Unit 1: Markets in action · WEC11/01

Edexcel International AS Unit 1, October 2021

All 12 written questions and 6 multiple choice questions from Edexcel International AS Unit 1 (October 2021), Markets in action. Case studies: The markets for rubber, tyres (tires) and rubber gloves. Each question shows its marks and topic, and opens the question paper and mark scheme at the right page.

Question paper Mark scheme Examiner report

Section A

Q11 mark

1 Which one of the following is a role of the government in a mixed economy?

ATo ration resources according to the price mechanism
BTo charge indirect taxes on goods with external benefits
CTo pay subsidies to manufacturers of goods that produce external costs
DTo introduce a tradeable pollution permit scheme to reduce external costs

Show the answer

The answer is D.

TopicMarket failure: externalities

Question paper p.2 Mark scheme p.4 Examiner report p.3 Open in the tool

Q21 mark

Which one of the following could explain this behaviour?

AConsumers being valued by the original supplier
BConsumers aiming to maximise utility
CConsumers being poor at computation
DConsumers aiming to minimise utility

Show the answer

The answer is B.

TopicBehavioural economics and consumer choice

Question paper p.2 Mark scheme p.4 Examiner report p.3 Open in the tool

Q31 mark

Which one of the following can be deduced from the table?

AThe demand for clothes dryers is price elastic
BThe demand for dishwashers is perfectly price inelastic
CThe demand for refrigerators is price inelastic
DThe demand for washing machines is perfectly price elastic

Show the answer

The answer is C.

TopicElasticities of demand and supply

Question paper p.3 Mark scheme p.4 Examiner report p.3 Open in the tool

Q41 mark

Which one of the following can be deduced from the diagram?

ATotal revenue will rise by €13 500
BTotal revenue will rise by €58 500
CTotal revenue will decrease by €6 000
DTotal revenue will decrease by €45 000

Show the answer

The answer is A.

TopicDemand, supply and market equilibrium

Question paper p.4 Mark scheme p.4 Examiner report p.3 Open in the tool Practise the PED and revenue diagram

Q51 mark

Which one of the following can be deduced from the diagram?

AQuantity supplied extends from Q0 to Q1
BQuantity demanded contracts from Q2 to Q1
CExcess demand will be equal to Q0Q2
DExcess supply will be equal to Q0Q2

Show the answer

The answer is C.

TopicDemand, supply and market equilibrium

Question paper p.5 Mark scheme p.5 Examiner report p.3 Open in the tool Practise the supply and demand diagram

Q61 mark

Which one of the following can be deduced from the table?

AT he demand for coffee will be most responsive to a change in the price of sugar-sweetened drinks
BThe demand for water will be most responsive to a change in the price of sugar-sweetened drinks
CAn increase in the price of sugar-sweetened drinks will lead to a more than proportionate increase in the demand for milk
DAn increase in the price of sugar-sweetened drinks will lead to a decrease in the demand for water, milk and coffee

Show the answer

The answer is B.

TopicElasticities of demand and supply

Question paper p.6 Mark scheme p.5 Examiner report p.3 Open in the tool

Section B

Q7Draw4 marks

Draw a diagram to illustrate the impact of the introduction of a subsidy on the market for solar panels. Show the new equilibrium price and quantity and the area of government expenditure on the subsidy in your diagram.

Mark splitKnowledge 1Application 3

TopicDemand, supply and market equilibrium

Question paper p.8 Mark scheme p.6 Examiner report p.3 Open in the tool Draw it: subsidy diagram

Q8Explain4 marks

With reference to the table, explain the difference between 'capital goods' and 'consumer goods'.

Mark splitKnowledge 2Application 2

TopicThe nature of economics

Question paper p.9 Mark scheme p.7 Examiner report p.3 Open in the tool

Q9Explain4 marks

Explain one reason for the provision of this public good by the Dutch Government.

