Component 1: Economic Principles · A520U10-1

Eduqas A-level Component 1, June 2017

All 9 written questions and 20 multiple choice questions from Eduqas A-level Component 1 (June 2017), Component 1: Economic Principles. Each question shows its marks and topic, and opens the question paper and mark scheme at the right page.

Question paperMark schemeExaminer report

Section A

Q11 mark
Which of the following levels of output corresponds to where the firm is allocatively and productively efficient? (The diagram is in the question paper.)
  1. AAllocative efficiency: W; Productive efficiency: Y
  2. BAllocative efficiency: X; Productive efficiency: Z
  3. CAllocative efficiency: Z; Productive efficiency: Y
  4. DAllocative efficiency: Y; Productive efficiency: Z
  5. EAllocative efficiency: Y; Productive efficiency: X
Show the answer

The answer is D.

Question paper p.2Mark scheme p.3Examiner report p.3Open in the tool
Q41 mark
An economy has two major sectors, mineral extraction and agriculture. As a result of years of mineral extraction, its mineral reserves are falling and extraction is becoming increasingly difficult. However, more advanced production methods are being introduced into agriculture. As a result of these changes the economy's production possibility frontier (PPF) shifts from XX to YY. Which diagram best illustrates the change in the economy's PPF? (Options A to E are diagrams: see the question paper.)
  1. A
  2. B
  3. C
  4. D
  5. E
Show the answer

The answer is B.

TopicThe economic problem and resource allocation

Question paper p.4Mark scheme p.3Examiner report p.3Open in the toolPractise the PPF diagram
Q51 mark
In the diagram below, point A indicates the equilibrium price and quantity of white rice sold in a country per year. Suppose that there is a decrease in the price of brown rice and an increase in sales tax on white rice. Which point (U-Z) marks the most likely new equilibrium in the market for white rice? (The diagram is in the question paper.)
  1. AU
  2. BV
  3. CX
  4. DY
  5. EZ
Show the answer

The answer is C.

TopicDemand, supply and elasticity

Question paper p.5Mark scheme p.3Examiner report p.3Open in the toolPractise the supply and demand diagram
Q61 mark
As a result of an increase in the Bank of England's base rates, a firm's interest payments on its loans increase. What is the likely impact on its marginal and average cost?
  1. AMarginal cost: Increase; Average cost: Increase
  2. BMarginal cost: Increase; Average cost: No change
  3. CMarginal cost: No change; Average cost: Increase
  4. DMarginal cost: Fall; Average cost: Increase
  5. EMarginal cost: Increase; Average cost: Fall
Show the answer

The answer is C.

TopicMacroeconomic objectives and policyCosts, revenues and profit

Question paper p.5Mark scheme p.3Examiner report p.3Open in the tool
Q71 mark
A significant increase in consumer spending is most likely to affect the economy in which of the following ways?
  1. AUnemployment: Fall; Inflation: Rise; Current account: Worsen; Budget balance: Worsen
  2. BUnemployment: Rise; Inflation: Fall; Current account: Improve; Budget balance: Worsen
  3. CUnemployment: Fall; Inflation: Rise; Current account: Improve; Budget balance: Improve
  4. DUnemployment: Fall; Inflation: Rise; Current account: Worsen; Budget balance: Improve
  5. EUnemployment: Rise; Inflation: Rise; Current account: Improve; Budget balance: Worsen
Show the answer

The answer is D.

TopicMeasuring economic performanceMacroeconomic objectives and policy

Question paper p.6Mark scheme p.3Examiner report p.3Open in the tool
Q81 mark
The chart in the question paper shows Greece's annual GDP growth rate (quarterly data). It can be concluded that over the period shown, Greece's GDP was:
  1. AHighest at the end of the period
  2. BHighest in the second quarter of 2015
  3. CHighest in the third quarter of 2014
  4. DLowest at the start of the period
  5. EHighest at the start of the period
Show the answer

The answer is E.

Question paper p.6Mark scheme p.3Examiner report p.3Open in the tool
Q91 mark
Which one of the following is most likely to have caused the shift from SRAS1 to SRAS2 in the diagram below? In the diagram the price level rises from P1 to P2 and real GDP falls from Y1 to Y2.
  1. AAn increase in consumption
  2. BAn increase in the price level
  3. CAn increase in wages
  4. DAn increase in the exchange rate
  5. EAn increase in immigration
Show the answer

The answer is C.

