WEC13 — Edexcel IAL Economics Unit 3: Business Behaviour

Complete Question Compilation — All 15 Past Papers

53 min read

Paper structure: Section A = 6 MCQs (1 mark each) | Section B = Q7 with sub-parts (a)–(e) = 34 marks | Section C = Q8, Q9, Q10 (answer TWO) = 20 marks each | Total: 80 marks, 2 hours

#January 2025

#Section A

1. Luxottica is a French-Italian business that operates in an imperfectly competitive market. It produces glasses and is a profit-maximising firm. Which one of the following conditions must be true when this firm is profit maximising?

A Marginal revenue = marginal cost
B Average cost = marginal cost
C Marginal cost = zero
D Marginal revenue = zero

2. In 2023 Sony and Honda announced they would collaborate to produce an electric car. Which one of the following best describes this type of business arrangement?

A A co-operative
B State-owned enterprise
C A joint venture
D Horizontal integration

3. The elasticity of demand for labour in the French shipbuilding industry is −0.88. Which one of the following is most likely to cause this inelastic demand for labour?

A Labour can easily be substituted by capital
B All workers are members of a trade union
C There is a large supply of labour available
D Labour costs are a small percentage of total costs

4. The diagram shows the MC, ATC and AVC curves for a profit-maximising sweetcorn producer in Argentina, operating in a perfectly competitive market. Prices P₁, P₂, P₃ and P₄ are marked on the diagram. At which price would the firm continue to produce in the short-run but shut down in the long-run?

A P₁
B P₂
C P₃
D P₄

5. In 2019 the EU fined the technology company Qualcomm €242 million for pricing below its average variable costs. Which one of the following pricing strategies did Qualcomm use?

A Marginal cost pricing
B Limit pricing
C Predatory pricing
D Price discrimination

6. Which one of the following diagrams shows the total revenue curve for a profit-maximising firm operating in a perfectly competitive market? [Diagrams A–D shown: A = downward sloping line, B = upward sloping line from origin, C = horizontal line, D = inverted U shape]

A / B / C / D

#Section B — Question 7

(Study Figure 1 and Extracts A, B and C in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the 4-firm concentration ratio of the global fast-food industry. You are advised to show your workings. (2)

(b) With reference to Extract C, explain what is meant by organic growth. (4)

(c) With reference to Extract A, analyse two reasons why the global fast-food market is expected to grow. (6)

(d) With reference to the last paragraph of Extract B, examine the likely impact on McDonald's profits by switching 'to suppliers that use more ethical and sustainable methods of production'. Illustrate your answer with an appropriate diagram. (8)

(e) With reference to Figure 1, Extract C and your own knowledge, discuss the likely effects of McDonald's opening CosMc's on its competitors. (14)

#Section C (Answer TWO questions)

8. In 2023 British Sugar was the only purchaser of sugar beet from 3 000 farmers in the UK. Evaluate the benefits of a monopsony to firms and consumers. Illustrate your answer with an appropriate diagram(s). (20)

9. In 2007 the Government of Indonesia set up the Kredit Usaha programme to support small businesses with subsidies and low-cost loans. In 2022 the amount a business could borrow was increased significantly. Evaluate measures that a government could introduce to promote competition and contestability. (20)

10. In 2023 Mars, a confectionery manufacturer, completed the takeover of Hotel Chocolat, a UK luxury chocolate company, for £534 million. Evaluate the benefits of a takeover for businesses and consumers. Illustrate your answer with an appropriate diagram(s). (20)

#January 2024

#Section A

1. In 2022 Canadian National Railway paid $27.2 billion to acquire Kansas City Southern, a Mexico–USA cross-border railway. Which one of the following best describes this acquisition?

A Conglomerate integration
B Forward vertical integration
C Horizontal integration
D Backward vertical integration

2. The table shows the price and quantity demanded for shirts produced by a textile manufacturer in Botswana. Prices range from $18 to $12 and quantities demanded from 4 000 to 7 000. Which one of the following is the marginal revenue if the price is reduced from $16 to $14?

A $0
B $4
C $12
D $14

3. The diagram shows a short-run profit-maximising equilibrium for an agricultural business in a perfectly competitive market, with price Pe above cost C and a shaded profit area. Ceteris paribus, which one of the following is the most likely long-run outcome?

A Make normal profit
B Shut down
C Increase output
D Increase price

4. Google's market share of the global search engine market was 84% in 2022. Which one of the following is the most likely outcome at Google's profit-maximising output?

A Average revenue = marginal cost
B Marginal revenue > average revenue
C Marginal revenue = total cost
D Average revenue > average cost

5. In Australia the elasticity of demand for construction workers is −0.18. Which one of the following most likely explains this?

A They cannot easily be replaced by capital
B The costs of employing them are low
C Their productivity is low
D The majority are trade union members

6. A cereal manufacturer lowers its price to deter entry into the market while still covering its costs. Which one of the following pricing strategies is this?

A Predatory pricing
B Limit pricing
C Price leadership
D Short-run profit maximisation

#Section B — Question 7

(Study Figure 1 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1 and Extract A, calculate the number of workers employed by SMEs in Bangladesh. You are advised to show your workings. (2)

(b) With reference to Figure 1 and Extract A, explain what is meant by the term 'monopolistic competition'. (4)

(c) With reference to Extract B, examine the impact of rising energy costs on the profits of a garment manufacturer in Bangladesh. Illustrate your answer with an appropriate diagram. (8)

(d) With reference to Extract B, analyse two likely effects on the labour market for garment workers of the possible increase in the minimum wage to 22 000 taka. (6)

(e) With reference to Extract A and your own knowledge, discuss the likely effects of Government policies on the productive efficiency of SMEs. (14)

#Section C (Answer TWO questions)

8. In 2018 the US-owned business Toys "R" Us shut down after not being able to cover its costs. Evaluate the view that a business will always shut down if it is not able to make a normal profit. Illustrate your answer with an appropriate diagram(s). (20)

9. The tyre market in India is dominated by three large businesses, MRF, Apollo Tyres and JK Tyres, with a combined market share of 70.4%. The price of tyres has remained relatively stable over time. With reference to an industry of your choice, evaluate the likely disadvantages for a business operating in an oligopolistic market structure. Illustrate your answer with a payoff matrix diagram. (20)

10. Jeff Bezos owns 12.7% of Amazon shares and works as the Executive Chair of the board of directors. By contrast, Daniel Kretinsky owns 22% of the shares in the UK's Royal Mail Service but he does not work for the company. Evaluate the likely impact of the divorce of ownership from control on business objectives. Illustrate your answer with an appropriate diagram(s). (20)

#January 2023

#Section A

1. The diagram shows the short-run MC curve for a small café in Thailand, with points X and Y marked. Which one of the following is the reason MC slopes upwards from X to Y?

