Component 1: Economic Principles · A520U10-1

Eduqas A-level Component 1, October 2020

All 5 written questions and 20 multiple choice questions from Eduqas A-level Component 1 (October 2020), 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

Autumn series, sat in October because the summer exams were cancelled.

Section A

Q11 mark
The diagram below shows the production possibility frontier for an economy. The frontier meets the goods axis at 90 and the services axis at 110. Point X is 50 goods and 40 services; point Y is 65 goods and 70 services. The opportunity cost for an economy of moving from point X to point Y is:
  1. AZero
  2. B15 goods and 30 services
  3. C25 goods and 40 services
  4. D40 goods and 70 services
  5. E50 goods and 40 services
Show the answer

The answer is A.

TopicThe economic problem and resource allocation

Question paper p.2Mark scheme p.4Examiner report p.3Open in the toolPractise the PPF diagram
Q21 mark
Study the table below. Output 5: short run total cost £170, long run total cost £150. Output 6: £180, £174. Output 7: £196, £196. Output 8: £240, £216. Output 9: £288, £234. Output 10: £340, £250. Over the output range shown in the table, which of the following is true as output increases?
  1. AShort run: Diminishing returns to the variable factor; Long run: Diseconomies of scale
  2. BShort run: Diminishing returns to the variable factor; Long run: Economies of scale
  3. CShort run: Increasing returns to the variable factor; Long run: Economies and then diseconomies of scale
  4. DShort run: Increasing returns to the variable factor; Long run: Diseconomies of scale
  5. EShort run: Increasing returns to the variable factor; Long run: Economies of scale
Show the answer

The answer is B.

TopicCosts, revenues and profit

Question paper p.3Mark scheme p.4Examiner report p.3Open in the tool
Q31 mark
The chart in the question paper gives information on UK nominal wage growth and CPI inflation (annual % change). From the chart, it can be concluded that:
  1. ABetween January 2012 and January 2015 prices were falling
  2. BNominal wages rose throughout the period
  3. CNominal wages were lower in September 2014 than in May 2008
  4. DReal wages were rising between January 2007 and May 2008
  5. EReal wages were falling between September 2014 and January 2017
Show the answer

The answer is D.

TopicMeasuring economic performance

Question paper p.4Mark scheme p.4Examiner report p.3Open in the tool
Q41 mark
Over a 6-month period the exchange rate between the pound sterling (£) and the Singapore dollar (S$) changed from £1=S$1.75 to £1=S$1.85. The fee for an overseas student taking a course at the LSE (the London School of Economics) was around £17 000 per year. The effect of the change in exchange rate would be to:
  1. AReduce amount received by the LSE from £17 000 to £16 081 per year
  2. BIncrease the amount received by the LSE from £17 000 to £17 971
  3. CIncrease the amount paid by a Singaporean student by S$1 700
  4. DReduce the amount paid by a Singaporean student by S$1 700
  5. EReduce the fee received by the LSE per student in pounds sterling (£) but increase the amount of Singapore dollars (S$) paid by the student
Show the answer

The answer is C.

TopicInternational trade and exchange rates

Question paper p.5Mark scheme p.4Examiner report p.3Open in the tool
Q51 mark
The table below contains information on the HDI (Human Development Index) in Senegal and Ivory Coast: HDI Ivory Coast 0.492 Senegal 0.505 Which of the following can be safely concluded from this information?
  1. AGNI per capita at PPP is higher in Senegal than in Ivory Coast
  2. BGDP per capita is higher in Senegal than in Ivory Coast
  3. CAdult literacy is higher in Senegal than in Ivory Coast
  4. DChild mortality is lower in Senegal than in Ivory Coast
  5. ENone of the above
Show the answer

The answer is E.

TopicGrowth and developmentMeasuring economic performance

Question paper p.5Mark scheme p.4Examiner report p.3Open in the tool
Q61 mark
Study the AD/AS diagram below. LRAS shifts from LRAS1 to LRAS2 and SRAS shifts from SRAS1 to SRAS2, with AD unchanged; the price level moves from PL1 to PL2 and real GDP from Y1 to Y2. The most likely explanation for the changes shown in the diagram is: (The diagram is in the question paper.)
  1. AFalling oil prices and higher labour productivity
  2. BRising consumer confidence and higher labour productivity
  3. CRising investment and a rise in the minimum wage
  4. DFalling oil prices and rising consumer confidence
  5. EA higher minimum wage and higher labour productivity
Show the answer

The answer is A.

TopicThe labour marketAggregate demandMeasuring economic performance

Question paper p.6Mark scheme p.4Examiner report p.3Open in the toolPractise the AD/AS diagram
Q71 mark
Study the exchange rate diagram below (supply S and demand D for the currency; exchange rates R1 and R2; quantities X, Y and Z). If the central bank wanted to maintain the exchange rate at R1, it would need to: (The diagram is in the question paper.)
  1. ABuy XZ of its own currency
  2. BBuy XY of its own currency
  3. CBuy YZ of its own currency
  4. DSell XZ of its own currency
  5. ESell YZ of its own currency
Show the answer

The answer is D.

