A Level Paper 1, June 2022

Q1(a) Given Disney+ subscriber growth from 10m to 50m, what is the most likely consequence, ceteris paribus? (fixed costs / income elasticity of demand / price elasticity of demand / revenue)

Q1(b) Sketch demand and supply for Disney+ services, showing how the shift in subscriber numbers moves that market's equilibrium.

Q2(a) Given a price elasticity of demand of −1.37 for sweetened drinks in Chile, calculate the percentage change in quantity demanded following a 5% price increase.

Q2(b) With cross price elasticity at +0.63, work out how far bottled water demand shifts in percentage terms when sweetened drinks rise 5% in price.

Q2(c) Using the Chilean drinks elasticity data, identify the combined effect of a fall in the price of sweetened drinks on revenue, and whether sweetened drinks and bottled water are complements or substitutes.

Q3(a) Use an externalities diagram to trace how illegal sewage dumped in the River Severn hits local tourism.

Q3(b) Pick the most probable consequence of the £180 000 fine levied on the water company (more market failure / higher profits / lower external costs / less government failure).

Q4(a) Use a simple game theory matrix with two firms and two outcomes to explain collusion by US chicken suppliers, fined $107.9m for price-fixing.

Q4(b) Identify which practice fits tacit collusion most closely (open information sharing / predatory pricing / price wars / informal understandings).

Q5(a) Classify the 2021 tie-up between the Fiat and Vauxhall car makers (backward integration / forward integration / horizontal merger / internal expansion).

Q5(b) Set out one internal economy of scale the merged Fiat–Vauxhall business could gain.

Q5(c) Give one worry EU competition regulators probably raised over the Fiat–Vauxhall deal.

Q6(a) Work out a three-firm concentration ratio for branded UK coffee shop chains, reading market shares off Figure 1.

Q6(b) Drawing on Figure 2 and price elasticity theory, examine two reasons why world coffee bean prices swing sharply.

Q6(c) Assess, using Extract A, whether coffee shop owners really pursue profit maximisation as their main objective.

Q6(d) Discuss what climbing wage, minimum wage and rent bills (Extract A) do to coffee shop profits; a cost and revenue diagram is needed.

Q6(e) Judge how contestable the coffee shop market looks, based on the evidence given.

Q7 Evaluate the efficiency of monopoly, naming at least one real monopolist — Tesla held 82% of the US EV market.

Q8 Evaluate what determines labour supply in one occupation you select, given UK shortfalls of nurses, chefs, construction workers and software engineers.