A Decreasing returns to scale
B Increasing fixed costs
C Diminishing returns
D Diseconomies of scale

2. A textile manufacturer in Botswana produces 30 000 units per month. Total revenue is $78 000, total costs are $57 800 and total fixed costs are $30 800 per month. Which one of the following is the average variable cost?

A $0.90
B $1.03
C $1.93
D $2.60

3. A 2021 survey found that 76% of US companies with factories in China were moving operations to South East Asia, causing manufacturing job losses in China. Which one of the following government measures is most likely to increase the occupational mobility of labour?

A Increase unemployment benefits
B Increase relocation grants for businesses
C Increase training schemes
D Increase the national minimum wage

4. The diagram shows the short-run cost and revenue curves for a profit-maximising street food business in Sri Lanka, with MC, AC, AR and MR shown. Which one of the following can be deduced?

A The firm is dynamically efficient
B The firm is making normal profit
C The firm operates in a perfectly competitive market
D The firm will shut down in the short-run

5. A monopolist changes its objective from profit maximisation to sales volume maximisation. Which one of the following is the most likely impact?

A A fall in the number of workers employed
B An increase in price
C A fall in total fixed costs
D An increase in the firm's output

6. The elasticity of demand for agricultural workers in South Africa is −0.3. Which one of the following is the most likely reason?

A Labour cannot easily be replaced by capital
B Wage rates are relatively high
C Consumer demand for the final product is price elastic
D Productivity is relatively low

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage change in the wholesale price of gas from 1 April 2021 to 1 April 2022. You are advised to show your working. (2)

(b) With reference to Figure 2 and the second paragraph of Extract A, explain what is meant by the term 'concentration ratio'. (4)

(c) With reference to Figure 2 and Extract A, analyse two barriers to entry that might prevent a new firm from entering the UK energy market. (6)

(d) With reference to Figure 1 and Extract A, examine the impact of the increase in the wholesale price of natural gas on the cost of production for UK gas suppliers. (8)

(e) With reference to Extract A and Extract B, discuss the likely effects of the increase in the energy price cap on both energy suppliers and consumers. Illustrate your answer with an appropriate cost and revenue diagram. (14)

#Section C (Answer TWO questions)

8. The Government of Norway fully subsidises university education. Universities in Norway have social objectives rather than a profit maximising objective. By contrast, in the USA, students pay fees to study at profit maximising universities. Evaluate the view that the objectives of state-owned enterprises and private sector organisations always differ. Illustrate your answer with an appropriate diagram(s). (20)

9. The global supermarket chain, Walmart, operates 10 500 stores in 24 countries. It has monopsony power when buying agricultural products and employing labour in these countries. A 2021 study suggested that Walmart buys these agricultural products at a lower price than when they are sold to other businesses. Evaluate the likely impacts of monopsony power on employees and suppliers. Refer to a firm with monopsony power in your answer. (20)

10. In 2022, the Canadian airline WestJet completed a takeover of Sunwing Travel Group, an airline and luxury holiday provider. WestJet's objective was to sell luxury flights and holidays to more destinations. Evaluate the benefits of growth by takeover for a business in an industry of your choice. Illustrate your answer with an appropriate diagram(s). (20)

#January 2022

#Section A

1. In 2020 the Turkish airline AtlasGlobal ceased its operations. Which one of the following will cause a firm to shut down in the short-run?

A Average revenue was below marginal revenue
B Average revenue equalled marginal cost
C Average revenue was below average variable cost
D Average revenue equalled average cost

2. The diagram shows the short-run cost and revenue curves for a hairdresser in a monopolistically competitive market in Mumbai, with MC, AC, AR=D and MR shown. Which one of the following can be deduced from the diagram?

A At Q₁ the firm is maximising total revenue
B At Q₁ the firm is minimising average cost
C At Q₁ the firm is making normal profit
D At Q₁ the firm is making supernormal profit

3. The table shows Netflix's international subscribers and total revenue for Q4 2017–Q4 2020. Which one of the following can be deduced?

A Average revenue was $32.62 in Q4 2017
B Average revenue was $29.70 in Q4 2018
C Average revenue was $32.72 in Q4 2019
D Average revenue was $30.07 in Q4 2020

4. Total revenue for American Airlines fell from $45.77bn (2019) to $17.34bn (2020), and it made 31 000 staff redundant. Which one of the following is the most likely reason for these redundancies?

A The number of airline passengers rose
B Derived demand for labour fell
C Government employment subsidies increased
D Taxation on airline employees decreased

5. The diagram shows a minimum wage increase in British Columbia, Canada from $14.60 to $15.20 per hour. Which one of the following is the most likely impact on shop assistants in retail?

A Unemployment rises to Q₁–Q₄
B Unemployment rises to Q₂–Q₃
C Demand for labour extends from Q₁ to Q₂
D Supply of labour contracts from Q₄ to Q₃

6. A small fruit farm in Namibia operates in a perfectly competitive market and is in long-run equilibrium. Which one of the following is true?

A Allocatively inefficient / Supernormal profit
B Allocatively inefficient / Normal profit
C Allocatively efficient / Supernormal profit
D Allocatively efficient / Normal profit

#Section B — Question 7

(Study Figure 1 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the four-firm concentration ratio for the US car market in 2019. (2)

(b) With reference to Extract A, explain what is meant by 'horizontal integration'. (4)

(c) With reference to Extract A, analyse two barriers that Stellantis are likely to experience when trying to increase market share in China. (6)

(d) With reference to Extract A, examine the impact of an increase in car sales in the USA on the profits of Stellantis. Illustrate your answer with an appropriate diagram. (8)

(e) With reference to the information provided and your own knowledge, discuss the possible impact of the merger between PSA Group and Fiat Chrysler on workers and consumers. (14)

#Section C (Answer TWO questions)

8. In 2020 three pharmaceutical firms Lexon, King Pharmaceuticals Ltd and Alissa Healthcare Research Ltd were found to have illegally shared information in order to keep prices artificially high. Each firm was fined £1.2 million for this collusion by the UK competition authorities. Evaluate the possible benefits of collusive behaviour between firms. Use a simple game theory model in your answer. (20)

9. In 2019 the New Zealand Government created a new organisation to regulate the local monopolies that supply water. This organisation imposed a price cap that resulted in these water companies making insufficient profit for investment in improving water quality. Evaluate methods that a government could use to control monopoly behaviour. Illustrate your answer with an appropriate diagram(s). (20)

10. JBS is the largest meat processing firm in the world, as measured by value of sales. Its revenue was $814.5 million in 2020. After a significant increase in sales to China in quarter 4 2020, its total revenue from sales to China rose by 60%. Evaluate the view that revenue maximisation is always the main objective of a firm. Illustrate your answer with an appropriate diagram(s). (20)

#January 2021

#Section A

1. Between 2009 and 2019 real house prices in Sydney, Australia rose by 40%. What might be the effect of this increase on the mobility of labour?