TopicInternational trade and exchange ratesThe financial sector

Question paper p.7Mark scheme p.4Examiner report p.3Open in the tool
Q81 mark
Which of the following could best be described as an external diseconomy of scale?
  1. AInefficiencies resulting from a merger between a firm and its supplier
  2. BCommunication problems arising from a merger between two firms in the same sector
  3. CHigher labour costs due to new firms entering the industry and competing for workers
  4. DA rise in interest rates leading to an increase in the repayments on the firm's existing loans
  5. ECoordination problems arising from a firm's decision to open a subsidiary in another country
Show the answer

The answer is C.

TopicBusiness growth and objectivesMacroeconomic objectives and policyGovernment intervention in markets

Question paper p.8Mark scheme p.4Examiner report p.3Open in the tool
Q91 mark
The Indian rupee (the Indian currency) depreciated to a record low after the country's trade deficit widened to a five-year high because petroleum imports rose sharply. Which one of the possible exchange rate diagrams best reflects the situation described? (Options A to E are diagrams: see the question paper.)
Show the answer

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

TopicInternational trade and exchange ratesMeasuring economic performance

Question paper p.8Mark scheme p.4Examiner report p.3Open in the tool
Q101 mark
Study the table on elasticities below. Good X: PED -0.7, XED between X and Y +1.1, YED -0.3. Good Y: PED -0.9, XED between X and Y +1.1, YED +0.5. It can be concluded that:
  1. AGoods X and Y are substitutes and are both normal goods
  2. BGoods X and Y are substitutes and both have price inelastic demand
  3. CGoods X and Y are complements and good X is normal, but good Y is inferior
  4. DGoods X and Y are complements and have price inelastic demand
  5. EGood X is inferior, good Y is normal and both goods have price elastic demand
Show the answer

The answer is B.

TopicDemand, supply and elasticity

Question paper p.9Mark scheme p.4Examiner report p.3Open in the tool
Q111 mark
The chart in the question paper gives information on changes in real median household disposable income (index, 2003-04 = 100) for pensioner, non-working, higher income and low to middle income households in the UK from 1994-95 to 2016-17. Which of the following can be safely concluded?
  1. AIn 2016-17 the real median household disposable income of pensioner households was approximately 30% higher than that of low to middle income households
  2. BThe real median household disposable income of pensioner households in (2016-17) was about 27% higher than in 1994-95
  3. CThe real median household disposable income of low to middle income households was lower in 2012-13 than in (2003-04)
  4. DThe real median household disposable income of pensioner households rose throughout the period
  5. EThe real median household disposable income of the four groups shown were equal in 2003/04
Show the answer

The answer is C.

Question paper p.10Mark scheme p.4Examiner report p.3Open in the tool
Q121 mark
Assuming that the Marshall-Lerner condition holds, a depreciation in the exchange rate would be most likely to have which of the following effects?
  1. ATerms of trade: No effect; Current account balance: Improve
  2. BTerms of trade: Improve; Current account balance: Improve
  3. CTerms of trade: Improve; Current account balance: Worsen
  4. DTerms of trade: Worsen; Current account balance: Worsen
  5. ETerms of trade: Worsen; Current account balance: Improve
Show the answer

The answer is E.

TopicInternational trade and exchange rates

Question paper p.11Mark scheme p.4Examiner report p.3Open in the tool
Q131 mark
The table below gives a set of different economic indicators for an economy in £billions. In which situation (A, B, C, D or E) would national income be expected to rise?
  1. ANational income: 800; Exports: 200; Government spending: 250; Investment: 150; Imports: 225; Tax: 275; Saving: 200
  2. BNational income: 900; Exports: 200; Government spending: 250; Investment: 150; Imports: 250; Tax: 175; Saving: 200
  3. CNational income: 1 000; Exports: 200; Government spending: 250; Investment: 150; Imports: 125; Tax: 175; Saving: 200
  4. DNational income: 1 100; Exports: 200; Government spending: 250; Investment: 150; Imports: 250; Tax: 300; Saving: 100
  5. ENational income: 1 200; Exports: 200; Government spending: 250; Investment: 150; Imports: 200; Tax: 200; Saving: 200
Show the answer

The answer is C.

TopicInternational trade and exchange ratesAggregate demand

Question paper p.11Mark scheme p.4Examiner report p.3Open in the tool
Q141 mark
The table below gives index numbers of unit labour costs in selected economic areas: Index of unit labour costs, selected economic areas (2010=100) 2010 2014 2015 2016 2017 2018 2019 Brazil 100 95.1 77.3 80.6 91.2 86.0 87.4 China 100 123.8 137.6 133.3 130.9 137.7 139.7 Euro area 100 96.5 91.0 93.4 92.9 96.0 94.8 United 100 102.4 109.6 99.4 94.0 97.9 97.9 Kingdom United 100 100.7 114.3 118.9 117.5 112.6 112.6 States It can be concluded that:
  1. AUnit labour costs were lower in Brazil, the euro area and the UK in 2019 than they were in 2014
  2. BBrazil had the lowest unit labour costs of the economic areas shown in 2019
  3. CUnit labour costs rose by 15.9% in China between 2014 and 2019
  4. DUnit labour costs in the euro area fell in every year over the period shown
  5. EThe UK's labour force has become less competitive against the USA's labour force over the period shown
Show the answer

The answer is A.

