Component 1: Economic Principles · A520U10-1

Eduqas A-level Component 1, June 2019

All 7 written questions and 20 multiple choice questions from Eduqas A-level Component 1 (June 2019), 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

Q31 mark
A demerit good would be most likely to have:
  1. AMarginal private benefit more than marginal social cost
  2. BMarginal social cost more than marginal private cost
  3. CMarginal private cost more than marginal social cost
  4. DMarginal social benefit more than marginal private benefit
  5. EMarginal private benefit more than marginal social benefit
Show the answer

The answer is E.

TopicMarket failure

Question paper p.2Mark scheme p.3Examiner report p.3Open in the tool
Q41 mark
The diagram below shows the long run average cost curve (LRAC) for a firm. Point A is at output Q1 and cost C1. Point B is at a lower output, Q2, and a higher cost, C2. The impact on costs as a result of a movement from A to B is an example of:
  1. ADiseconomies of scale
  2. BDiminishing returns to the variable factor
  3. CDecreasing returns to scale
  4. DThe loss of internal economies of scale
  5. EExternal diseconomies of scale
Show the answer

The answer is D.

TopicCosts, revenues and profit

Question paper p.3Mark scheme p.3Examiner report p.3Open in the toolPractise the cost curves diagram
Q71 mark
In early 2016, the inflation rate in South Africa rose from 4.5% to 6.5%. The most likely explanation for this is:
  1. AAn increase in direct taxes designed to reduce extreme levels of inequality
  2. BA move toward freer international trade combined with policies to reduce the budget/fiscal deficit
  3. CA major drought combined with a depreciation in the exchange rate
  4. DSupply side reforms in product and labour markets
  5. ETighter credit conditions designed to reduce the demand for new houses
Show the answer

The answer is C.

TopicInternational trade and exchange ratesMeasuring economic performancePoverty and inequality

Question paper p.5Mark scheme p.3Examiner report p.3Open in the tool
Q81 mark
The change in GDP in the UK in 2008, as shown in the chart of the UK GDP growth rate (2008 to 2016) in the question paper, is most likely the result of:
  1. AThe bursting of the dotcom bubble
  2. BThe UK's referendum vote to leave the EU
  3. CThe Bank of England's quantitative easing programme
  4. DThe UK's exit from the Exchange Rate Mechanism on Black Wednesday
  5. EThe global financial crisis
Show the answer

The answer is E.

TopicMacroeconomic objectives and policyInternational trade and exchange ratesThe financial sector

Question paper p.6Mark scheme p.3Examiner report p.3Open in the tool
Q91 mark
The diagram below shows a £5 tariff being imposed on an imported product with a world price of £15. At the world price of £15, domestic supply is 35m and domestic demand is 180m. With the tariff (price £20), domestic supply is 70m and domestic demand is 150m. The impact of the tariff is:
  1. AChange in imports: 30m; Change in domestic producer surplus: £350m; Change in consumer surplus: £900m
  2. BChange in imports: 30m; Change in domestic producer surplus: £262.5m; Change in consumer surplus: £825m
  3. CChange in imports: 45m; Change in domestic producer surplus: £175m; Change in consumer surplus: £900m
  4. DChange in imports: 65m; Change in domestic producer surplus: £350m; Change in consumer surplus: £3000m
  5. EChange in imports: 65m; Change in domestic producer surplus: £262.5m; Change in consumer surplus: £825m
Show the answer

The answer is E.

TopicInternational trade and exchange ratesDemand, supply and elasticity

Question paper p.7Mark scheme p.3Examiner report p.3Open in the tool
Q101 mark
In a hypothetical economy, consumers divide their purchases between 5 categories of goods. The table shows the weights of those goods in the economy's inflation index and the price index for each good in 2018 (2010 = 100). Food and drink: weight 200, price index 110. Housing: 300, 90. Leisure: 150, 100. Transport: 250, 100. Communications: 100, 120. The price index for the economy in 2018 is:
  1. A52
  2. B101
  3. C104
  4. D200
  5. E101 000
Show the answer

The answer is B.