A Decrease in geographical mobility
B Decrease in occupational mobility
C Increase in geographical mobility
D Increase in occupational mobility

2. The chart shows the market share of smartphone companies in India in Q4 2019: Xiaomi 27%, Vivo 21%, Samsung 19%, Oppo 12%, Realme 8%, Others 13%. What is the 4-firm concentration ratio?

A 67%
B 79%
C 80%
D 87%

3. Hairdressing salons are assumed to operate under monopolistic competition. Which one of the following will be true in long-run equilibrium?

A It is productively efficient
B It makes supernormal profit
C It is allocatively efficient
D It makes normal profit

4. In 2017 the Centre for Economic Analysis estimated that the elasticity of supply of labour for car manufacturing in Poland was 1.3. Which one of the following would cause the elasticity of supply of labour to become more elastic?

A A fall in net migration
B A rise in welfare benefits
C A fall in income tax rates
D A rise in trade union membership

5. In March 2020 the Angolan Government announced plans to privatise three state-owned textile factories. Which one of the following is the most likely effect of this privatisation?

A Decrease in X-inefficiency
B Decrease in productive efficiency
C Decrease in consumer choice
D Decrease in share ownership

6. The diagram shows a firm's total revenue as output increases, with TR as an upward-sloping straight line from the origin. Which one of the following best characterises such a firm?

A Rising marginal revenue
B Constant marginal revenue
C Negative marginal revenue
D Falling marginal revenue

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A, B and C in the Source Booklet before answering.)

(a) With reference to Figure 1 and Figure 2, calculate Tata Steel's total costs for steel production in 2019. (2)

(b) Explain what is meant by the term 'monopsony employer' (Extract C, line 11). (4)

(c) With reference to Extract B, examine the likely effects of the proposed merger between Tata Steel and Thyssenkrupp on the profits of European car manufacturers. Illustrate your answer with an appropriate diagram. (8)

(d) With reference to Extract C, analyse two reasons why the proposed merger between Tata Steel and Thyssenkrupp was blocked by the European Competition Commission. (6)

(e) With reference to Extract A, Extract B and your own knowledge, discuss the benefits to Tata Steel and Thyssenkrupp of the proposed horizontal integration. Illustrate your answer with an appropriate diagram. (14)

#Section C (Answer TWO questions)

8. In South Africa, in 2019, insurance, mobile phones and retail banking were markets that had high concentration ratios. For example, the 4-firm concentration ratio was 96% for mobile phones and 74% for insurance. Evaluate the disadvantages of an oligopolistic market for producers and consumers. Refer to an industry of your choice in your answer. Illustrate your answer with an appropriate diagram(s). (20)

9. In 2020 the low-cost airline Flybe shut down. A decrease in demand for European flights led to Flybe's revenue falling below its costs of production. Evaluate whether a firm should always shut down if its costs of production are greater than its revenue. Refer to an industry of your choice in your answer. Illustrate your answer with an appropriate diagram(s). (20)

10. In 2018 the South African Government passed the National Minimum Wage Act. Evaluate the likely microeconomic effects of the introduction of a national minimum wage on businesses and workers in the tourism industry. Illustrate your answer with an appropriate diagram(s). (20)

#January 2020

#Section A

1. In 2014 the Irish Government allowed private sector bus operators to bid for public transport contracts for the first time. This is an example of:

A Government failure
B Trade liberalisation
C Competitive tendering
D Regulation

2. The table shows UK grocery store market share by value in March 2016 and March 2017. From the data it can be deduced that:

A The 3-firm concentration ratio was 50.7% in March 2016
B The 5-firm concentration ratio was 87.3% in March 2016
C The 3-firm concentration ratio was 49.4% in March 2017
D The 5-firm concentration ratio was 76.6% in March 2017

3. In 2016 workers in the USA were changing jobs less frequently than at any time since the 1970s. Which one of the following can be deduced?

A Decrease in skills of workforce
B Decrease in house prices and rents
C Increase in transferable skills
D Increase in number of job vacancies

4. The diagram shows a long-run average cost curve (LRAC) for a firm, with Q₁ and Q₂ marked at the bottom of the U-shape. Which one of the following must be true as output rises from Q₁ to Q₂?

A There are diminishing returns
B There are economies of scale
C There are diseconomies of scale
D There are falling total costs

5. A monopoly is operating at its revenue-maximising output. Which one of the following is true?

A Marginal revenue = marginal cost
B Average revenue = average cost
C Average fixed costs are rising
D Marginal revenue is zero

6. Which one of the following is most likely to cause the demand for labour to be elastic?

A Labour costs form a high proportion of total costs
B Labour cannot easily be replaced by capital
C Consumer demand for the final product is inelastic
D A long training period is needed once workers have been recruited

#Section B — Question 7

(Study Figure 1 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage change in electric car sales from 2013 to 2017. You are advised to show your working. (2)

(b) With reference to Extract A and Extract B, explain what is meant by specialisation. (4)

(c) With reference to Extract A, examine the likely effect of a decrease in variable costs on Tesla's profits. Illustrate your answer with an appropriate diagram(s). (8)

(d) With reference to Extract B, analyse the relationship between price elasticity of demand and total revenue. Illustrate your answer with an appropriate diagram(s). (6)

(e) With reference to the information provided, discuss the significance of barriers to entry and exit in the electric car market for new entrants, such as Dyson. (14)

#Section C (Answer TWO questions)

8. In July 2017 the German retailer Metro Group demerged into two independent companies. Its wholesale and food division became New Metro and a separate consumer electronics business, CECONOMY, was formed. Evaluate the possible benefits of a demerger for the business and its workforce. Illustrate your answer with an appropriate diagram(s). (20)

9. By 2017 Ethiopia was one of very few African countries that had not privatised its telecommunications market and introduced competition. The state-owned company, Ethio Telecom, was the only firm in the market. Evaluate the likely benefits of a monopoly to its consumers. Illustrate your answer with an appropriate diagram(s). (20)

10. In 2018 the Malaysian Government increased the monthly minimum wage for garment and textile workers from MYR 1 000 to MYR 1 500. Evaluate the benefits of an increase in the minimum wage on businesses and workers. Illustrate your answer with an appropriate diagram(s). (20)

#October 2024

#Section A

1. A pineapple producer in Costa Rica, operating in a perfectly competitive market, is currently making supernormal profits. Which one of the following is the most likely outcome in the long-run?

