A-level
ECONOMICS
Paper 3 Economic Principles and Issues
Friday 7 June 2024 Morning Time allowed: 2 hours
For Examiner’s Use
Section Mark
A
B
TOTAL
7136/3
, 2
Section A
Answer all questions in this section.
Only one answer per question is allowed.
For each question completely fill in the circle alongside the appropriate answer.
CORRECT METHOD WRONG METHODS
If you want to change your answer you must cross out your original answer as shown.
If you wish to return to an answer previously crossed out, ring the answer you now wish to select
as shown.
0 1 Which one of the following is a consequence of the basic economic problem of limited
resources and unlimited wants?
[1 mark]
A All goods and services will have a market price
B Employment of factors of production has an opportunity cost
C Markets are unable to allocate resources efficiently
D There will not be an excess supply in markets
0 2 A profit-maximising firm, in the service sector, needs to recruit a new employee. Which
one of the following explains why asymmetric information could mean that the most
suitable person is not chosen?
[1 mark]
A It is difficult to calculate the marginal revenue productivity of workers in the
service sector
B Occupational immobility of labour means that there is a limited supply of
workers with the right skill set
C The firm may have to recruit the worker from the local area because labour
is often geographically immobile
D The firm is unlikely to know everything about job applicant’s skills, abilities
and motivation
, 3
Do not write
outside the
0 3 Figure 1 shows the production possibility boundary for petrol-powered cars and electric- box
powered cars in a country's car industry.
Figure 1
If production has moved from Point A to Point B, which one of the following must be true?
[1 mark]
A Allocative efficiency in the car industry is unchanged
B Demand for electric-powered vehicles has increased
C Productive efficiency in the car industry is unchanged
D Static efficiency in the car industry has improved
0 4 A household's annual income increases from £35 000 to £38 500. All other things being
equal, if the household's income elasticity of demand for Good X is –0.2 and its income
elasticity of demand for Good Y is 0.4, which one of the following statements is correct?
[1 mark]
A Spending on Good X will fall by £70 and spending on Good Y will
increase by £140
B Spending on Good X will fall by £700 and spending on Good Y will
increase by £1400
C Spending on Good X will fall by 2% and spending on Good Y will
increase by 4%
D Spending on Good X will fall by 20% and spending on Good Y will
increase by 40%
Turn over ►
, 4
Do not write
outside the
0 5 Table 1 shows the effect of cash benefits and taxes on household incomes in the UK in box
2020–21.
Table 1
Income of
Income of top Ratio of top to
bottom quintile
quintile (£s) bottom quintile
(£s)
Original
107 551 8 196 13.1
income
plus cash
2 581 7 267 0.4
benefits
Gross income 110 132 15 463 7.1
less direct
32 000 2 267 14.1
taxes
Disposable
78 131 13 196 5.9
income
less indirect
7 133 3 024 2.4
taxes
Post-tax
70 998 10 172 7.0
income
Source: Office for National Statistics
Which one of the following can be concluded from the data in Table 1 regarding the
distribution of income between the top and bottom quintile of households?
[1 mark]
A Cash benefits were less effective than direct taxes in redistributing income
from the bottom quintile of households to the top quintile
B Direct taxes made the distribution of income more unequal
C Indirect taxes made the distribution of income more unequal
D Indirect taxes were more effective than cash benefits in redistributing income
from the top quintile of households to the bottom quintile
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