TopicMeasuring economic performance

Question paper p.8Mark scheme p.3Examiner report p.3Open in the tool
Q111 mark
Study the table below on economic growth rates World economic growth forecasts (annual % changes) Actual Forecasts World Output (the average growth rate of Advanced and 3.2 3.1 3.4 3.6 Non-Advanced Economies) Advanced Economies 2.1 1.6 1.9 2.0 United States 2.6 1.6 2.3 2.5 Germany 1.5 1.7 1.5 1.5 France 1.3 1.3 1.3 1.6 Italy 0.7 0.9 0.7 0.8 Spain 3.2 3.2 2.3 2.1 Japan 1.2 0.9 0.8 0.5 United Kingdom 2.2 2.0 1.5 1.4 Canada 0.9 1.3 1.9 2.0 Other Advanced Economies 2.0 1.9 2.2 2.4 From the table, it can be concluded that:
  1. AWorld output was lower in 2016 than in 2015
  2. BSpain's economy is forecast to be larger than that of the UK by 2018
  3. CNon-Advanced economies are forecast to grow more quickly than advanced ones
  4. DSpain's economy is forecast to be the best performing in growth terms
  5. EJapan's GDP has fallen and is forecast to continue to fall over the period shown
Show the answer

The answer is C.

TopicEconomic growth and the economic cycle

Question paper p.9Mark scheme p.3Examiner report p.3Open in the tool
Q131 mark
According to the website thisismoney.co.uk, diamond prices fell 9% in the first quarter of 2016. Which of the following statements would necessarily explain this fall in prices?
  1. ASlowing demand from China was combined with production difficulties in South Africa
  2. BNew investment in South African diamond mines was combined with an increase in the demand for industrial diamonds
  3. CThe world's leading diamond supplier, De Beers, increased its stockpile of raw diamonds
  4. DSlowing demand from China was combined with new investment in South African diamond mines
  5. EAn increase in the demand for industrial diamonds was combined with production difficulties in South Africa
Show the answer

The answer is D.

TopicAggregate demandDemand, supply and elasticity

Question paper p.10Mark scheme p.3Examiner report p.3Open in the tool
Q141 mark
The chart below gives information on the global aerospace industry Top 20 global aerospace companies by revenue, 2016 US$, billions Boeing, USA 94.6 Airbus, Europe 73.7 Lockheed Martin, USA 47.2 General Dynamics, USA 31.4 United Technologies, USA 29.4 GE Aviation, USA 26.3 BAE Systems, UK 25.7 Northrop Grumman, USA 24.5 Raytheon, USA 24.1 Rolls Royce, UK 20.2 Safran, France 17.5 Thales, France 16.5 Honeywell Aerospace, USA 14.8 Leonardo, Italy 13.3 L-3 Technologies, USA 10.5 Textron, USA 10.0 Bombardier Aerospace, Canada 9.9 Mitsubishi Aviation and Integrated Defense, Japan 9.5 Harris Corp, USA 7.5 Huntington Ingals, USA 7.1 Total sales of firms shown in the chart = $513.7 billion Source: PwC, Aerospace and defense 2016 year in review and 2017 forecast, June 2017 Ignoring any firms not shown in the chart, which of the following can be concluded?
  1. ABoeing is a monopolist
  2. BUK firms have 45.9% of the market
  3. CThe two firm concentration ratio is 32.76%
  4. DThe five firm concentration ratio is over 70%
  5. EThe largest two firms have a larger market share than all the others combined
Show the answer

The answer is C.

TopicMarket structures

Question paper p.11Mark scheme p.3Examiner report p.3Open in the tool
Q151 mark
In a market there are two main competitors, Firm X and Firm Y. Firm X is considering the launch of a new product into the market whilst Firm Y is considering a change in the price of its existing products. The matrix below shows their expected pay-offs in terms of profits: Firm Y Low price High price Firm X Don't launch £10m, £15m £15m, £20m Launch £30m, £10m £40m, £3m What, if any, is the Nash equilibrium in this market?
  1. ALaunch, low price
  2. BLaunch, high price
  3. CDon't launch, low price
  4. DDon't launch, high price
  5. ENo Nash equilibrium in this case
Show the answer

The answer is A.