A The producer will make more supernormal profit
B The producer's output will decrease but industry output will increase
C The producer will leave the market
D The market concentration will increase

2. In 2023 Cineworld sold tickets for standard seats at £9.99 in the UK. Students only paid £7.99 for the same seats. Which one of the following best describes this pricing strategy?

A Marginal cost pricing
B Limit pricing
C Price discrimination
D Predatory pricing

3. In 2023 the Government of the Philippines introduced a maximum price for rice of 41 pesos ($0.72) per kilogram. Ceteris paribus, which one of the following is the most likely impact of the introduction of this maximum price on producers?

A Producer surplus will increase
B Fixed costs will decrease
C Dynamic efficiency will increase
D Average revenue will decrease

4. The table shows the total costs of a clothing manufacturer producing jeans at different levels of output (0: $40 000; 10 000: $60 000; 20 000: $100 000; 30 000: $160 000; 40 000: $240 000). What is the average fixed cost per unit if the firm produces 20 000 pairs of jeans?

A $2
B $3
C $4
D $5

5. In 2002 the elasticity of demand for agricultural labour in South Africa was estimated to be −1.32. Which one of the following is most likely to influence the elasticity of demand for agricultural labour?

A The cost of capital required for farming relative to the cost of agricultural labour
B The level of educational qualifications required to be an agricultural worker
C The location of agricultural jobs in South Africa
D The occupational and geographical mobility of labour

6. In October 2023 Apple's market share of the smartphone market in the USA was 56.41%. It faces a downward-sloping demand curve. Which one of the following diagrams would illustrate Apple's total revenue curve? [Diagrams shown: A = horizontal line, B = upward straight line from origin, C = downward sloping line, D = inverted U shape]

A / B / C / D

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A, B and C in the Source Booklet before answering.)

(a) With reference to Figure 2, calculate the change in AstraZeneca's total costs between 2021 and 2022. You are advised to show your workings. (2)

(b) With reference to Extract B line 14, explain the term 'dynamic efficiency'. (4)

(c) With reference to Extract A, analyse two ways that pharmaceutical companies may benefit from external economies of scale. (6)

(d) With reference to the last paragraph of Extract B, examine the impact of the increase in fixed costs on AstraZeneca's profit. Illustrate your answer with an appropriate diagram(s). (8)

(e) With reference to the information provided and your own knowledge, discuss the likely barriers that might prevent a new company from entering the pharmaceutical industry. (14)

#Section C (Answer TWO questions)

8. In October 2023 Lidl was the fastest-growing supermarket by revenue in the UK. The business opened 25 new stores in 2023 and plans to open a further 50 by 2025. Evaluate the benefits of organic growth to a business such as Lidl. Illustrate your answer with an appropriate diagram(s). (20)

9. In 2023 the Government of Mexico intervened in the country's labour market by: increasing the daily minimum wage by 20% to 207.44 pesos; and setting a maximum of 48 hours per week for a full-time employee. Evaluate the economic benefits of government intervention in labour markets. Illustrate your answer with an appropriate diagram(s). (20)

10. In 2022 the South Korean competition authority fined 15 shipping companies $63 million. These companies were found guilty of fixing prices by colluding. Evaluate the benefits of collusion in a market of your choice. Illustrate your answer with a simple game theory model. (20)

#October 2023

#Section A

1. Japan's population of working age is estimated to fall from 65.3 million (2017) to 60.8 million (2025). Ceteris paribus, which one of the following might result from this fall?

A A decrease in job vacancies
B An increase in the rate of unemployment
C A decrease in immigration into Japan
D An increase in wage rates

2. In 2022 the Government of Canada updated its competition policy in order to increase market contestability. Ceteris paribus, which one of the following would increase market contestability?

A An increase in legal costs to start a business
B An increase in legislation to control mergers
C An increase in patent protection
D An increase in regulatory capture

3. The diagram shows the profit-maximising output for a street food seller in Taiwan operating in a monopolistically competitive market, with MC, AC, AR=D and MR shown. Supernormal profit is shaded. Which one of the following can be deduced?

A The seller is operating at the short-run equilibrium output
B The seller is operating at the long-run equilibrium output
C The seller is operating at the productively efficient level of output
D The seller is operating at the allocatively efficient level of output

4. Big Bazaar is a large grocery retailer in India. It faces a downward-sloping AR curve and is making supernormal profits. In 2022 rental costs increased by an average of 6.5%. Ceteris paribus, which one of the following indicates the impact on Big Bazaar?

A No change in profit / No change in price
B Rise in profit / Decrease in price
C Fall in profit / No change in price
D No change in profit / Decrease in price

5. The table shows the total costs of a shirt manufacturer at different levels of output (0: $100 000; 5 000: $120 000; 10 000: $150 000; 15 000: $170 000; 20 000: $180 000). Which one of the following is the average fixed cost if the firm is producing 10 000 shirts?

A $5
B $6.67
C $10
D $20

6. In 2022 the average price of a standard cinema ticket in Johannesburg was R60 in the daytime and R105 in the evening. Which one of the following is the most likely reason for this price difference?

