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The document provides examination details for the Pearson Edexcel International Advanced Level Economics paper scheduled for January 8, 2020. It includes instructions for candidates, the structure of the exam, and specific questions related to economic concepts. The total marks for the paper are 80, with various sections requiring different types of responses.

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13 views32 pages

2020 Jan U1

Uploaded by

myathmue49

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You are on page 1/ 32

Please check the examination details below before entering your candidate information

Candidate surname Other names

Pearson Edexcel Centre Number Candidate Number

International
Advanced Level

Wednesday 8 January 2020

Afternoon (Time: 1 hour 45 minutes) Paper Reference WEC11/01

Economics
International Advanced Subsidiary
Unit 1: Markets in action

You must have: Total Marks

Source Booklet (enclosed)
71
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

P60588RA
©2020 Pearson Education Ltd.

1/1/1/1/1/1/1/1/1
*P60588RA0128*
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 will cause a movement along the demand curve in the
market for rice?

A An increase in the global population

B An increase in real incomes

C A decrease in the price of noodles

D A decrease in the price of rice

(Total for Question 1 = 1 mark)

2 Which one of the following is an advantage of a free market economy?

A The profit motive gives firms the incentive to be more efficient

B Public goods may be under-provided by the price mechanism

C Goods may be over-provided compared with the social optimum level of

output
D Government intervention leads to the correction of market failure

(Total for Question 2 = 1 mark)

3 Which one of the following is an example of market failure?

A Government provision of flood defences that is greater than the social

optimum output
B Doctors prescribe too many medicines because the cost is covered by health
insurance
C Lower prices create an incentive for firms to switch production to more
profitable activities
D Unintended consequences that follow the introduction of an indirect tax

(Total for Question 3 = 1 mark)

2
*P60588RA0228*
4 The diagram shows the market for new house construction.

Costs and
benefits
MSC

P3 W MPC

P2 U

P1 V

MPB = MSB

O Q2 Q1 Quantity of new houses

The housing construction industry is a major source of pollution.

Which one of the following can be deduced from the diagram?

A The social optimum output is Q₁

B The market equilibrium output is Q₂

C Welfare loss is shown by the area UVT

D Welfare loss is shown by the area UWV

(Total for Question 4 = 1 mark)

3
*P60588RA0328* Turn over
5 The table shows the percentage of electricity generated by different sources for
Portugal in 2016.

Coal 22

Gas 22

Hydro 24

Oil 2

Solar 2

Wind 22

Other renewable 6

(Source: https://www.iea.org/countries/Portugal/)

Which one of the following can be deduced from the table?

A Portugal generated 44% of its electricity from non-renewable sources

B Portugal generated 50% of its electricity from renewable sources

C Portugal generated most of its electricity from renewable sources

D Portugal generated most of its electricity from non-renewable sources

(Total for Question 5 = 1 mark)

4
*P60588RA0428*
6 The table shows the estimated price elasticity of demand for air travel. Short-haul is
air travel within the same continent and long-haul is air travel to a different continent.

Estimates of price elasticity

of demand

Short-haul business travellers -0.70

Long-haul business travellers -0.27

Short-haul leisure travellers -1.52

Long-haul leisure travellers -1.04

(Source: https://www.fin.gc.ca/consultresp/Airtravel/airtravStdy_-eng.asp)

Which one of the following can be deduced from the table?

A An increase in the price of flights for long-haul business travellers will -
increase total revenue for airlines
B An increase in the price of flights for short-haul leisure travellers will
increase total revenue for airlines
C Long-haul business travellers are more responsive to a change in price than
short-haul business travellers
D Long-haul leisure travellers are more responsive to a change in price than
short-haul leisure travellers

(Total for Question 6 = 1 mark)

TOTAL FOR SECTION A = 6 MARKS

5
*P60588RA0528* Turn over
SECTION B
Answer ALL questions in this section in the space provided.
7 In 2000 the population of Qatar was 592 267. By 2018 the population had increased
to 2 694 849. Most of this growth was caused by immigration.
Draw a diagram to illustrate the impact of this change in Qatar’s population on its
production possibility frontier.

. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(Total for Question 7 = 4 marks)

6
*P60588RA0628*
8 A report identified that Hong Kong is the city with the highest risk of experiencing
a housing market bubble. House prices in Hong Kong increased by 10% per year
between 2012 and 2018.
With reference to the Hong Kong housing market, explain what is meant by a ‘market
bubble’.

(Total for Question 8 = 4 marks)

7
*P60588RA0728* Turn over
9 In 2017 the Government of the Philippines imposed a 50% tax on the import of cars
with a price above $74 000. Since then the Government has seized smuggled cars.
For example, in July 2018, it removed 800 smuggled cars from the market.
Explain why this tax on imported cars is an example of government failure.

(Total for Question 9 = 4 marks)

8
*P60588RA0828*
10 The table shows the gross weekly income for workers in the UK and the number of
visits abroad by UK citizens in 2016 and 2017.

2016 2017

Gross weekly income £539 £550

Number of visits abroad

70.8 million 72.7 million
by UK citizens

(Source: adapted from https://www.ons.gov.uk/ © Crown Copyright)

Based on the data in the table, calculate the income elasticity of demand for visits
abroad by UK citizens. Show your workings.

(Total for Question 10 = 4 marks)

9
*P60588RA0928* Turn over
11 In September 2018 the global price of wheat decreased by 3%. This was caused by an
increase in supply from the USA.
Explain the likely impact of this fall in price on consumer surplus in the market for
wheat. Illustrate your answer with a diagram.

(Total for Question 11 = 4 marks)

TOTAL FOR SECTION B = 20 MARKS

10
*P60588RA01028*
BLANK PAGE

SECTION C BEGINS ON THE NEXT PAGE.

11
*P60588RA01128* Turn over
SECTION C
Study Figures 1 and 2 and Extracts A, B and C in the Source Booklet before answering
Question 12.
Write your answers in the space provided on the following pages.
12 (a) Define the term ‘substitutes’ (Extract A, line 8).
(2)
(b) Explain what is meant by the term ‘inelastic supply’. Refer to Figure 1 and Extract A
in your answer.
(4)
(c) Analyse why the price of vanilla increased significantly between 2014 and 2018.
Refer to Figure 2 and Extract A in your answer.
Illustrate your answer with a supply and demand diagram.
(6)
(d) With reference to Extract C, examine two microeconomic effects of Finland’s
decision to remove the sugar tax.
(8)
(e) Discuss reasons why the ‘quantity of education is below the social optimum level’
(Extract B, lines 2 and 3). Refer to external benefits in your answer.
Illustrate your answer with an appropriate diagram.
(14)

12
*P60588RA01228*
12 (a) Define the term ‘substitutes’ (Extract A, line 8).
(2)

(b) Explain what is meant by the term ‘inelastic supply’. Refer to Figure 1 and Extract A
in your answer.
(4)

13
*P60588RA01328* Turn over
(c) Analyse why the price of vanilla increased significantly between 2014 and 2018.
Refer to Figure 2 and Extract A in your answer.
Illustrate your answer with a supply and demand diagram.
↑ (6)

~
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- -
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

I
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

-
-
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

-
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

data? ⑮
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

14
*P60588RA01428*
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

15
*P60588RA01528* Turn over
(d) With reference to Extract C, examine two microeconomic effects of Finland’s
decision to remove the sugar tax.
(8)

16
*P60588RA01628*
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

17
*P60588RA01728* Turn over
(e) Discuss reasons why the ‘quantity of education is below the social optimum level’
(Extract B, lines 2 and 3). Refer to external benefits in your answer.
Illustrate your answer with an appropriate diagram.
(14)

18
*P60588RA01828*
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

19
*P60588RA01928* Turn over
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

(Total for Question 12 = 34 marks)

TOTAL FOR SECTION C = 34 MARKS

20
*P60588RA02028*
BLANK PAGE

SECTION D BEGINS ON THE NEXT PAGE.

