GCSE ECONOMICS - PAST PAPER ANSWERS JUNE 2006

a.)i.) Explain the graph in detail and be more specific.

use the word - FLUCTUATE - up and down.

b.)i.) Price goes up ^
Quantity demanded goes up ^

c.)i.) Total Costs

ii.)Productivity, market share, sales revenue, level of consumer satisfaction

d.)i.) government, employees, debtors, creditors, consumers

ii.) the profits are a result of the high price of petrol (1) which takes money
from motorists (1) and reduces their ability to buy other goods (1)’

e.) decrease in price and a fall in demand - Elasticity of Demand - measures how responsive changes in quantity demand to changes in price.

a.)i.) VAT, Alcohol and tobacco taxes.

ii.) Fiscal policy is the use of changes in expenditure and revenue to control the economy.

b.)i.) People will not pay much income tax so they are more willing to work

ii.) the increase in spending will result in more demand for goods and services leading to more workers being needed to produce this goods and services.

c.)i.) When price goes up.

ii.) reduce in spending and rise in unemployment.

d.)i.) the consumer - easier to borrow more money; cheaper to pay debts because their is less interest so they buy more goods and services. BUT it could lead to inflation.

ii.) Business - easier to borrow money for investment, consumers will buy more goods and services from them, higher profit. MIGHT lead to inflation when demand increase ^ and price increase ^

a.) Monopoly, Less competition, charge high prices = more PROFIT

b.) Economies of Scale - when long run average costs fall as size of firm and output increase.

i.) lower prices for consumers, more profits lead to more research and development ~ new products, better and improved.

c.)

i.) Figure 3.

ii.) very skilled in short supple, hard to replace, gain high wages = nearly inelastic.

d.) better goods and services, reduce unemployment, improved productivity, increase chance of people getting jobs.....EXPLAIN.

a.) Increase by 100m.

b.) More travelling for business and pleasure, possible railway - give better services, possible cheap, higher incomes...EXPLAIN.

c.)i.)Money given by government to a firm (1) in order to reduce the cost of production/cut the price
to the consumer/increase output/cut negative externalities/improve quality of the product/etc (1).

ii.) Subsidy will make rail travel cheaper and, possibly, more available thus reducing car use. This
will depend on both price elasticity and cross elasticity. It is also costly drawing resources from
other uses.
Other possibilities could be: subsidising buses; road charges; congestion charges; park and ride;
pedestrianisation; etc.

a.) Points from both sides and to come to a conclusion. Include reference to all items.

b.) first time buyers - cannot afford, women and divorcees

Government = subsidies houses, control taxes interests and DEMAND.

EXPLAIN PROBLEMS

DISCUSS HOW CAN IT BE SOLVED?

SUPPORTED CONCLUSION.