A Demand for cinema tickets is more price inelastic in the daytime than in the evening
B Demand for cinema tickets is more price elastic in the daytime than in the evening
C The supply of cinema tickets is perfectly price elastic
D The supply of cinema tickets is more price elastic in the evening than in the daytime

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 2, calculate the percentage change in the price of the Model 3 Rear Wheel Drive vehicle between January and October 2022. (2)

(b) With reference to Extract A, analyse two reasons why sales of electric vehicles in China increased. Illustrate your answer with a supply and demand diagram. (6)

(c) With reference to Figure 1 and Extract B, explain the market structure that best describes the electric vehicle market in China. (4)

(d) With reference to the first two paragraphs of Extract B, examine the impact of Tesla producing its electric vehicles in China on its costs and profits. Illustrate your answer with a costs and revenues diagram. (8)

(e) With reference to the information provided and your own knowledge, discuss the impact of Tesla reducing its prices on the behaviour of other electric vehicle manufacturers. (14)

#Section C (Answer TWO questions)

8. In Pakistan, internet services are provided by a monopolist, Pakistan Telecommunication Company Ltd (PTCL). The quality of the service offered is poor and the internet speed is slow, resulting in a high level of complaints from consumers. Evaluate policies that a government could use to control and regulate monopolies, such as PTCL. Illustrate your answer with an appropriate diagram(s). (20)

9. In 2022 Belgium had an unemployment rate of 5.5% and a vacancy rate of 4.8%. Evaluate policies that a government could use to reduce the geographical immobility of labour and the occupational immobility of labour. Refer to industries of your choice in your answer. (20)

10. Nestlé is the largest manufacturer of pre-packaged food and beverages in the world, based on revenue. Its size has enabled it to reduce its average cost of production. Evaluate the impact that the size of a business has on its efficiency. Illustrate your answer with an appropriate diagram(s). (20)

#October 2022

#Section A

1. Patent protection makes it difficult for new firms to enter the pharmaceutical industry. Which one of the following is also a barrier to entry for new firms?

A Predatory pricing
B Constant returns to scale
C Low advertising costs
D High supernormal profits

2. The diagram shows the short-run profit-maximising equilibrium of a street food seller in Beijing, with MC and ATC shown, D=AR=MR at 80, and output at 10. Which one of the following can be deduced?

A The productively efficient level of output is being produced
B The allocatively inefficient level of output is being produced
C There would be an incentive for new firms to enter the market
D Firms will always make supernormal profits in this market

3. From September 2019 to September 2021 the US labour force participation rate fell. Which one of the following is most likely to have caused this fall in the supply of labour?

A An increase in benefit payments
B An increase in net migration
C An increase in the wage rate
D An increase in productivity

4. A car manufacturer employs 40 engineers at a wage rate of $570 per week. To attract an additional worker, the car manufacturer must raise the wage rate for all engineers to $590 per week. What is the marginal cost of employing this additional worker?

A $20
B $820
C $1 390
D $24 190

5. Between February 2020 and February 2021 approximately 65 000 businesses shut down in New Zealand. The majority of these closures were caused by a fall in revenue as a result of the global health crisis. Which one of the following would cause a firm to shut down in the short-run?

A Average revenue is above its average total cost of production
B Average revenue is below its average total cost of production
C Average revenue is above its average variable cost of production
D Average revenue is below its average variable cost of production

6. A monopolist decides to set its price at P₃, as shown in the diagram (with MC, AC, D=AR, MR shown and prices P₁, P₂, P₃ and quantities Q₁, Q₂, Q₃ marked). Which one of the following business objectives is shown by this pricing decision?

A Revenue maximisation
B Sales volume maximisation
C Profit maximisation
D Satisficing

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A, B and C in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage point change in the four-firm concentration ratio between 2020 and 2021. (2)

(b) With reference to Extract A, analyse two reasons why India has become the world's second largest smartphone market. (6)

(c) With reference to Extract B, explain what is meant by 'economies of scale'. (4)

(d) With reference to Figure 2 and Extract B, examine the likely impact on the profits of Samsung of opening a smartphone factory in India. Use an appropriate diagram in your answer. (8)

(e) With reference to Extract C, Figure 2 and your own knowledge, discuss the benefits of non-price competition for consumers and businesses in the Indian smartphone industry. (14)

#Section C (Answer TWO questions)

8. In January 2022 the Australian firm Peak Minerals demerged from Vertex Minerals. The main reason for the demerger was to enable Peak Minerals to focus on copper and gold mining production in Western Australia. Evaluate the possible benefits of a demerger. Illustrate your answer with an appropriate diagram(s). (20)

9. In February 2020 the European Commission fined the Spanish hotel group Meliá €6.678 million for charging consumers from different EU countries different prices for the same rooms. Evaluate the possible benefits of price discrimination to both the business and consumers. Illustrate your answer with an appropriate diagram(s). (20)

10. In January 2022 the Government of Greece announced plans to raise the national minimum wage by 2% to €773 per month. However, many restaurant owners are worried about the impact of this increase in the minimum wage on their businesses. Evaluate the likely microeconomic effects of an increase in the national minimum wage on an industry of your choice. Illustrate your answer with an appropriate diagram(s). (20)

#October 2021

#Section A

1. In December 2020 Electronic Arts, an American video game producer, agreed to take over Codemasters, the producer of Formula One racing video games. Which one of the following is likely to be a benefit of this takeover for Electronic Arts?

A An increase in contestability in the video games market
B A decrease in total costs of production
C An increase in competition in the video games market
D A decrease in long-run average costs

2. The chart shows the market share for mobile virtual network operators (MVNOs) in Japan for 2019: Rakuten 15.6%, IIJ 13.2%, UQ Comm. 11.3%, NTT Comm. 10.5%, K-Opticom 9.0%, Biglobe 4.6%, Others 35.8%. What was the five-firm concentration ratio for MVNOs in Japan for 2019?

A 48.6%
B 50.6%
C 59.6%
D 86.4%

3. The diagram shows the effect of the introduction of a national minimum wage on the labour market for agricultural workers in South Africa, with W₁ above equilibrium We, and quantities N₁, Ne, N₂ marked. Which one of the following is the most likely impact of the introduction of the national minimum wage?

A There will be N₁ to N₂ more agricultural workers employed
B There will be an extension of demand for agricultural workers from Y to U
C There will be a contraction of supply of agricultural workers from Y to V
D There will be N₁N₂ unemployed agricultural workers

4. The table shows the total costs of producing sports footwear by a firm in the USA (0: $12; 1: $16; 2: $19; 3: $22; 4: $27; 5: $33; 6: $40; 7: $48). Between which of the following outputs do diminishing returns start to set in?

