A Level Paper 1, June 2019

Q1(a) Work out supply price elasticity for newly built homes, using the 5.4% price rise and output moving from 134 612 in 2016 to 162 880 in 2017.

Q1(b) Housebuilding jumps 10% when new build prices rise 2.5%; state what this implies about supply, other things equal (perfectly elastic / perfectly inelastic / relatively elastic / relatively inelastic).

Q1(c) Set out one determinant of how responsive the supply of newly built housing is to price, i.e. its price elasticity of supply.

Q2(a) Show, on a demand/supply diagram, how Hurricane Harvey affected the US oil market at micro level once almost a quarter of production capacity shut.

Q2(b) Pick, from the four offered, the production possibility frontier diagram that best captures what a disaster such as Hurricane Harvey does to the US economy.

Q3(a) Say what makes UK hair and beauty a case of monopolistic competition (no advertising spend / few dominant firms / identical products / easy entry and exit).

Q3(b) Sketch costs and revenues for a monopolistically competitive firm sitting at its long-run equilibrium position.

Q4(a) Choose the likeliest motive behind Esure splitting off GoCompare in 2016 (external scale economies / internal scale economies / concentrating on core activity / winning market share).

Q4(b) Given 2017 profit of £17.5m (up 21.5% on 2016) and 2017 revenue of £75.8m (up 4.1% on 2016), calculate GoCompare's total costs in 2016.

Q5(a) Set out the way a free market economy decides where scarce resources end up going.

Q5(b) Identify which statement about Hayek and Marx is true.

Q5(c) Give one benefit a business gains by organising its production around division of labour.

Q6(a) Using Extract A on UK energy and telecoms, distinguish a positive statement from a normative one.

Q6(b) Drawing on Extract B, examine how consumers might gain once BT and EE combine.

Q6(c) Assess, using Extract C, why landline-only households stay put instead of moving to a cheaper phone supplier.

Q6(d) Discuss one explanation for BT's higher profits, supporting the answer with a costs and revenue diagram.

Q6(e) Discuss the ways governments can step in to safeguard customers in utility markets such as energy and telecoms.

Q7 Taking one industry as your example, evaluate the causes of pay gaps across the UK labour market, given BBC presenter salaries and CEO pay ratios.

Q8 Picking one industry, evaluate what drives firms towards collusion, given Scania's €880m penalty over a 14-year truck cartel.