Exam (elaborations)
OCR A Level EconomicsH460/01Microeconomics MERGED QUESTION PAPER AND MARK SCHEME FOR MAY 2024
- Course
- Institution
OCR A Level EconomicsH460/01Microeconomics MERGED QUESTION PAPER AND MARK SCHEME FOR MAY 2024
[Show more]
Content preview
Wednesday 15 May 2024 – MorningA Level Economics
H460/01 Microeconomics
Time allowed: 2 hours
Turn over
, 2
Section A
Read the stimulus material and answer all the parts of Question 1.
Is the UK housing market in crisis?
Between August 2020 and August 2021, average house prices in the UK rose from £239 000
to £280 825. 2021 was a record year for house sales in the UK. Very high demand continued,
with many in the market saying that there is considerable shortage in supply. This prompted
predictions that prices would continue to rise as they had since the start of 2020. (see Fig. 1).
Fig. 1
UK average house and rental price index
Price (Feb 2015 = 100) Key: House prices
Rental prices
140
135
130
125
120
115
110
105
100
Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug Feb Aug
2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 2020 2020 2021 2021
Partly due to competitive supply, trends in the market for houses also affected those wanting to 5
rent properties. Record demand in 2021 for rental properties outside of London forced average
rental prices up by 4.2%. At the same time, average rents in London fell by 7.8% in a year.
Converting empty shops into homes has been proposed as one way to increase the supply of
housing and tackle the shortage of housing in the UK. A change to legislation in 2021 means
that planning permission is no longer required to convert commercial buildings, such as shops, 10
restaurants and gyms, into homes. However, critics highlight research which suggests that 89%
of commercial buildings in the London Borough of Barnet could be lost due to the new legislation.
© OCR 2024
, 3
One private sector retailer taking advantage of changes in the law is John Lewis plc. During
2020 and 2021, John Lewis plc announced the permanent closure of 16 of its 50 UK department
stores. In July 2021 it announced plans to convert some of its closed stores to create 100 000 15
new homes.
The City of London Corporation is the public sector organisation responsible for managing the
historic centre of London, known as ‘The Square Mile’. It is responding to housing shortages by
planning to convert empty office space into 1500 homes.
Regulations mean that all new homes must be of a high quality and meet legal space standards 20
and building regulations. However, concerns have been raised about many new developments.
Some politicians have complained that while more homes are needed, the necessary
infrastructure (such as roads, schools, and doctors) will not follow.
There are also worries about the concentration of power in the housebuilding industry (see Fig. 2).
In 2019, four of the UK’s largest housebuilders – Barratt, Countryside, Persimmon and 25
Taylor Wimpey had a relatively large market share. Some economists and politicians suggested
these companies were acting as a cartel, deliberately slowing down construction and controlling
competition.
Fig. 2
Market share of UK housebuilders – 2019
Key:
11% Barratt
10% Persimmon
57% Taylor Wimpey
9% Bellway
Redrow
6%
Countryside
4% Others
3%
According to the House of Lords’ Economic Affairs Select Committee, “The UK’s big developers
[housebuilders] have become far too powerful with the result that profit margins can be as high 30
as 30%.” Instead of competing on quality and price, each housebuilder focuses on separate
geographical locations giving potential house buyers little choice. As smaller housebuilding firms
continue to go out of business, six of the largest housebuilders own more than one million sites
ready for new building.
© OCR 2024 Turn over
, 4
1
(a) Explain what is meant by ‘competitive supply’.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..................................................................................................................................................... [2]
(b) Explain, using an appropriate diagram, the situation in the housing market described in lines 1–3.
..........................................................................................................................................................
..........................................................................................................................................................
..........................................................................................................................................................
..................................................................................................................................................... [4]
© OCR 2024
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller williesmaish2999. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $10.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75323 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now