A 1–2 units
B 3–4 units
C 5–6 units
D 6–7 units

5. India's net migration was −2.7 million in 2017. This caused a decrease in the supply of labour. Which other factor would also cause a decrease in India's supply of labour?

A An increase in the level of welfare benefits
B A decrease in the productivity of labour
C An increase in the size of the population
D A decrease in the price of capital

6. Which one of the following combinations best describes a profit-maximising firm operating in a monopolistically competitive market in the long-run?

A Productively inefficient / Normal profit
B Productively efficient / Supernormal profit
C Allocatively inefficient / Supernormal profit
D Allocatively efficient / Normal profit

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage change in the average world price of coffee beans from 1 July 2017 to 1 May 2019. You are advised to show your working. (2)

(b) With reference to Extract A (line 12), explain what is meant by 'short-run shutdown point'. (4)

(c) With reference to Figure 2 and Extract A, analyse two possible reasons for the increase in supply of coffee beans between 2015 and 2019. (6)

(d) With reference to Extract B, examine two barriers to entry into the US coffee shop market. (8)

(e) With reference to the information provided, discuss the reasons for the increase in Starbucks' profits in 2019. For one of these reasons, illustrate your answer with an appropriate cost and revenue diagram. (14)

#Section C (Answer TWO questions)

8. Visinema, an Indonesian company that produces TV shows and feature films, is expanding into neighbouring countries. The company is also planning to acquire several Indonesian animation studios. For an industry of your choice, evaluate why many businesses have growth as their main objective. Illustrate your answer with an appropriate diagram(s). (20)

9. In July 2020 the mobile phone company, MTN Ghana, had a 70% market share in Ghana. The competition authorities in Ghana stated that this was preventing new firms from entering the market and was having a negative effect on the quality of service. For an industry of your choice, to what extent is a monopoly market structure inefficient? Illustrate your answer with an appropriate diagram(s). (20)

10. In February 2020 the Indian Government announced plans for university degrees to be fully accessed online. This was to make higher education more accessible and to increase the skills of India's young people. Previously only 20% of a degree could be studied online. Evaluate measures to reduce the occupational and geographical immobility of labour. (20)

#October 2020

#Section A

1. In 2018 the Competition and Markets Authority carried out an investigation into a proposed merger between two of the largest UK supermarket companies, Sainsbury's and Asda. If approved, this type of merger would be an example of:

A Conglomerate integration
B Horizontal integration
C Backward vertical integration
D Forward vertical integration

2. The diagram shows a firm operating in a perfectly competitive market with the objective of profit maximisation. MC, ATC, AVC curves are shown with prices P₁–P₄. Which one of the following is true?

A At a price of P₁ the firm will shut down in the short-run
B At a price of P₂ the firm will cover fixed costs and variable costs
C At a price of P₃ the firm will shut down in the long-run
D At a price of P₄ the firm will make supernormal profits

3. Which one of the following is most likely to cause the supply of engineers to the aerospace industry to be inelastic?

A Jobs in the aerospace industry require a high level of skill
B Aerospace engineers are very responsive to changes in wage rates
C The government provides support for training programmes
D There is a fall in demand for aerospace industry products

4. Which one of the following characteristics always applies to a highly contestable market?

A There is a large number of small firms
B There are high sunk costs
C There are low barriers to entry
D There is imperfect information

5. In 2019 the minimum wage rate in Spain was increased by 22%. If the elasticity of demand for labour currently earning the minimum wage is −0.6, then the demand for these workers will:

A Rise by 13.2%
B Fall by 13.2%
C Rise by 36.7%
D Fall by 36.7%

6. The diagram shows a competitive labour market with Supply and Demand curves, and an outward shift to Demand₁, raising the wage from W to W₁ and employment from Q_L to Q_L1. Which one of the following would cause the increase in the wage rate from W to W₁ as shown in the diagram?

A An increase in firms' costs of production
B A decrease in the productivity of labour
C An increase in demand for the final product
D A decrease in net migration

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A, B and C in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage change in Uber India's revenue from 2016 to 2018. You are advised to show your working. (2)

(b) With reference to Extract B, explain what is meant by 'privatisation'. (4)

(c) With reference to Extract B, examine two likely effects of deregulation and privatisation. (8)

(d) With reference to Figure 2 and Extract A, analyse the likely effect of predatory pricing on the profits of a ride-hailing taxi firm. (6)

(e) With reference to Extract C and your own knowledge, discuss the likely effects on consumers of the price discrimination strategy. Illustrate your answer with an appropriate diagram(s). (14)

#Section C (Answer TWO questions)

8. In 2017 19% of firms in the UK construction industry were small or medium-sized businesses. Evaluate why some firms remain small. Illustrate your answer with an appropriate diagram(s). (20)

9. There are many hotel businesses in the Philippines that operate in a monopolistically competitive market. To what extent would a perfectly competitive market be more efficient than a monopolistically competitive market? Illustrate your answer with an appropriate diagram(s). (20)

10. Garuda Indonesia is the country's national airline. In November 2017 the company's Vice-President stated that the airline's main objective was to maximise revenue. Evaluate the extent to which different business objectives may affect a firm's profits. Illustrate your answer with an appropriate diagram(s). (20)

#June 2024

#Section A

1. In 2021, Koji Sato, the CEO of Toyota, stated that technical economies of scale were one of the main reasons for the company's success. Which one of the following results from technical economies of scale?

A An increase in purchasing economies
B A decrease in advertising costs
C An increase in short-run average costs
D A decrease in long-run average costs

2. The table shows the costs for a small hairdressing business as it increases the number of haircuts: 1 haircut (TFC $50, TVC $12); 2 haircuts (TFC $50, TVC $18); 3 haircuts (TFC $50, TVC $26); 4 haircuts (TFC $50, TVC $36). Which one of the following is the marginal cost of increasing the number of haircuts from 2 to 3?

A $4.00
B $8.00
C $8.66
D $12.50

3. In 2022 the pharmaceutical company GlaxoSmithKline (GSK) demerged from the consumer health business Haleon. GSK's shareholders believed that the businesses would be able to work more successfully as separate companies. Which one of the following is the most likely reason why GSK decided to demerge from Haleon?

A To benefit from external economies of scale
B To diversify the business
C To achieve diseconomies of scale
D To focus on its core business

4. The diagram shows the short-run costs and revenues for a farmer producing wheat in India (MC, AC, D=AR=MR shown, with P at the intersection of MC and D=AR=MR above AC minimum). Which one of the following is most likely to occur in the long-run?

