gce as/a levelpmt.physicsandmathstutor.com/download/economics/a-level/past-pap… · 1131 010001 do...

1131

01

00

01

DO NOT OPEN THIS BOOKLET UNTIL YOU ARE TOLD TO DO SO.

ADDITIONAL MATERIALS

In addition to this paper, you will need a calculator.

INSTRUCTIONS TO CANDIDATES

Use black ink or black ball-point pen.Write your name, centre number and candidate number in the spaces at the top of this page.Answer all the questions in the spaces provided. You may use continuation paper on pages 14 and 15 if necessary, taking care to number the continuation correctly.

INFORMATION FOR CANDIDATES

Mark allocations are shown in brackets. This paper has a total of 50 marks.

VP*(S16-1131-01)

Surname

Other Names

CandidateNumber

2

CentreNumber

© WJEC CBAC Ltd.

GCE AS/A level

1131/01 – LEGACY

ECONOMICS – EC1

A.M. MONDAY, 16 May 2016

1 hour

S16-1131-01

For Examiner’s use only

Question MaximumMark

MarkAwarded

1. 4

2. 10

3. 4

4. 8

5. 8

6. 8

7. 8

Total 50

PMT

2

(1131-01)

Examineronly

Answer all the questions in the spaces provided.

1. In 2011 the Tohoku region of Japan was hit by a massive tsunami which then resulted in significant damage to the Fukushima nuclear power station, land and businesses in the surrounding area. Parts of the Tohoku region are still uninhabitable today.

Tohoku is a region where agriculture is the main economic activity contributing 25% of Japan’s rice production. There is relatively little industrial activity; the region accounts for less than 3% of Japan’s industrial production.

Production Possibility Frontier for Japan as a whole

© WJEC CBAC Ltd.

4

Agriculture

Industry

Adapting the PPF above, explain the impact of the tsunami on the production potential of the Japanese economy. [4]

PMT

(1131-01) Turn over.

1131

01

00

03

3

© WJEC CBAC Ltd.

BLANK PAGE

PMT

4

(1131-01)

Examineronly

(a) Calculate the effect of a 10% fall in the price of good A on:

(i) The demand for good A [1]

(ii) The demand for good B [1]

(b) Explain what is meant by cross elasticity of demand. [2]

© WJEC CBAC Ltd.

2. The table below shows the price elasticities and cross-price elasticities between several products. For example, the price elasticity of demand for product B is –1.3 and the cross-price elasticity between the price of good A and the demand for good C is –1.4.

Effect on the:

Demand for A Demand for B Demand for C

Change in the:

Price of A –0.6 +0.7 –1.4

Price of B +0.5 –1.3 0

Price of C –1.2 0 –0.2

PMT


1131

01

00

05

5Examiner

only (c) Using an example in each case, explain the likely cross-price elasticity relationship

between:

(i) Good A and good C [3]

(ii) Good B and good C [3]

© WJEC CBAC Ltd.

10

PMT

6

(1131-01)

Examineronly

3. Ghana cuts fuel subsidy in policy U-turn to reduce spending

In 2014, the Ghanaian government removed petrol subsidies just three months after introducing them, to reduce government spending. The subsidies, paid per litre of petrol to producers, had cost the government an estimated $US85 m.

The end of the subsidies will cause petrol prices to rise by about $US1 per litre increasing living costs and reducing consumer surplus.

Adapt the supply and demand diagrams below to illustrate:

(a) The reduction in consumer surplus to Ghanaian consumers of petrol following the removal of the subsidy. [2]

© WJEC CBAC Ltd.

Price per litre

S1 (Supply with subsidy)

Litres of petrol

D1Q1

P1

Price per litre

S1 (Supply with subsidy)

Litres of petrol

D1Q1

P1

(b) The cost to the Ghanaian government of operating the subsidy before it was removed. [2]

4

PMT


1131

01

00

07

7Examiner

only4. Free part-time pre-school education in England has not led to lasting educational

benefits, a study suggests.

Providing three year-olds with free nursery places is costing £800 m a year, but research is questioning whether it provides long-term benefits.

The report suggests that on average, free nursery places had a small beneficial impact at age five, but the size of this effect had declined by age seven and disappeared by age eleven.

Research also suggested that more than 80% of the children taking up free places would probably have gone to nursery anyway.

However, the research also suggested that children who had taken up a nursery place just because it had been free – the poorest children – had seen significant improvements to their educational attainment by the age of five and in total this policy resulted in an additional 12,000 women in work.

Adapted source: The Guardian and BBC

To what extent can this policy, of providing free part-time education for three year-olds, be considered to be an example of government failure? [8]

© WJEC CBAC Ltd.

8

PMT

8

(1131-01)© WJEC CBAC Ltd.

5. UK private business investment has risen to its highest level since the 2008 recession, in a further sign the economic recovery is becoming more balanced.

Diagram 1

2008 2010 2012 2014– 40

– 20

20

40

0

Quarterly business investment% change, year on year

In the first three months of 2014, business investment was 10.6 per cent higher than the same period in 2013. It has now grown for five consecutive quarters, raising hopes of a sustained recovery in investment.

Diagram 2

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0

–200

200

400

600

800

1000

1200

Components of UK Aggregate Demand

Consumption

Government Spending

Investment

Net Exports

£bn

real

term

s

PMT

9

(1131-01)

Examineronly

With reference to the data, evaluate the importance of private business investment in supporting the UK’s economic recovery. [8]

© WJEC CBAC Ltd. Turn over.

8

PMT

(1131-01)

10Examiner

only

Using an aggregate demand and aggregate supply diagram, analyse why the trend described in the data might lead to inflation in South Africa. [8]

© WJEC CBAC Ltd.

6. Rand depreciation leads to fears of inflation in South Africa

The South African currency, the Rand, depreciated by 5% against the US dollar between May and October 2014, having fallen by 22% in 2013. Analysts fear that the depreciation may lead to a rise in South Africa’s inflation.

Rand/$US exchange rateValue of $US per Rand

JAN JANAPR JUL OCT APR JUL OCTJANAPR JUL OCT

0.14

0.13

0.12

0.11

0.1

0.09

2012 2013 2014

PMT

12

(1131-01)

Examineronly

7. US imposes tariffs on steel from nine countries accused of dumping

The US Government has announced substantial tariffs on steel imports worth hundreds of millions of dollars imported from South Korea and eight other countries.

Steel from some of the nine countries will be hit with tariffs of up to 118% but steel from South Korea will have smaller tariffs of approximately 13%. Of the nine countries, South Korea is the largest supplier of steel to the US.

In the short term, the decision is expected to cut steel imports and raise prices of certain steel goods, which could help save a few hundred steel-workers’ jobs that were threatened because of competition from imports.

But any benefit to US steel manufacturers is likely to be short-lived, in a global economy that is adjusting to a worldwide excess supply of steel and China’s slowing demand.

Evaluate how beneficial the steel tariffs described in the text are likely to be to the US economy. [8]

© WJEC CBAC Ltd.

PMT

gce as/a levelpmt.physicsandmathstutor.com/download/economics/a-level/past-pap… · 1131 010001 do...

Documents