TopicMeasuring economic performanceInternational trade and exchange ratesAggregate demand

Question paper p.7Mark scheme p.3Examiner report p.3Open in the toolPractise the AD/AS diagram
Q111 mark
If the central bank reverses its policy of quantitative easing by selling government bonds to financial markets then the most likely economic effect will be to:
  1. AIncrease the size of the national debt
  2. BReduce long term interest rates
  3. CIncrease the size of the fiscal (budget) deficit
  4. DReduce the rate of growth of the money supply
  5. EIncrease the rate of inflation
Show the answer

The answer is D.

TopicMacroeconomic objectives and policyThe financial sectorPublic finances and the role of the state

Question paper p.8Mark scheme p.3Examiner report p.3Open in the tool
Q161 mark
In the matrix below two firms A and B are selling a homogeneous product. They are both considering a pricing strategy unaware of the other firm's intentions and neither trusts each other. The profits each firm could make by selling at a price of £4 or £3 are shown below (Firm A's profit first): both sell at £3: £15m, £15m; Firm A £3 and Firm B £4: £30m, £10m; Firm A £4 and Firm B £3: £10m, £30m; both sell at £4: £20m, £20m. It can be deduced that the Nash equilibrium occurs when:
  1. ABoth firms sell the product for £4
  2. BFirm A sells for £4 and Firm B for £3
  3. CFirm A sells for £3 and Firm B for £4
  4. DBoth firms sell the product for £3
  5. ENone of the above – there is no Nash equilibrium in this case
Show the answer

The answer is D.

TopicDemand, supply and elasticity

Question paper p.10Mark scheme p.3Examiner report p.3Open in the tool
Q181 mark
The diagram below shows the market for a good with external benefits in consumption. Supply is S=MPC=MSC, demand is D=MPB and the MSB curve lies above it. Which one of the following can be deduced from the diagram? (The diagram is in the question paper.)
  1. AMarket equilibrium: Q1; Socially optimal output: Q2; Welfare loss area: UVX
  2. BMarket equilibrium: Q1; Socially optimal output: Q2; Welfare loss area: VXY
  3. CMarket equilibrium: Q1; Socially optimal output: Q2; Welfare loss area: WXZ
  4. DMarket equilibrium: Q2; Socially optimal output: Q1; Welfare loss area: UVX
  5. EMarket equilibrium: Q2; Socially optimal output: Q1; Welfare loss area: TVZ
Show the answer

The answer is A.

TopicMarket failureAggregate demandDemand, supply and elasticity

Question paper p.11Mark scheme p.3Examiner report p.3Open in the toolPractise the positive externality diagram
Q191 mark
A sharp increase in both supply and demand in a market would be likely to do which one of the following?
  1. AEquilibrium price: Increase; Equilibrium quantity: Increase
  2. BEquilibrium price: Decrease; Equilibrium quantity: Increase
  3. CEquilibrium price: Unchanged; Equilibrium quantity: Increase
  4. DEquilibrium price: Cannot be sure; Equilibrium quantity: Cannot be sure
  5. EEquilibrium price: Cannot be sure; Equilibrium quantity: Increase
Show the answer

The answer is E.

TopicDemand, supply and elasticity

Question paper p.12Mark scheme p.3Examiner report p.3Open in the tool
Q201 mark
The diagram below shows the short run average cost curves (SRAC1 to SRAC4) and the long run average cost curve (LRAC) for a firm. Based on this diagram it is likely that as output increases the firm will experience:
  1. AIn the short run: Increasing returns to the variable factor; In the long run: Economies of scale
  2. BIn the short run: Diminishing returns to the variable factor; In the long run: Economies of scale
  3. CIn the short run: Economies of scale; In the long run: Diseconomies of scale
  4. DIn the short run: Increasing returns to the variable factor; In the long run: Diseconomies of scale
  5. EIn the short run: Diseconomies of scale; In the long run: Economies of scale
Show the answer

The answer is B.

TopicCosts, revenues and profit

Question paper p.13Mark scheme p.3Examiner report p.3Open in the toolPractise the cost curves diagram

Section B

Question text is quoted from the question papers, © WJEC CBAC Ltd (Eduqas), 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.