diagram, explain the cost of a subsidy on the market for cooking oil to the Indian government (Extract E, line 6).
Mark splitKnowledge 2Application 2Analysis 1
Examiner insight
- What to cover
- A subsidy shifts supply right, lowering the price to consumers and raising quantity. The cost to the Indian government is the subsidy per unit multiplied by the new quantity.
- Diagram
- Demand and supply diagram for cooking oil with supply shifting right and the government cost shown as the rectangle between the price producers receive and the price consumers pay, across the new quantity.
- Watch out
- Shading the wrong rectangle. The government cost runs across the new quantity, not the original one.
Q2(b)
Examine two advantages of using the Human Development Index (HDI) to measure the level of economic development in India.
Mark splitKnowledge 2Application 2Analysis 2Evaluation 2
TopicEmerging and developing economies
Examiner insight
- What to cover
- Give two advantages and develop each. HDI combines income, health and education, so it captures development rather than growth alone, and the data is comparable across countries and over time.
- Evaluation
- Say which advantage matters most for India and note that HDI still omits inequality, environment and political freedom.
- Watch out
- Listing the components of HDI without explaining why combining them is an advantage.
Q2(c)
With reference to Extract F, discuss the problems that might be involved with the buffer stock system in India.
Mark splitKnowledge 2Application 2Analysis 4Evaluation 4
Examiner insight
- What to cover
- A buffer stock sets a price band and buys or sells stock to hold the price inside it. Identify the problems: storage and administration cost, perishability, setting the price too high, and eventual stock build up.
- Diagram
- Buffer stock diagram with a price floor and ceiling, showing the surplus bought in a good harvest and the stock released in a poor one.
- Evaluation
- Weigh price stability for farmers and consumers against the fiscal cost, waste, corruption and the difficulty of forecasting the equilibrium price. Depends on harvest variability.
- Watch out
- Explaining how a buffer stock works without identifying the problems, which is what the question asks for.
Q2(d)
Evaluate the microeconomic and macroeconomic reasons for the fall in poverty in India.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
Examiner insight
- What to cover
- Cover both sides. Micro: education and skills, microfinance, property rights, rural to urban migration raising productivity. Macro: rapid growth, industrialisation, FDI, remittances, and welfare transfers.
- Diagram
- Lorenz curve moving towards the line of equality, or LRAS shifting right.
- Evaluation
- Judge micro and macro. Rank the causes and argue which mattered most in India. Note that absolute poverty has fallen while relative inequality may have risen.
- Watch out
- Confusing absolute with relative poverty. India's fall is in absolute poverty, and the distinction earns marks.
Q2(e)
Evaluate the microeconomic and macroeconomic effects of rapid increases in population in India.
Mark splitKnowledge 4Application 4Analysis 8Evaluation 9
Examiner insight
- What to cover
- Cover both sides. Micro: pressure on housing, food, water and schooling, cheaper and more abundant labour for firms. Macro: a larger labour force raising LRAS, a higher dependency ratio, strain on public finances.
- Diagram
- PPF or LRAS shifting right, with AD also shifting right, plus a labour market diagram showing labour supply rising.
- Evaluation
- Judge micro and macro. Weigh the demographic dividend against the Malthusian pressure on resources. Depends on whether capital and infrastructure grow alongside the population.
- Watch out
- Treating population growth as wholly negative. A young and growing workforce can raise growth if investment keeps pace.
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.