TopicMeasuring economic performance

Question paper p.12Mark scheme p.4Examiner report p.3Open in the tool
Q151 mark
According to neo-classical economists, an increase in the level of aggregate demand will have which of the following effects in the short run (SR) and long run (LR)?
  1. APrice level (SR): Rise; Output (SR): No change; Price level (LR): Rise; Output (LR): Rise
  2. BPrice level (SR): No change; Output (SR): No change; Price level (LR): Rise; Output (LR): Rise
  3. CPrice level (SR): Rise; Output (SR): Rise; Price level (LR): No change; Output (LR): Rise
  4. DPrice level (SR): No change; Output (SR): Rise; Price level (LR): Rise; Output (LR): No change
  5. EPrice level (SR): Rise; Output (SR): Rise; Price level (LR): Rise; Output (LR): No change
Show the answer

The answer is E.

TopicMeasuring economic performanceAggregate demandAggregate supply

Question paper p.13Mark scheme p.4Examiner report p.3Open in the tool
Q161 mark
Firms X and Y compete in the same market. Currently Firm X is seen as having both higher quality and being better value for money than Firm Y. Each firm is considering possible future strategies: to cut price to improve value for money or to advertise to improve consumers' views of quality. The forecast outcomes (Firm X first) are: both cut price: £20m, £15m; X cuts price and Y advertises: £15m, £20m; X advertises and Y cuts price: £10m, £20m; both advertise: £20m, £15m. Which combination of strategies, if any, will lead to a Nash equilibrium in this case?
  1. AFirm X's strategy: Cut price; Firm Y's strategy: Cut price
  2. BFirm X's strategy: Cut price; Firm Y's strategy: Advertise
  3. CFirm X's strategy: Advertise; Firm Y's strategy: Cut price
  4. DFirm X's strategy: Advertise; Firm Y's strategy: Advertise
  5. EFirm X's strategy: No Nash equilibrium in this case
Show the answer

The answer is E.

TopicDemand, supply and elasticity

Question paper p.13Mark scheme p.4Examiner report p.3Open in the tool
Q171 mark
Cross-price elasticity of demand between good G and good H is negative. Assuming that the market for good H is initially in equilibrium at point X, which point would show the new equilibrium in the market for good H following a cut in VAT on good G? (The diagram is in the question paper.)
  1. APoint J
  2. BPoint K
  3. CPoint L
  4. DPoint M
  5. EPoint N
Show the answer

The answer is B.

TopicDemand, supply and elasticityGovernment intervention in markets

Question paper p.14Mark scheme p.4Examiner report p.3Open in the tool
Q191 mark
The chart in the question paper shows the EU's share of the world's economy (GDP at PPP) over time, with the dates when new countries joined the EU. Which of the following can be concluded from the chart over the period shown?
  1. AGlobal GDP fell over the period
  2. BNew countries joining the EU reduced the EU's GDP
  3. CThe EU's GDP fell over the period shown
  4. DThe rest of the world's economies grew relatively faster than the EU
  5. ESmaller trade blocs have more impact on the global economy
Show the answer

The answer is D.

TopicMeasuring economic performance

Question paper p.15Mark scheme p.4Examiner report p.3Open in the tool
Q201 mark
The diagram below shows the total revenue (TR) and total costs (TC) of a profit maximising firm which is producing an output of 8 000 units. This diagram is a representation of: (The diagram is in the question paper.)
  1. APerfect competition in the short run
  2. BMonopolistic competition in the long run
  3. CPerfect competition in the long run
  4. DMonopolistic competition in the short run
  5. EMonopoly
Show the answer

The answer is A.

TopicMarket structuresCosts, revenues and profitDemand, supply and elasticity

Question paper p.16Mark scheme p.4Examiner report p.3Open in the toolPractise the perfect competition diagramPractise the monopoly diagram

Section B

Q218 marks
Fears over Brexit driving growth but not profit for the UK's food and drink industry. The weak pound saw international exports for UK food and drink producers increase by 14%. However, inflation in raw material prices caused by a depreciation in sterling reduced producers' profits. Wage cost per employee has continued to rise. This has meant that even though revenue from overseas sales has increased, overall profits have fallen. Adapting the diagram opposite, analyse the impact of the factors above on the profits of the UK food and drink sector.
Mark splitKnowledge 3Application 2Analysis 3

TopicInternational trade and exchange ratesMeasuring economic performance

Question paper p.18Mark scheme p.5Examiner report p.3Open in the tool

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.