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ADDITIONAL MATERIALS

In addition to this paper you may require a calculator and a ruler.

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 page 13 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*(S13-1131-01)

Surname

Other Names

CandidateNumber

2

CentreNumber

© WJEC CBAC Ltd.

GCE AS/A level

1131/01

ECONOMICS – EC1

A.M. MONDAY, 13 May 2013

1 hour

For Examiner’s use only

Question MaximumMark

MarkAwarded

1 3

2 10

3 4

4 4

5 3

6 10

7 8

8 8

Total 50

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

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Answer all the questions in the spaces provided.

1. The data below shows the trends in output and employment of UK manufacturing since 1980.

© WJEC CBAC Ltd.

Source: Daily Mail 11 December 2011

With reference to the data, explain one factor that could explain the change in manufacturing productivity over the period shown. [3]

3

19802m

3m

4m

5m

6m

1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2011

60

80

100

ManufacturingVolume of

Output

Employment

Employment

Manufacturing output

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Suppose, as a result of an increasing number of serious accidents involving cyclists, firstly the government made the wearing of cycle helmets compulsory and secondly, at the same time, reduced the rate of VAT on cycle helmets.

(a) Adapt the above diagram to discuss whether the policy changes are likely to increase or reduce the price of cycle helmets. [6]

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2. The diagram below shows the market for cycle helmets.

S

Q1

D

P1

Price ofcycle helmets

Quantity

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5Examiner

only (b) Explain how the policies outlined above may help to correct market failure. [4]

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3. A football club charges a £15 admission fee to their home games and its average attendance is 5,000 per game. It then reduces its admission fee to £12 and as a result average attendances rise to 7,000 per game.

Calculate the price elasticity of demand for this football club and explain why the club’s revenue has been affected by the price change. [4]

4. An antiques expert has bought a valuable religious painting dating back 1,000 years at a car boot sale for £13. The painting has since been valued at several thousand pounds.

Using the above passage explain the concept of asymmetry of information. [4]

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Flow 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Flow 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Flow 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Flow 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Flow 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

© WJEC CBAC Ltd.

5. Complete the circular flow diagram below by identifying flows 1 to 5. [3]

Consumer expenditure

Income to factors of production

Households Business

Goods and services

Circular Flow

Flow 1

Savings Investment

Flow 4 Flow 2

Flow 5 Flow 3

3

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(a) In the above diagram explain the shape of both the aggregate demand and aggregate supply curves. [4]

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6.

Price Level

AS

AD

Yfe0 Real GDP

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only (b) Explain how fiscal policy can shift both the aggregate demand and aggregate supply

curves to the right. [6]

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7. In the 2010 Budget the UK government announced a five year plan to rebuild the economy.

© WJEC CBAC Ltd.

-16-14

-10

-6-4

-12

-8

-20

-16-14

-10-12

-8-6-4-20

2009

-4.6

-11.1

-2.9-2

-11 -10.9-12.5

-14.1

-7.3 -7.3

2010 2011

-15.2

UNITED KINGDOM CURRENT ACCOUNTCurrent Account (Billion)

£ (billions) £ (billions)

6.87

7.4

7.88

7.2

7.6

8.2

8.68.4

6.87

7.47.2

7.67.888.28.48.6

UNITED KINGDOM UNEMPLOYMENT RATEPercentage of Labour Force

% %

Jul/09 Jan/10 Jul/10 Jan/11 Jul/11 Jan/12

0

1

3

5

2

4

6

0

1

3

2

4

5

6

UNITED KINGDOM INFLATION RATEAnnual Change in Consumer Price Index

% %

Jul/09 Jan/10 Jul/10 Jan/11 Jul/11 Jan/12

-2

-1.5

-0.5

0.5

1

-2

-1.5

-0.5

-1

0

-1

0

0.5

1

1.5 1.5

2009

-1.6

-0.2

0.70.4

1.1

0.7

-0.5

0.4 0.5

0

-0.2

0.2

2010 2011

UNITED KINGDOM GDP GROWTH RATEPercentage Change in Gross Domestic Product

% Change on previous

quarter

% Change on previous

quarter

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only With reference to the data, discuss how successful this plan seems to have been. [8]

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8. RUSSIA JOINS WORLD TRADE ORGANISATION (WTO).

The WTO is an international organisation which promotes free trade amongst its members.

To what extent might Russia expect to benefit as a result of freer international trade? [8]

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