Past Paper Questions and answers

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  • Created on: 09-04-13 12:58
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January 2009:
5B:
"Comment on the relevance of these estimates for meat producers in China." [8]
The estimates show that they are normal and superior goods, and that an increase in real income will lead to an increase in
demand and vice versa. Income elasticity of demand for pork is more elastic than it is for chicken, meaning that the
quantity demanded of pork is more responsive to a change in income than chicken is. However the data is only an
estimate and therefore could be inaccurate. The figures will most likely change over time and be effected by external
factors such as the position of the economy, taxation on income and meat products or advertising.
June 2009:
5B:
"Explain why negative externalities arising from air transport are an example of
market failure." [4]
In the source there is evidence of market failure through CO2 emissions, excessive noise disturbance and congestion
around major airports. Residents on the flight path suffer from excessive noise disturbance and may have to spend money
on blocking out the noise. The cost of this isn't accounted for in the price of airline tickets and that is where market failure
occurs. Furthermore, the value of houses along the flight path will fall; market failure has occurred because the loss in the
value of the house is accounted for in the pricing of the air travel tickets, meaning a third party will have to pay.
January 2010:
1B:
"In December 2007, the East Sussex NHS Trust decided to concentrate its
maternity services at Hastings. Describe one likely economic advantage of
specialisation." [2]
Raises output per person, therefore reducing costs per unit because lower skilled workers are easily trained and quickly
become proficient through constant repetition of a task, increasing efficiency.
January 2010:
2B:
"Explain why point X is efficient and point Y is inefficient." [4]
Point X shows that maximum output has been reached because it is on the curve. All the resources available are being
used. Point Y shows that not all the resources are being used efficiently because it is inside the curve. It's possible to
produce more drugs without sacrificing surgical treatments, therefore meaning there has been no opportunity cost.
January 2010:
4:
"The estimated income elasticity of demand for private dental implants is shown
below for three groups of consumers. Explain what these estimates mean and
comment on their usefulness for dentists who carry out implants." [8]
YED measures the sensitivity of quantity demanded with respect to a change in consumer income. A normal good is
positive and an elastic good is greater than one. Low and average earners have an inelastic income elasticity of demand;
there's little change in the quantity demanded with respect to their incomes changing. The above average earners YED is
good news for dentists as they can expect demand for implants to increase in the future as incomes increase. Dentists can

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The data is only an estimate and is dependent on things such as the
nature of the consumer's income and health.
January 2010:
5:
"Comment on why there is likely to be information failure amongst consumers
of processed red meat products." [6]
Information failure is when one party knows more than the other party in an exchange, in this case the consumer and the
producer.…read more

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January 2011:
5A:
"Define the term 'cross elasticity of demand'." [2]
XED measure the sensitivity of demand for one product with respect to the change in price of another. % of quantity
demand of X ÷ % in price of Y.
January 2011:
5B:
"Using the information in Fig. 1, comment on whether the Maldives is likely to
attract tourists who are considering taking holidays in Goa. (You answer
must include calculations of cross elasticity of demand.…read more

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January 2012:
1Bii:
"Explain why the opportunity cost of removing waste chewing gum from
Peterborough's streets is not zero." [2]
The £150m spent on resources to remove waste chewing gum could have been used to fund other government
investments such as education or infrastructure.
January 2012:
5B:
"Using information in Fig. 1, comment on whether therapeutic chewing gum
and traditional chewing gum are substitutes. (Your answer should include all relevant
calculations.)" [8]
XED; % of quantity demand of X ÷ % in price of Y.…read more

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