21
*P60588RA02128* Turn over
SECTION D
Answer ONE question from this section.
Write your answer in the space provided.
EITHER
13 Adam Smith identified that if workers completed every stage of production
individually they would each produce 10 to 20 pins per day. The application of
the division of labour in a pin factory enabled ten workers to produce 48 000 pins
per day.
Evaluate the advantages of the division of labour in organising production.

(Total for Question 13 = 20 marks)

OR
14 The European Union (EU) operates a tradeable pollution permit scheme which affects
12 000 businesses including energy producers, airlines and the steel industry.
Evaluate the use of tradeable pollution permits to reduce pollution.

(Total for Question 14 = 20 marks)

22
*P60588RA02228*
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 .

Chosen question number: Question 13 Question 14

Write your answer here:

23
*P60588RA02328* Turn over
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

24
*P60588RA02428*
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

25
*P60588RA02528* Turn over
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

26
*P60588RA02628*
. . . . . . . . . . . .. .. .. .. .. .. .. .. .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............................................................................................................................................ .............. .. . . . . . . . . . . . . . . . . . . . .

TOTAL FOR SECTION D = 20 MARKS

TOTAL FOR PAPER = 80 MARKS

27
*P60588RA02728*
BLANK PAGE

28
*P60588RA02828*
Pearson Edexcel International Advanced Level

Wednesday 8 January 2020

Afternoon Paper Reference WEC11/01

Economics
International Advanced Subsidiary
Unit 1: Markets in action

Source Booklet
Do not return this Source Booklet with the question paper.

Turn over

1/1/1/1/1/1/1/1/1
*P60588RA*
Sources for use with Section C.
The markets for vanilla, education and sugar
Figure 1 Estimated price elasticity of supply for vanilla in Madagascar and
Indonesia

Madagascar Indonesia

Price elasticity
0.48 0.52
of supply

Figure 2 US$ price of vanilla per kilogram, 2008-2018

600

450

$ 300

150

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2
P60588RA
Extract A Vanilla price increases
Madagascar grows 80% of the world’s vanilla. Few other countries have the climate to
be able to grow the crop. Between 2008 and 2011 the price was so low that some vanilla
growers stopped production and grew other crops instead. However, the price of vanilla
increased significantly between 2014 and 2018. 5

In 2017 a cyclone in Madagascar destroyed a large quantity of the vanilla crop. As a result
some farmers will not see their vanilla crops recover fully until 2020.
There are artificial substitutes for vanilla such as vanillin. However, in recent years,
consumers have shown an increased preference for natural vanilla. Vanilla is a key
ingredient used in ice cream, sweets, chocolate and in cosmetic products. The demand 10
for all of these products has increased rapidly in recent years.
The high price attracted farmers in other countries, such as Uganda, to start growing
vanilla. However, it takes three years for the plantations to mature and produce
vanilla crops.
Extract B Lack of education in Madagascar
Adults in Madagascar have typically spent only 4.4 years at school. This quantity of
education is below the social optimum level.
In 2012 it was estimated that 20 000 children aged 12 to 17 years old worked in the
production of vanilla. This was 32% of the workforce employed in this industry. Many 5
families need their children to work to earn an additional income. They cannot afford to
lose this income by sending their children to school. Following the cyclone the price of
food in Madagascar rose significantly. This increased the need for children to work.
Many primary schools are in a poor condition and are overcrowded. Teachers have
limited or no training. Many schools are destroyed by the annual cyclones and public 10
funds for education have been reduced.
Extract C Sugar tax removed in Finland
In 2011 the Government of Finland introduced an indirect tax known as a sugar tax on
sweets, chocolate, ice cream and fizzy drinks. This was charged at €0.95 per kilogram or
€0.11 per litre. The tax raised revenue for the government and decreased consumption of
these products by approximately 5%. 5

In 2017 Finland removed the sugar tax. It had been criticised as being unfair.
Manufacturers of biscuits and cakes had been unaffected by the tax giving them
a competitive advantage over sweet and chocolate manufacturers. The tax revenue
that would have been raised was estimated to be €109 million per year.

