Section A
Case study
Bottled water in the UK
In the extracts: United Utilities, Bottled, Thames Water, Operating Company Revenue, Yorkshire Severn Trent, Anglian Thames Wessex, Northumbrian Water, Severn Trent Water, English and Welsh, Evian and Volvic
Q1(a)(i)2 marks
Refer to lines 7–11. Using information from the stimulus material, explain the term external costs.
Mark splitKnowledge 1Application 1
TopicMarket failure
Q1(a)(ii)2 marks
Using information from the stimulus material, explain the term information failure.
TopicMarket failure
Q1(b)2 marks
Refer to lines 15–19. Calculate the percentage change in branded water bottle consumption predicted by 2028.
Mark splitApplication 2
TopicAggregate demand
Q1(c)4 marks
'Bottled water has seen a huge increase in its popularity in the last 50 years.' Lines 1–2. Explain, using an appropriate diagram, the impact on the level of producer surplus of an increase in demand for bottled water.
Mark splitKnowledge 2Application 2
TopicDemand, supply and elasticity
Q1(d)8 marks
'Both the market power and the environmental impact of the water industry have been a topic of much debate in the UK recently.' Lines 20–21. Evaluate, using evidence from the stimulus material, whether there is market failure in the water industry.
Mark splitKnowledge 1Application 1Analysis 3Evaluation 3
TopicMarket failure
Q1(e)12 marks
Two-thirds of England's biggest water companies employ key executives who previously worked at the water regulator OFWAT. Lines 38–39. Evaluate, using evidence from the stimulus material, whether regulation of the water industry is beneficial to consumers.
Mark splitKnowledge 1Application 1Analysis 5Evaluation 5
TopicCompetition policy and regulationGovernment intervention in markets
Section B
Q2OptionalEvaluate25 marks
Evaluate, using an appropriate diagram(s), the extent to which the principal agent problem is the main factor influencing the choice of objective for a firm.
TopicBusiness growth and objectives
Q3OptionalEvaluate25 marks
Evaluate, using an appropriate diagram(s), the extent to which a rise in the price of oil will always lead to a rise in the price of goods and services sold in UK supermarkets.
TopicMeasuring economic performance
Section C
Q4OptionalEvaluate25 marks
Evaluate the extent to which the free market is the most effective way to ensure an efficient allocation of resources.
Mark splitKnowledge 6Application 6Analysis 6Evaluation 7
TopicThe economic problem and resource allocation
Q5OptionalEvaluate25 marks
Evaluate the extent to which information provision is effective at incentivising consumers to change their behaviour.
Mark splitKnowledge 6Application 6Analysis 6Evaluation 7
TopicGovernment intervention in markets
