A Level Paper 1, June 2018

Q1(a) Work out how the opportunity cost of 50 capital goods changes once the production possibility frontier moves from XY to XZ.

Q1(b) Pick the reason that best explains why the production possibility frontier has shifted from XY to XZ.

Q1(c) Give and explain one feature of an economy sitting at point W, inside its production possibility frontier.

Q2(a) With 73 million tickets sold weekly at £2 each, of which 24p is tax, work out Camelot's post-tax weekly revenue.

Q2(b) Given a cross elasticity of demand of 1.28 for gaming machines with respect to lottery ticket prices, explain the likely impact of the lottery ticket price rise from £1 to £2 on demand for gaming machines.

Q2(c) Choose why a £30m National Lottery grant might fund coastal flood defences (excludability / a private good / a public good / rivalry).

Q3(a) An estate agent charges 1.3% to sell a house; calculate the fee it collects on a £489 000 sale.

Q3(b) Given average house prices of £489 000 in London and £127 000 in the North East, identify the ratio of the two.

Q3(c) Set out one reason average house prices might differ so much between London and England's North East.

Q4(a) On a nail salon's cost and revenue diagram, find how supernormal profit changes when the owner moves from profit to revenue maximisation.

Q4(b) Say what changes for the nail salon when the owner's goal moves from maximising revenue to maximising sales.

Q5(a) Using a graph of global PC sales 2011–2015, identify the percentage decrease in sales over the period.

Q5(b) Set out one plausible reason why sales of PCs have been falling.

Q5(c) Using a table of global PC sales by company in 2015, calculate the five-firm concentration ratio.

Q6(a) Using Figure 1, explain one cause of the broad direction taken by real gas and electricity prices.

Q6(b) Drawing on Extract A, discuss how well attempts to make the UK energy market more competitive are likely to work.

Q6(c) Using Extract B, assess the effects on both consumers and firms of regulating the profits energy suppliers can earn.

Q6(d) UK electricity's price elasticity of demand is −0.35 short run but −0.85 long run: examine two explanations for that shift.

Q6(e) Using Extract C plus your own knowledge, discuss measures firms and government could take to cut labour immobility in the energy sector.

Q7 Evaluate the private and external costs of building large power stations, using an externalities diagram (context: Hinkley Point C, £18bn).

Q8 Evaluate whether consumers gain when a single firm holds a large market share, with diagram support (context: Apple, 38% of UK smartphones, July 2016).