A Additional wheat farmers will enter the market
B Some wheat farmers will leave the market
C The wheat farmer will make supernormal profit
D The wheat farmer will make a loss

5. A profit-maximising firm decides to change its objective to revenue maximisation. Which one of the following combinations is the most likely impact of this decision?

A No change in supernormal profit / No change in price
B Increase in supernormal profit / Increase in price
C Decrease in supernormal profit / Decrease in price
D Increase in supernormal profit / No change in price

6. A 2022 study found that the geographical mobility of labour in the USA has been decreasing for the last 30 years. Which one of the following is most likely to cause a decrease in the geographical mobility of labour?

A An increase in the skills of the workforce
B An increase in relocation grants provided by the government
C An increase in average house prices and rents
D An increase in the availability of affordable housing

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A, B and C in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the change in Uniqlo's total costs between 2021 and 2022. Show your workings. (2)

(b) With reference to the first paragraph of Extract A, explain what is meant by the term 'organic growth'. (4)

(c) With reference to the second paragraph of Extract A, analyse two reasons why Uniqlo has been very successful in establishing itself in international markets. (6)

(d) With reference to Extract B, examine the likely impact of a reduction in Uniqlo's costs of production on its total profits. Illustrate your answer with an appropriate diagram. (8)

(e) With reference to Extract C, Figure 2 and your own knowledge, discuss the likely barriers to entry for a business wishing to enter the global fashion retail market. (14)

#Section C (Answer TWO questions)

8. In 2023 the US Department of Justice began an investigation into claims that Google had used its market power to limit competition and to increase the amount charged to advertisers. Evaluate policies that a government could adopt to control monopolies. Illustrate your answer with an appropriate diagram(s). (20)

9. In 2023 the highest-paid lawyers in Switzerland earned, on average, three times more than the lowest-paid lawyers. Evaluate possible reasons for wage differentials in an occupation of your choice. Illustrate your answer with an appropriate diagram(s). (20)

10. In July 2023 the Competition and Markets Authority fined Leicester City Football Club £880 000 for colluding with JD Sports. The club was found guilty of price fixing and restricting the selling of Leicester City-branded clothing in the UK. Evaluate the likely effects of collusion on businesses and consumers in an industry of your choice. Illustrate your answer with reference to game theory. (20)

#June 2023

#Section A

1. In 2022 the entertainment production companies Sony Picture Networks India and Zee Entertainment Enterprises Ltd signed an agreement to merge. Which one of the following best describes this type of merger?

A Forward vertical integration
B Backward vertical integration
C Horizontal integration
D Conglomerate integration

2. The diagram shows a long-run average cost curve (LRAC) for a firm, with Q₁ and Q₂ marked on the rising portion. Which one of the following must be true as output rises from Q₁ to Q₂?

A Marginal costs are falling
B There are economies of scale
C Marginal costs are constant
D There are diseconomies of scale

3. A firm employs 50 workers in its factory. Each worker is paid a weekly wage of $1 500. To attract an additional worker the firm needs to raise the wage from $1 500 to $1 600 a week for each of its employees. Which one of the following is the marginal cost of employing the additional worker?

A $100
B $6 600
C $75 000
D $81 600

4. The diagram shows the equilibrium output of a profit-maximising firm operating in a perfectly competitive market, with MC intersecting AC at the D=AR=MR line, below the minimum of AC. Which one of the following can be deduced from this diagram?

A Loss in short-run / Increase in number of firms in long-run
B Normal profit in short-run / Decrease in number of firms in long-run
C Normal profit in short-run / Increase in number of firms in long-run
D Loss in short-run / Decrease in number of firms in long-run

5. A German electricity company aims to maximise its total revenue. At which one of the following would total revenue be maximised?

A The level of output at which marginal cost is equal to marginal revenue
B The level of output at which average variable cost is equal to marginal cost
C The level of output at which average revenue is equal to zero
D The level of output at which marginal revenue is equal to zero

6. A diamond mining company is considering whether to set up operations in Botswana. Which one of the following would be a barrier to entry into this industry?

A High level of government subsidies
B High sunk costs
C Low level of government regulation
D Low concentration ratio

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage change in Deliveroo's total revenue between 2017 and 2021. You are advised to show your working. (2)

(b) With reference to Figure 2, explain the market structure of the UK food delivery market in 2021. (4)

(c) With reference to Extract B, analyse two factors that influence the demand for online food delivery. (6)

(d) With reference to Figure 1 and the first paragraph of Extract B, examine two reasons why Deliveroo is making a loss. Illustrate your answer with an appropriate diagram(s). (8)

(e) With reference to the information provided, discuss the strategies used by food delivery businesses to increase their market shares. Refer to game theory analysis in your answer. (14)

#Section C (Answer TWO questions)

8. In 2015 Egypt's Government introduced a maximum wage of $5 800 per month. This was 35 times greater than the minimum wage of public sector workers. Many Chief Executives were earning far more than this maximum wage at the end of 2014. As a consequence, 200 executives in the banking sector resigned. Evaluate the impact of imposing a maximum wage. Illustrate your answer with an appropriate diagram(s). (20)

9. In 2022 the French Government planned to pay nearly €10bn to nationalise EDF Energy. This business had a 90% market share. The Government aims to ensure stability of energy supplies and to prevent significant price fluctuations. Evaluate the impact of a profit maximising monopolist being nationalised. Illustrate your answer with an appropriate diagram(s). (20)

10. According to a 2021 World Bank report, small and medium-sized enterprises accounted for 98.5% of the businesses in Malaysia. The report stated that these businesses were reluctant to invest in the technology that would enable them to expand because many of them wanted to remain small. Evaluate why the objectives of small and medium-sized enterprises may differ from those of large enterprises. Illustrate your answer with an appropriate diagram(s). (20)

#June 2022

#Section A

1. Ceteris paribus, which one of the following would reduce the geographical mobility of labour within a country?

A An increase in relocation grants paid by the government
B An increase in the costs of relocating from one region to another
C More accurate information about job opportunities in different locations
D Similar average house prices in different regions of the country

2. The diagram shows the long-run equilibrium for a restaurant in Bangkok, Thailand, operating in a monopolistically competitive market, with MC, AC, D=AR and MR shown, price P₁ tangent to AC at Q₁. Which one of the following can be deduced from the diagram?