TopicDemand, supply and elasticity

Question paper p.12Mark scheme p.3Examiner report p.3Open in the tool
Q161 mark
The chart in the question paper gives the 2015 world population and the 2050 world population forecast by region (% of world population). Over the period 2015 to 2050, global population is predicted to rise. It can safely be concluded from this data that:
  1. AOf the regions shown, Africa will have the fastest-growing population
  2. BThe population of Asia is forecast to fall between 2015 and 2050
  3. CIn 2015, more people live in Northern America and the Caribbean, Central and South America than in Africa
  4. DBy 2050 the Rest of Europe will be the region with the lowest population
  5. EOf the regions shown, Oceania will have the slowest growing population
Show the answer

The answer is A.

Question paper p.13Mark scheme p.3Examiner report p.3Open in the tool
Q171 mark
The chart in the question paper shows CPI inflation (annual growth rate, %) for the United Kingdom, Italy, Germany and France between January 2011 and October 2017. Over the period shown in the chart, it can be seen that:
  1. AThe UK's inflation rate was always higher than the other three countries
  2. BPrices in the UK were highest in late 2011
  3. CPrices were higher in the UK than in the other three countries by late 2017
  4. DPrices were falling in all countries between 2012 and 2014
  5. EAll countries experienced periods of inflation and deflation
Show the answer

The answer is E.

TopicMeasuring economic performance

Question paper p.14Mark scheme p.3Examiner report p.3Open in the tool
Q181 mark
The table below shows the terms of trade for 5 economies: Terms of Trade Country 2011 2012 2013 2014 2015 2016 Canada 103.37 101.78 101.78 100.42 93.53 91.66 France 97.64 97.32 98.42 99.61 102.71 103.54 Germany 97.29 97.10 98.17 99.50 102.13 103.70 Italy 97.38 95.90 97.40 99.96 102.20 104.73 Japan 92.40 91.32 90.39 89.94 97.90 102.97 It can safely be concluded that between 2011 and 2016:
  1. AThe Canadian trade balance worsened
  2. BThe Japanese trade balance worsened
  3. CExport prices in Italy fell relative to import prices
  4. DExport prices in Canada fell relative to import prices
  5. EJapanese export prices rose faster than German export prices
Show the answer

The answer is D.

TopicInternational trade and exchange rates

Question paper p.15Mark scheme p.3Examiner report p.3Open in the tool
Q201 mark
The table below shows UK gross household income by income decile groupings in 2016 Average gross weekly Decile household income Lowest 10% £130 Second 10% £250 Third 10% £340 Fourth 10% £440 Fifth 10% £550 Sixth 10% £670 Seventh 10% £820 Eighth 10% £1 010 Ninth 10% £1 280 Highest 10% £2 280 Source: ONS Based on the data given, the median gross weekly household income in the UK is approximately:
  1. A£550
  2. B£610
  3. C£670
  4. D£777
  5. E£1 205
Show the answer

The answer is B.

Question paper p.16Mark scheme p.3Examiner report p.3Open in the tool

Section B

Q23(a)4 marks
Suppose the price elasticity of demand for UK car exports to the eurozone is -0.5 and that the exchange rate is £1=1.5 euros. A UK based car manufacturer exports 300 000 cars per year to the eurozone at an average price of £15 000. If the exchange rate depreciates to £1=1.1 euros, calculate: (i) the expected new level of demand for UK cars in the eurozone following the change in the exchange rate. (ii) the expected new level of revenue in pounds (£) for the manufacturer, assuming that the new level of demand can be met.

TopicInternational trade and exchange ratesDemand, supply and elasticity

Question paper p.20Mark scheme p.6Examiner report p.4Open in the tool

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