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PAPER 3: Microeconomics and Macroeconomics
Instructions
• Fill in the boxes at the top of this page with your name, centre number
• In Section B, answer all questions 2(a) to 2(c) and one question from 2(d) or 2(e). – there may be more space than you need.
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Pearson Edexcel Level
3 GCE
Friday 7 June 2024
Morning (Time: 2 hours)
referen
Paper
9EC0/
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Economic 03
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A
PAPER 3: Microeconomics and Macroeconomics
You do not need any other materials. Total Marks
Instructions
• Use black ink or ball-point
• Fill in the boxes at the top of this page with your name, centre number
and candidate
pen.
• number.
There are two sections in this question
• In Section A, answer all questions 1(a) to 1(c) and one question from
• In Section B, answer all questions 2(a) to 2(c) and one question from
paper.
• Answer the questions
2(d) or 1(e).
1(d) 2(e). in the
– there may bespaces
more space than you need.
Information
provided
• The total mark for this paper is 100.
• The marks for each question are shown in
– use this as a guide as to how much time to spend on each
• question. Calculators may be used.
brackets
Advice
• Read each question carefully before you start to answer it.
• Check your answers if you have time at
the end.
Turn over
, SECTION A
Read Figures 1 and 2 and the following extracts (A to C) before answering Question 1.
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Answer ALL Questions 1(a) to 1(c), and EITHER Question 1(d) OR 1(e).
Write your answers in the spaces provided.
You are advised to spend 1 hour on this section.
Question 1
The energy market
Figure 1: UK wholesale gas prices per therm, 2021, in pence
500p
Price
per
therm 400p
352p
300p
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200p
100p
0p
Feb Apr Jun Aug Oct
Dec
Figure 2: Number of firms supplying gas and electricity in the UK, 2004–2021
80
60
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40
20
0
2004 06 08 10 12 14 16 18 21
Gas and electricity
Electricity
Gas
, Extract A
Rising gas prices
UK consumers are some of the biggest users of gas. 85% of homes use
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gas central heating, and gas generates a third of the country’s electricity.
North Sea gas is running out – and as Britain has replaced coal-fired
energy production with wind power in order
to reduce carbon emissions, it has become dependent on gas imports. 5
Almost all UK businesses face significant rises in fuel costs over the next few
months, and there is no substitute for energy, at least in the short run – an
almost perfect example of price inelastic demand.
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Extract B
(Source: adapted from
The UK gas market is https://www.theecoexperts.co.uk/
blog/reasons-for-uk-gas-price-increase)
broken
During the past decade the government has allowed new entrants into the
retail energy market with business models that left them ill-prepared to
achieve long term business growth. Now the UK must choose between
letting its energy market collapse and
offering large subsidies for energy retailers. 5
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The problem began in the 1980s and 1990s, when privatisation created an
oligopolistic energy market dominated by the “Big Six”, which paid their
shareholders high dividends and their bosses excessive salaries. The
government responded to anger over high energy bills with further
liberalisation. Some of the new entrants were innovative, such
as Bulb, which offered consumption-tracking apps, and Octopus, which discouraged 10
consumption when demand was high with dynamic pricing. But most
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were under- capitalised and produced no energy, merely buying it on
global wholesale markets and selling it on. Some paid little attention to
ensuring continuity of supply or forward buying of gas.
The constraints on energy retailers worsened in 2017 with the closure of a big 15
gas-storage facility, which left the UK able to store just 2% of its annual
demand. Other big gas importing countries, by contrast, can store 20%–
30%. The risks rose further
in 2019, when the government capped consumer prices in response to
continued complaints about high energy bills.
The perfect storm came in the summer of 2021. As economies opened up, global 20
demand for energy rose. Gas supply in Russia, a big producer, was
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disrupted, and unusually calm weather reduced UK wind turbine energy
production to 11% of capacity. In August Ofgem, the industry regulator, said
that from October the firms would be able to raise prices for households by
54%. But since then the wholesale price of gas paid by
UK energy firms has risen by more than 70%. The result is that UK energy firms are tied 25
into contracts to supply gas to households at far less than they must pay to get it.
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(Source: adapted from https://www.economist.com/britain/britains-gas-market-is-broken/)
, Extract C
The gender pay gap in the oil and gas industry
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Despite best efforts to try to attract more women into the oil and gas
industry, females are still hugely under-represented in science, technology,
engineering and maths careers, whether school leavers, graduates or
experienced workers. Women hold under 25% of
careers in these areas, and typically hold more non-technical roles, which can attract 5
lower salaries than technical disciplines.
There is an even smaller female representation in the offshore workforce
(3.6%) e.g. working on rigs in the North Sea, an area that pays higher salaries
than onshore work.
Despite continued efforts there is still a lack of female applications. Only 5% of the
applications to the technical apprentice programme were female, of which half withdrew10
their applications at the first stage of the recruitment process.
There is also a low representation of females in senior leadership roles within
the oil and gas industry, especially in technical positions. Women also
generally take up part-time positions which are typically lower paid. This
has resulted in the oil and gas industry
having an average gap in hourly pay of 25%. 15
In the majority of developed countries, women have made substantial
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progress in the labour market since the 1970s, with both wages and labour force
participation increasing relative to that for men. Notwithstanding these large
improvements, women still earn less than ‘comparable’ men in all
developed countries and, since the 2000s, progress for
women in the labour market seems to have slowed. 20
(Source: adapted from https://www.harbourenergy.com/media/2a2nmavb/chr-
18311- 01-gender-pay-gap-2020-v6-final.pdf and
https://ftp.iza.org/dp10975.pdf)
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