3
P60588RA
BLANK PAGE

Acknowledgements

Figure 1 adapted from Developing Countries In The World Economy, Volume 42 of World Scientific Studies
In International Economics, by Jaime de Melo © WSPC - 2015, 2015, World Scientific https://books.google.
co.uk/books?id=2mYGCwAAQBAJ&printsec=frontcover&dq=inauthor:%22De+Melo+Jaime%22&hl=en&sa=
X&ved=0ahUKEwjV5tK3ueDdAhUrI8AKHWV5AJIQ6AEIMDAB#v=onepage&q&f=false

Figure 2 adapted from https://african-crossing.com/the-demand-for-vanilla/

Extract A adapted from https://agronomag.com/vanilla-price-hits-all-time-record-in-2018/

Extract B adapted from https://www.dol.gov/agencies/ilab/projects/madagascar-vanilla and

https://www.unicef.org/madagascar/5559.html

Extract C adapted from http://www.loc.gov/law/foreign-news/article/finland-tax-on

chocolate-and-sweets-to-be-eliminated-2017/

4
P60588RA

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2020 Jan U1

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2020 Jan U1

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Please check the examination details below before entering your candidate information

Candidate surname Other names

Pearson Edexcel Centre Number Candidate Number

Wednesday 8 January 2020

You must have: Total Marks

A An increase in the global population

B An increase in real incomes

C A decrease in the price of noodles

D A decrease in the price of rice

(Total for Question 1 = 1 mark)

2 Which one of the following is an advantage of a free market economy?

A The profit motive gives firms the incentive to be more efficient

B Public goods may be under-provided by the price mechanism

C Goods may be over-provided compared with the social optimum level of

(Total for Question 2 = 1 mark)

3 Which one of the following is an example of market failure?

A Government provision of flood defences that is greater than the social

(Total for Question 3 = 1 mark)

O Q2 Q1 Quantity of new houses

The housing construction industry is a major source of pollution.

A The social optimum output is Q₁

B The market equilibrium output is Q₂

D Welfare loss is shown by the area UWV

(Total for Question 4 = 1 mark)

Which one of the following can be deduced from the table?

A Portugal generated 44% of its electricity from non-renewable sources

B Portugal generated 50% of its electricity from renewable sources

C Portugal generated most of its electricity from renewable sources

D Portugal generated most of its electricity from non-renewable sources

(Total for Question 5 = 1 mark)

Estimates of price elasticity

Short-haul business travellers -0.70

Long-haul business travellers -0.27

Short-haul leisure travellers -1.52

Long-haul leisure travellers -1.04

Which one of the following can be deduced from the table?

(Total for Question 6 = 1 mark)

TOTAL FOR SECTION A = 6 MARKS

(Total for Question 7 = 4 marks)

(Total for Question 8 = 4 marks)

(Total for Question 9 = 4 marks)

Gross weekly income £539 £550

Number of visits abroad

(Source: adapted from https://www.ons.gov.uk/ © Crown Copyright)

(Total for Question 10 = 4 marks)

(Total for Question 11 = 4 marks)

TOTAL FOR SECTION B = 20 MARKS

SECTION C BEGINS ON THE NEXT PAGE.

(Total for Question 12 = 34 marks)

TOTAL FOR SECTION C = 34 MARKS

SECTION D BEGINS ON THE NEXT PAGE.

(Total for Question 13 = 20 marks)

(Total for Question 14 = 20 marks)

Chosen question number: Question 13 Question 14

Write your answer here:

TOTAL FOR SECTION D = 20 MARKS

Wednesday 8 January 2020

Figure 2 US$ price of vanilla per kilogram, 2008-2018

Figure 2 adapted from https://african-crossing.com/the-demand-for-vanilla/

Extract A adapted from https://agronomag.com/vanilla-price-hits-all-time-record-in-2018/

Extract B adapted from https://www.dol.gov/agencies/ilab/projects/madagascar-vanilla and

Extract C adapted from http://www.loc.gov/law/foreign-news/article/finland-tax-on

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