Edexcel A AS Paper 1, June 2023

Question paper p.2 Mark scheme p.4 Open in the tool

Q1(b)2 marks

Annotate the diagram below to show the original and new maximum price in this market.

Mark splitApplication 2

Question paper p.2 Mark scheme p.4 Examiner report p.6 Open in the tool Draw it: maximum price diagram

Q1(c)Define1 mark

Define the term ‘equilibrium price’.

Mark splitKnowledge 1

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Q2(a)3 marks

Using the data provided, explain one likely factor that may influence the price elasticity of supply of gas.

Mark splitKnowledge 1Application 1Analysis 1

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Q2(b)1 mark

The table below shows estimates of the price elasticity of supply and price elasticity of demand for gas. Natural Gas Price elasticity of supply + 0.14 Price elasticity of demand − 0.10 (Source: adapted from http://www.usaee.org/usaee2013/submissions/Abs/Ponce_ Neumann_Elasticities_gas_supply.pdf, http://www.mackinac.org/1247) Which one of the following can be inferred from the table?

Show the answer

The answer is C. Open the question paper to read the options.

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Q3(a)Define1 mark

Define the term ‘specialisation’.

Mark splitKnowledge 1

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Q3(b)1 mark

Which one of the following is a positive economic statement?

Show the answer

The answer is A. Open the question paper to read the options.

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Q3(c)Explain2 marks

Explain one likely advantage of specialising in the production of goods to trade.

Mark splitKnowledge 1Analysis 1

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Q4(a)Explain3 marks

Explain one reason why it is rational for a firm to raise prices when there is excess demand.

Mark splitKnowledge 1Application 1Analysis 1

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Q4(b)1 mark

Which one of the following is the most likely cross price elasticity of demand for close substitutes?

A− 2.1
B− 0.1
C+ 0.1
D+ 2.1

Show the answer

The answer is D.

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Q5(a)2 marks

With reference to the above information, define the term ‘mixed economy’.

Mark splitKnowledge 1Application 1

Question paper p.8 Mark scheme p.10 Examiner report p.6 Open in the tool

Q5(b)1 mark

The diagram shows the production possibility frontier of an economy. Assuming the economy is at point W, annotate the diagram to show the opportunity cost of producing more consumer goods.

Mark splitApplication 1

Question paper p.9 Mark scheme p.11 Examiner report p.6 Open in the tool Draw it: PPF diagram

Q5(c)1 mark

Which one of the following is a likely advantage of a command economy?

ALow levels of unemployment
BPrice acts as a signal to allocate resources
CPrice controls cause shortages of goods
DThe profit motive gives firms the incentive to be more efficient

Show the answer

The answer is A.

Question paper p.9 Mark scheme p.11 Open in the tool

Section B

Case study

The market for television content

Extracts: A: The growth of streamed television content · B: Is television content a public good? · C: The environmental impact of streaming television content

In the extracts: Netflix, BBC, Guardian, Disney+, Fortunately for Netflix, Amazon Prime Video, Stranger Things, Royal Charter, Elasticities, Star Wars TV

Q6(a)Explain5 marks

With reference to Figure 1 and Extract A, explain the relationship between price elasticity of demand and total revenue.

Mark splitKnowledge 1Application 2Analysis 2

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Examiner insight

What to cover: Use the elasticity value in Figure 1 and Extract A. If demand is inelastic a price rise raises total revenue. If demand is elastic a price rise lowers it. Apply this to television content.
Diagram: Demand curve with the price change marked and the two total revenue rectangles drawn before and after, showing which is larger.
Watch out: Stating the elasticity rule without applying the figure to show what happens to revenue.

Q6(b)Explain6 marks

With reference to Extract B, explain two external benefits associated with the consumption of ‘public service broadcasting’ (line 2).

Mark splitKnowledge 2Application 2Analysis 2

TopicMarket failure

Examiner insight

What to cover: Give two benefits gained by third parties, such as a better informed electorate and improved education or social cohesion. Explain who gains beyond the viewer, using Extract B.
Watch out: Giving private benefits to the viewer, such as entertainment, and labelling them external.

Question paper p.13 Mark scheme p.13 Examiner report p.6 Open in the tool

Q6(c)Assess10 marks

‘Television content is a public good’ (Extract B). Assess this statement.

Mark splitKnowledge 2Application 2Analysis 2Evaluation 4

TopicMarket failure

Examiner insight

What to cover: Test television content against non rivalry and non excludability. A broadcast signal is non rival, but subscription and encryption make streaming excludable, so it is not a pure public good.
Evaluation: Weigh free to air broadcasting, which is close to non excludable, against paid streaming which excludes non payers. Conclude it is a quasi public good and depends on delivery method.
Watch out: Judging it a public good simply because some television is free at the point of use.

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Q6(d)4 marks

Using examples from the information provided, explain what is meant by both ‘substitutes’ and ‘complementary goods’.

Mark splitKnowledge 2Application 2

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Q6(e)Discuss15 marks

Discuss likely reasons why the market price of streaming television content is increasing. Draw a supply and demand diagram to support your answer.

Mark splitKnowledge 3Application 3Analysis 3Evaluation 6

TopicMarket failure

Examiner insight

What to cover: Give reasons such as rising demand for streaming and rising costs of producing content and buying rights. Show demand shifting right and supply shifting left, both raising price.
Diagram: Streaming market with demand shifting right from D1 to D2 and supply shifting left, price rising P1 to P2, and the quantity change shown as uncertain.
Evaluation: Weigh which cause dominates, and note the price rise depends on how inelastic demand is when rival platforms exist. Consider whether competition limits future rises. Judge.
Watch out: Explaining rising costs only and never shifting a curve on the diagram.

Question paper p.13 Mark scheme p.18 Examiner report p.7 Open in the tool Draw it: supply and demand diagram

Q6(f)OptionalEvaluate20 marks

Evaluate possible methods of government intervention to reduce the environmental damage caused by the consumption of television content.

Mark splitKnowledge 4Application 4Analysis 6Evaluation 6

Question paper p.13 Mark scheme p.21 Examiner report p.7 Open in the tool Practise the negative externality diagram

Examiner insight

What to cover: Consider taxing electricity or devices, minimum efficiency regulation, subsidies for efficient data centres, and information campaigns. Show each cutting consumption toward the social optimum.
Diagram: Negative externality in consumption with MPB above MSB, an indirect tax shifting supply left so output falls from Q1 to Q*, and the welfare gain labelled.
Evaluation: Weigh effectiveness against inelastic demand for streaming, the difficulty of measuring the environmental cost, enforcement costs and regressive effects on poorer households. Judge which method works best.
Watch out: Treating television consumption as environmentally costless and giving no mechanism for the damage.

Q6(g)OptionalEvaluate20 marks

Evaluate the possible disadvantages of a free market approach to the provision of television content.

Mark splitKnowledge 4Application 4Analysis 6Evaluation 6