A The firm is producing the allocatively efficient level of output at price P₁
B The firm will leave the industry if average costs fall
C The firm is producing the productively efficient level of output Q₁
D The firm is making normal profit

3. The table shows the total costs of a battery manufacturer at different levels of output (0: £4 500; 100: £8 000; 200: £10 700; 300: £13 200; 400: £15 300). Which one of the following is the average variable cost at 300 units?

A £15
B £27
C £29
D £44

4. The chart shows the market share, by revenue, for airlines operating domestic flights in the USA, February 2019–January 2020: American 17.6%, Delta 17.5%, Southwest 16.9%, United 14.9%, Alaska 6.4%, JetBlue 5.5%, Spirit 4.2%, Frontier 3.1%, SkyWest 2.9%, Others 11.0%. Which one of the following is the five-firm concentration ratio for airlines operating domestic flights in the USA?

A 66.9%
B 73.3%
C 77.9%
D 78.8%

5. In January 2021 the UK Government set up a new national construction products regulator to ensure that homes are built from safe materials. Which one of the following would limit the impact of government intervention in the housing market?

A Perfect mobility of resources
B A flexible labour market
C Perfect knowledge of the housing market
D Regulatory capture

6. Prior to 2016 there was a competitive labour market for nurses in Argentina. Following the introduction of a universal healthcare system there is now a monopsony employer of nurses in the country. Which one of the following combinations is the most likely impact of the introduction of this monopsonistic labour market?

A Lower wages / Lower number of employees
B Lower wages / Higher number of employees
C Higher wages / Lower number of employees
D Higher wages / Higher number of employees

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering.)

(a) With reference to Figure 1, calculate the percentage change in Amazon's revenue between 2010 and 2020. (2)

(b) With reference to Figure 2, explain the market structure of cloud infrastructure providers. (4)

(c) With reference to Extract A, analyse the likely impact on consumers of two methods by which Amazon competes with other retailers. (6)

(d) With reference to Extract A, examine two likely effects of the global health crisis on Amazon's profits. (8)

(e) With reference to Extract B and your own knowledge, discuss reasons why many SMEs in South Africa shut down in 2020. Illustrate your answer with an appropriate diagram. (14)

#Section C (Answer TWO questions)

8. In 2021, the UK-based firm PhotonLens, which produces virtual reality smart glasses, merged with the Chinese firm Shadow Creator, which specialises in virtual reality software. Evaluate the benefits of growth by merger. Illustrate your answer with an appropriate diagram(s). (20)

9. The tax authority in Singapore offers a tax incentive of up to S$100 000 to new businesses in their first three years of trading. The objective of this scheme is to promote competition. Evaluate methods that a government could use to promote competition in a market. Illustrate your answer with an appropriate diagram(s). (20)

10. The Indian premium smartphone industry is dominated by three firms: Apple, Samsung and OnePlus. These firms compete mainly using non-price competition. Evaluate the use of non-price and price competition in oligopolistic markets. Illustrate your answer with an appropriate diagram(s). (20)

#June 2021

#Section A

1. Mara Phone is a new smartphone developed by the African conglomerate, Mara Group. The business is aiming to grow its market share by maximising its sales. Which one of the following conditions is necessary for Mara Group to maximise sales volume of this new phone without making a loss?

A Marginal revenue equals marginal cost
B Average revenue equals average cost
C Marginal revenue equals zero
D Average revenue equals marginal revenue

2. A Swedish company, Lantmännen, is an agricultural business owned by 25 000 farming partners. Which one of the following is the best description of this type of business?

A State-owned enterprise
B Joint venture
C Conglomerate
D Co-operative

3. Which one of the following diagrams illustrates a firm's average fixed cost curve? [Four diagrams shown: A = U-shaped curve, B = downward-sloping curve that approaches zero, C = horizontal line, D = upward-sloping straight line]

A / B / C / D

4. Which one of the following will influence the elasticity of demand for labour?

A The size of the population
B The level of welfare benefits
C Labour costs as a percentage of total costs
D The rules determining the number of immigrants

5. The table shows a firm's total costs of producing textbooks (0: $14 000; 1 000: $15 000; 2 000: $16 000; 3 000: $17 000; 4 000: $18 000; 5 000: $19 000). What would be the average variable cost at an output of 4 000 textbooks?

A $0.75
B $1.00
C $3.25
D $4.50

6. A farm producing wheat is operating in a monopolistically competitive market. Which one of the following will apply to this firm?

A Allocative inefficiency in the long-run
B Productive efficiency in the short-run
C Supernormal profit in the long-run
D Allocative efficiency in the short-run

#Section B — Question 7

(Study Figures 1 and 2 and Extracts A and B in the Source Booklet before answering.)

In 2018 total new car sales in China were 23.7 million.

(a) With reference to Figure 2, calculate the 4-firm concentration ratio for the car market in China in 2018. You are advised to show your working. (2)

(b) With reference to the third paragraph of Extract B, explain what is meant by a 'takeover'. (4)

(c) With reference to Figure 1 and Extract A, analyse two reasons for the fall in car sales in China since 2017. (6)

(d) With reference to Extract A, examine the likely effects of the Chinese Government's subsidy on the profits of an electric car manufacturer. Illustrate your answer with an appropriate diagram. (8)

(e) With reference to Extract A and Extract B and your own knowledge, discuss the types of non-price competition that could be used by car manufacturers to increase the sales of cars. (14)

#Section C (Answer TWO questions)

8. In 2019 the Indian Government announced plans to privatise up to 25 airports across India. These airports are not the largest in India, but they each have annual passenger numbers between 1 million and 1.5 million. Evaluate the possible benefits of privatisation for the consumer. Illustrate your answer with an appropriate diagram(s). (20)

9. In the UK, for any given rail journey, there are usually more than five different ticket prices depending on the time and day of travel. Evaluate the view that price discrimination is always beneficial for producers. Illustrate your answer with an appropriate diagram(s). (20)

10. In New Zealand, in 2018, it was estimated that the average worker employed in the private sector earned 30% less than the average worker in the public sector. Evaluate the reasons why wage differences exist. Illustrate your answer with an appropriate diagram(s). (20)

End of compilation. Total: 15 papers × (6 MCQs + 5 Section B sub-questions + 3 Section C essays) = 15 papers fully transcribed.

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WEC13 Unit 3 — Combined Mark Schemes: All Series

NB: If correct answer is given award full marks regardless

307 min