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AQA AS ECONOMICS Paper 1 The Operation of Markets and Market Failure Insert June 2023
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AQA AS ECONOMICS Paper 1 The Operation of Markets and Market Failure Insert June 2023AS
ECONOMICS
Paper 1 The Operation of Markets and Market Failure
Insert
DO NOT WRITE ANY ANSWERS IN THIS INSERT. YOU MUST ANSWER THE QUESTIONS
IN THE ANSWER BOOKLET PROVIDED.
CONTEXT 1: OIL
Questions 21 to 26
• Extract A: Brent crude oil prices, 2013–2020 and market shares of leading
oil producers, 2019
• Extract B: The market for oil
• Extract C: Failures in the oil market
CONTEXT 2: DRONES
Questions 27 to 32
• Extract D: Annual worldwide sales of commercial drones, 2016–2023
and near misses between drones and planes in the UK,
2014–2018
• Extract E: The rise of the drone
• Extract F: Opportunity or threat?
IB/M/Jun23/E6 7135/1
, 2
Context 1 Total for this context: 50 marks
OIL
Extract A: Brent crude oil prices, 2013–2020 and market shares of leading oil producers,
2019
(i) Brent crude oil prices ($ per barrel), 2013–2020 (ii) Market shares of leading oil
producers (%), 2019
Country/group Market share (%)
Canada 5.9
OPEC 37.4
Russia 12.1
United States 17.9
Others 26.7
Note: Oil prices are the average price for the 12 months of each year. Source: World Bank and bp Statistical Review of World
Energy 2020
Extract B: The market for oil
Crude oil, a fossil fuel, is a non-renewable resource which plays a vital role in modern
economies. Oil is used to make petrol and diesel for cars, planes and machinery. It is also used
to make electricity, fertiliser and plastics.
Since the start of 2013, the average monthly price of Brent crude (one of two key oil prices) has
varied from $116.52 in February 2013 to $23.34 in April 2020. Income and price elasticity of
5
demand for oil are fairly inelastic, particularly in more developed economies. The supply of oil is
also inelastic. Like other primary products, the price of oil fluctuates in response to changes in
both demand and supply. For example, as more countries industrialise, incomes increase. This
10
causes demand for oil to rise, although it falls during recessions. Oil supplies are sometimes
disrupted for political reasons, which also contributes to the large price fluctuations.
As a natural resource, crude oil is only found in certain locations. In 1960, the Organization of
the Petroleum Exporting Countries (OPEC) was set up by five leading oil-producing countries,
led by the largest producer, Saudi Arabia. OPEC’s aim is to ‘coordinate and unify the petroleum
policies of its member countries and ensure the stabilisation of oil markets’. It currently has 13 15
members, accounting for about 40% of oil production and 80% of the world’s viable oil reserves.
At times, it has used its monopoly power to influence the supply of oil and therefore its price.
IB/M/Jun23/7135/1
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