Mark splitKnowledge 1Application 1Analysis 2

TopicMarket failure: public goods, information and immobility

Question paper p.10 Mark scheme p.8 Examiner report p.4 Open in the tool

Q10Calculate4 marks

Ceteris paribus, calculate the price elasticity of supply for coffee beans. Show your workings.

Mark splitKnowledge 1Application 3

TopicElasticities of demand and supply

Question paper p.11 Mark scheme p.9 Examiner report p.4 Open in the tool

Q11Explain4 marks

Explain the likely impact of this change in price on consumer surplus. Illustrate your answer with a diagram.

Mark splitKnowledge 1Application 1Analysis 2

TopicThe price mechanism, consumer and producer surplus

Question paper p.12 Mark scheme p.10 Examiner report p.4 Open in the tool Draw it: supply and demand diagram

Section C

Case study

The markets for rubber, tyres (tires) and rubber gloves

Extracts: Extract B: Rubber production and pollution from tyres · Extract C: Profits of manufacturers of rubber gloves · Figure 1: based on data taken from https://www.indexmundi.com/commodities/?commodity=rubber&months=12 · Extract A: adapted from https://www.michelin.com/en/finance/key-figures-and-indicators/markets/ · Extract B: adapted from https://airqualitynews.com/2020/03/09/air-pollution-from-tyres-1000-worse-than-from-exhaust- · Extract C: adapted from 'Malaysia's Top Glove Q3 profit jumps over 360% as sales shoot up during pandemic', Liz Lee,

In the extracts: Jan Feb Mar Apr, Sep Oct Nov Dec, Jun Jul Aug, South East Asia, North America, South America, Top Glove, West Africa, Rubber, PM2

Q12(a)Define2 marks

Define the term 'complementary goods' (Extract A, line 8).

Mark splitKnowledge 2

TopicDemand, supply and market equilibrium

Question paper p.15 Mark scheme p.11 Examiner report p.4 Open in the tool

Q12(b)Analyse6 marks

With reference to Figure 1 and Extract A, analyse why 'Between January and May 2020 the world price of rubber fell from $1.67 to $1.35 per kg'. Illustrate your answer with a supply and demand diagram.

Mark splitKnowledge 2Application 2Analysis 2

TopicDemand, supply and market equilibrium

Question paper p.15 Mark scheme p.12 Examiner report p.4 Open in the tool Draw it: supply and demand diagram

Q12(c)Explain4 marks

With reference to the first paragraph of Extract B, explain what is meant by 'the supply of rubber is price inelastic'.

Mark splitKnowledge 2

TopicElasticities of demand and supply

Question paper p.16 Mark scheme p.13 Examiner report p.4 Open in the tool

Q12(d)Examine8 marks

Examine the effect on producer surplus of the change in market conditions for rubber gloves as described in Extract C. Include a diagram in your answer.

Mark splitKnowledge 2Application 2Analysis 2Evaluation 2

TopicThe price mechanism, consumer and producer surplus

Question paper p.17 Mark scheme p.14 Examiner report p.4 Open in the tool Draw it: supply and demand diagram

Q12(e)Discuss14 marks

With reference to Extract B, discuss the external costs associated with tyre production and consumption.

Mark splitEvaluation 6

TopicMarket failure: externalities

Question paper p.19 Mark scheme p.15 Examiner report p.4 Open in the tool Practise the negative externality diagram

Section D

Q13OptionalEvaluate20 marks

Evaluate the likely microeconomic effects of the introduction of this indirect tax.

Mark splitEvaluation 8

TopicGovernment intervention and government failure

Question paper p.22 Mark scheme p.17 Examiner report p.5 Open in the tool Practise the indirect tax diagram

Q14OptionalEvaluate20 marks

With reference to the information above and your own knowledge, evaluate the role of financial markets in an economy.

Mark splitEvaluation 8

TopicMoney and financial markets

Question paper p.22 Mark scheme p.20 Examiner report p.5 Open in the tool

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.

Section A

Section B

Section C

The markets for rubber, tyres (tires) and rubber gloves

Section D

Other years of Edexcel International AS Unit 1

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