2023 AQA A-level ECONOMICS 7136/1 Paper 1 Markets and Market Failure Question Paper
& Mark scheme (Merged) June 2023 [VERIFIED]
A-level
ECONOMICS
Paper 1 Markets and Market Failure
Thursday 18 May 2023 Morning Time allowed: 2 hours
Materials
For this paper you must have:
• an AQA 12-page answer book
• a calculator.
Instructions
• Use black ink or black ball-point pen. Pencil should only be used for drawing.
• Write the information required on the front cover of your answer
book. The Paper Reference is 7136/1.
• In Section A, answer EITHER Context 1 OR Context 2.
• In Section B, answer ONE essay.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 80.
• There are 40 marks for Section A and 40 marks for Section B.
Advice
• You are advised to spend 1 hour on Section A and 1 hour on Section B.
IB/G/Jun23/E5 7136/1
, 2
Section A
Answer EITHER Context 1 OR Context 2.
EITHER
Context 1 Total for this context: 40 marks
Electric cars and battery production
Study Extracts A, B and C and then answer all parts of Context 1 which follow.
Extract A
Table 1: Sales of cars by fuel type Figure 1: UK demand for lithium-ion batteries,
in the UK, 2020 and 2021 Gigawatt hours (GWh), 2015 to 2030
2020 2021
Diesel 261 772 135 773
Petrol 903 961 762 103
Battery
108 205 190 727
Electric
Hybrid
357 126 558 578
Electric*
Total 1 631 064 1 647 181
*Hybrid Electric cars use lithium-ion
batteries and diesel/petrol
Extract B: The electric vehicle revolution
Sales of electric vehicles (EVs) in Europe have jumped from 198 000 in 2018 to an expected
1.17 million in 2021. They are an alternative to petrol and diesel vehicles, which create
damaging emissions through air pollution and contribute to climate change. EVs still only make
up about 1% of all cars on the road, but global sales of EVs are forecast to reach 10.7 million by 5
2025 and then 28.2 million by 2030. Carmakers have announced a total of $330 billion of
investment into electric and battery technology over the next five years. In fact, several
manufacturers have begun to phase out petrol and diesel cars altogether.
Why is this happening now? Regulations are becoming tighter. Ambitious plans to expand the
use of electric vehicles are one of the most obvious ways to meet emissions targets set by 10
national governments. The UK has already announced plans to ban the sale of petrol and
diesel cars by 2035. Meeting this target will require government spending to install the charging
points needed to convince consumers to switch to electric vehicles.
Another reason for the EV revolution is the improved choice of such vehicles. There are around
330 EV models on sale today, compared with just 86 five years ago. While many are still more 15
expensive than petrol vehicles, they boast substantially lower running costs, even more so as
global petrol prices rise. Also, many governments still offer generous financial incentives to
encourage people to purchase EVs.
IB/G/Jun23/7136/1
, 3
Driving cars of all fuel types creates environmental problems, traffic congestion and road traffic
accidents. Critics have suggested that, instead of governments offering subsidies and tax exemptions
for electric vehicles, all vehicle owners should be forced to pay the full costs of their 20 driving. This
would incentivise people to consider using public transport, cycling or walking.
Source: News reports, 2021
Extract C: Are electric vehicles as green as claimed?
Redwood Materials, a US firm, recycles discarded batteries into a fresh supply of metals
needed for new cars. Its goal is to solve the most glaring problem for electric vehicles. While
they are ‘zero emission’ when being driven, the mining, manufacturing and disposal process for
batteries could soon become an environmental disaster. Cobalt, one of the metals used in
batteries, typically originates in the Democratic Republic of Congo, where it is extracted in large 5
energy-intensive industrial mines and also dug by hand using basic tools. Then it might be
shipped to Finland, home to Europe’s largest cobalt refinery, before heading to China where the
majority of the world’s battery production occurs. From there it can be shipped to the US or
Europe for packing, then shipped again to car factories. In all, the cobalt can travel more than
20 000 miles before becoming part of a ‘zero emission’ car. 10
Every day, about 60 tonnes of old smartphones, power tools and scooter batteries are delivered
to Redwood’s warehouse. The firm then separates out the nickel, cobalt and lithium, so that
they can re-enter the supply chain as the building blocks for new lithium-ion batteries.
