Ial Wec11 01 Oct19
Ial Wec11 01 Oct19
Ial Wec11 01 Oct19
Economics
International Advanced Subsidiary
Unit 1: Markets in action
Instructions
• Use black ink or ball-point pen.
• centrethe
Fill in boxes at the top of this page with your name,
number and candidate number.
• Answer ALL questions in Sections A, B and C.
• Answer ONE question in Section D.
• – there may
Answer the questions in the spaces provided
be more space than you need.
Information
• The total mark for this paper is 80.
• The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
• Read each question carefully before you start to answer it.
• your answers if you have time at the end.
Check
Turn over
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SECTION A
Answer ALL questions in this section.
Questions must be answered with a cross in a box . If you change your mind about an answer,
put a line through the box and then mark your new answer with a cross .
1 Which one of the following best describes the nature of economics?
2 Which one of the following roles is the state most likely to undertake in a mixed
economy?
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4 The diagram shows the market for vanilla pods.
Price per kg
of vanilla T S
pods
U
P1 X
Pe W
V
D D1
0 Qe Q1 Quantity of
vanilla pods, kg
Madagascar is the world’s largest supplier of vanilla pods. Higher demand for natural
flavourings in rich countries has led to an increase in the demand for vanilla as shown
in the diagram above.
This will result in an increase in
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5 The table shows the estimated price elasticity of supply for cotton in selected
countries.
Australia 0.46
Egypt 0.16
India 0.31
Mexico 1.08
(Source: http://www.fao.org/3/a-ah470e.pdf )
A -1.25
B -0.80
C +0.80
D +1.25
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SECTION B
Answer ALL questions in this section in the space provided.
7 In the UK the average student debt was £46 000 for graduates completing their
courses in 2017. The UK Government considered reducing the maximum price of
university tuition fees from £9 250 to £6 000 per year.
Draw a diagram to illustrate the impact of a decrease in the maximum price of
university tuition fees in the UK.
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8 Governments of European Union countries spend a total of €3 billion a year on street
lighting.
With reference to the provision of street lights, explain what is meant by the term
‘public good’.
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9 In Canada, two of the largest internet providers, Bell and Rogers, increased prices in
2018. Consumers could save 25% by switching to smaller internet providers. However,
most consumers remained with their more expensive internet providers.
Explain one reason why many consumers behave in this way and remain with their
current internet providers.
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10 The table shows the gross weekly earnings of Chinese workers and the number of
visits abroad by Chinese citizens in 2016 and 2017.
2016 2017
Using the data in the table, calculate the income elasticity of demand for visits abroad
by Chinese citizens. Show your workings.
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11 The table shows the total utility gained by Luca as he increases the number of drinks
he consumes in one day.
1 15
2 32
3 52
4 73
5 85
6 90
Explain how the above table may be used to illustrate the concept of diminishing
marginal utility. Use the last column in the table to show your workings.
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SECTION C
Study Extracts A, B and C and Figures 1 and 2 in the Source Booklet before
answering Question 12.
Write your answers in the space provided on the following pages.
12 (a) Define the term ‘information gap’ (Extract B, line 3).
(2)
(b) Explain what is meant by ‘positive economic statements’. Include two examples
from the extracts to support your answer.
(4)
(c) Analyse one reason why ‘the price of plastic waste material fell by more than 40%.’
(Extract A, line 2).
Illustrate your answer with a supply and demand diagram.
(6)
(d) With reference to Extract B, examine the external costs associated with the
consumption and disposal of plastic bags.
(8)
(e) With reference to Extract C, Figure 1 and Figure 2, discuss the microeconomic
impact of the introduction of an indirect tax on plastic bags.
Illustrate your answer with an appropriate diagram.
(14)
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12 (a) Define the term ‘information gap’ (Extract B, line 3).
(2)
(b) Explain what is meant by ‘positive economic statements’. Include two examples
from the extracts to support your answer.
(4)
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(c) Analyse one reason why ‘the price of plastic waste material fell by more than 40%.’
(Extract A, line 2).
Illustrate your answer with a supply and demand diagram.
(6)
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(d) With reference to Extract B, examine the external costs associated with the
consumption and disposal of plastic bags.
(8)
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(e) With reference to Extract C, Figure 1 and Figure 2, discuss the microeconomic
impact of the introduction of an indirect tax on plastic bags.
Illustrate your answer with an appropriate diagram.
(14)
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SECTION D
Answer ONE question from this section.
Write your answer in the space provided.
EITHER
13 The Government of Finland plans to offer a subsidy of €400 for each purchase of an
electric bicycle. The aim is to encourage cycling to reduce the use of motor cars.
Evaluate the economic effects of subsidising electric bicycles.
OR
14 In 2007, 97% of Ukrainian children received the measles vaccination but in 2016 this
had fallen to 42%. In 2016 there were 102 cases of measles but in the first 10 months
of 2017 the number increased to 2 381.
Evaluate the private benefits and external benefits of children receiving the measles
vaccination.
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Indicate which question you are answering by marking a cross in the box . If you change your
mind, put a line through the box and then indicate your new question with a cross .
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Pearson Edexcel International Advanced Level
Economics
International Advanced Subsidiary
Unit 1: Markets in action
Source Booklet
Do not return this Source Booklet with the question paper.
Turn over
P61983A
©2019 Pearson Education Ltd.
1/1/1/1/1/1/1/1/1/1
*P61983A*
Sources for use with Section C.
The market for plastics
Extract A Plastic waste prices fall
During 2017 the price of plastic waste material fell by more than 40%. This was mainly
caused by China imposing a ban on the import of plastic waste. The loss of such a large
market caused a decrease in the average price from £373 per tonne in February to £215
per tonne in December. This is the price paid by the businesses who recycle the waste 5
material.
Craig Curtis, Managing Director of CS Recycling, commented that there were now
dramatically fewer buyers for the plastic waste.
Extract B Plastic bags damaging the environment
Plastic bags have a significant impact on the environment. However, there appears to be
an information gap since many people are not aware of the harmful effects caused by the
disposal of plastic bags. These include:
• Plastic bags break down into smaller and smaller toxic pieces 5
• A plastic bag takes between 400 to 1 000 years to break down
• As it breaks down, plastic particles contaminate soil and waterways
• Plastic bags cause over 100 000 marine animal deaths every year
• Nearly 90% of the debris in our oceans is plastic
• Some of the food humans eat may be contaminated with toxins from plastic. 10
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Figure 1 Revenues from the tax on plastic bags for Denmark
600
Single use
400
plastic bags
300
200
100
0
Czech Republic
Slovakia
EU Average
Bulgaria
Greece
UK
Spain
Sweden
France
Netherlands
Luxembourg
Denmark
Finland
Germany
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Acknowledgements
Extract A adapted from ‘Plastic film prices drop 40%’, 19 December 2017, Carrie Bone,
https://www.mrw.co.uk/latest/plastic-film-prices-drop-by-40/10026317.article
Extract C, Figure 1 and Figure 2 adapted from Fact Sheet: Tax on Plastic Bags, https://green-budget.eu/
wp-content/uploads/Tax-on-plastic-bags_FINAL.pdf
Extract C adapted from Greek Shoppers Responding to Plastic Bag Tax, 6 February 2018, John Smith,
https://greece.greekreporter.com/2018/02/06/greek-shoppers-responding-to-plastic-bag-tax/
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