AS Level Paper 1, June 2016

Q1(a) The likeliest outcome of deeper division of labour in smartphone assembly (less boredom / less specialised kit / cheaper per unit / costlier training).

Q1(b) Explain the role money plays in making specialisation work better when smartphones are produced.

Q2(a) Give the meaning of the term external benefits (short defined-term question).

Q2(b) Using a diagram of the market for nursery school places, identify the measure a government could introduce to achieve the social optimum level of consumption.

Q2(c) On the nursery school places diagram, mark in the new social optimum output plus the welfare gain area once intervention succeeds.

Q3(a) Classify what Kenya's flower growers do to fishing industry workers (private benefit / private cost / external cost / external benefit).

Q3(b) Explain a single policy Kenya's government might adopt to limit the damage done by drawing water out of Lake Naivasha.

Q4(a) Explain the idea of diminishing marginal utility, applying it to the £8.99 all-you-can-eat buffet described.

Q4(b) What follows if the buffet is cut from £8.99 down to £6.99 (demand extends / demand curve shifts left / supply curve shifts left / demand contracts).

Q5(a) Given a 20% fall in petrol prices and a price elasticity of demand of −0.2, identify the expected percentage change in quantity demanded. (−0.4% / +0.4% / −4% / +4%)

Q5(b) With petrol's price elasticity of demand at −0.2, explain how cutting prices would alter the total revenue earned by petrol stations.

Q6(a) Using Figure 1, explain why new housing's price elasticity of supply might vary so much from one country to another.

Q6(b) Drawing on Extract A, assess what the Help to Buy scheme has probably done to the UK rental property market.

Q6(c) Explain what happens to producer surplus when demand for housing strengthens, supporting the answer with a diagram.

Q6(d) From Figure 2, calculate the percentage move in house prices from the opening quarter of 2009 to the opening quarter of 2015.

Q6(e) Using Figures 1 and 2 alongside your own knowledge, discuss what jobs the price mechanism performs when housing is allocated.

Q6(f) Evaluate the microeconomic consequences, favourable and otherwise, of government intervening in the UK housing market.

Q6(g) Evaluate the argument for the state supplying goods and services directly, such as housing or flood defences.