Reclaiming these metals at scale is a massive task: roughly 10 000 smartphones need to be
recycled to produce one EV battery. 15
Redwood hope to play a role in the emergence of ‘the circular economy’ – a grand hope born in
the 1960s that society can re-engineer the way goods are designed, manufactured and recycled
so as to avoid waste. It has been estimated that recycling batteries could account for 30% of
the emissions cuts needed to meet the targets set in the Paris climate change agreement and
‘create 10 million safe and sustainable jobs around the world’ by 2030. 20
Source: News reports, 2021
0 1 Using the data in Extract A (Table 1), calculate the index of total car sales in 2021 if, in
the base year, total car sales were 1.25 million.
Give your answer to two decimal places.
[2 marks]
0 2 Explain how the data in Extract A ( Table 1 and Figure 1) show that developments
in the car market are the main reason for the changing demand for lithium-ion
batteries in the UK.
[4 marks]
0 3 Extract C (lines 3–4) states that ‘the mining, manufacturing and disposal process for
batteries could soon become an environmental disaster.’
With the help of a diagram, explain why the production and sale of lithium-ion
batteries might lead to market failure.
[9 marks]
0 4 Extract B (lines 20–21) states that ‘all vehicle owners should be forced to pay the full
costs of their driving. This would incentivise people to consider using public transport,
cycling or walking.’
Evaluate policies that could be used to reduce the environmental impact of
all types of car.
[25 marks]
Turn over ►
IB/G/Jun23/7136/1
, 4
Do NOT answer Context 2 if you have answered Context 1.
OR
Context 2 Total for this context: 40 marks
In-work poverty in the United Kingdom
Study Extracts D, E and F and then answer all parts of Context 2 which follow.
Extract D
Figure 2: Growth in real pre-tax earnings Figure 3: In-work poverty rate, by selected UK
for working households, by region, 2003/04 to 2019/20
percentile, 1994 to 2017
Source: Institute for Fiscal Studies, 2020 Source: Institute for Public Policy Research, 2021
Extract E: In-work poverty is on the rise in the UK
Approximately 14 million people are in poverty in the UK, more than one in five of the
population, including 4 million children and 2 million pensioners, up by 400 000 and 300 000
respectively over the past five years. A family is classified as being in poverty if it has an
income, after housing costs, of less than 60% of the median income for their family type. A
family’s income includes earnings from employment, self-employment and state benefits. 5
For generations, politicians in the UK have highlighted the important role of employment in
tackling poverty. However, employment is no longer a strong defence against poverty. The
Joseph Rowntree Foundation, an anti-poverty group, said that while paid employment does
reduce the risk of poverty, about 56% of people living in poverty in 2018 were in working
households, compared with 39% 20 years ago. Seven in 10 children in poverty are now in a 10
working household, and such in-work poverty is particularly common amongst single-parent
families. Working single parents accounted for three in 10 households in poverty in 2018,
compared with two in 10 in 2011. Working poverty among single-earning couple households
also rose dramatically, increasing from 19% in 2003–04 to 31% last year, meaning this group
now experiences poverty rates almost as high as those households where no one 15
works full time.
Amid concerns that the poorest receive worse healthcare and have the most insecure jobs, the
Government faces a huge task if it is to ‘level up’ incomes across the UK by narrowing the gap
between the wealthiest and poorest regions. Some out-of-work benefits have not kept up with
inflation, putting downward pressure on wages, contributing to the rise in in-work poverty. Other 20
factors include rising prices of energy, essential groceries and rented properties.
Source: News reports, 2021
IB/G/Jun23/7136/1
