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This document provides examination details for the Pearson Edexcel International Advanced Level Economics paper scheduled for October 11, 2023. It includes instructions for candidates, the structure of the exam, and sample questions from different sections. The total marks for the paper are 80, and calculators are permitted.

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0% found this document useful (0 votes)

236 views32 pages

Solved

Uploaded by

shertaz khan

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You are on page 1/ 32

Please check the examination details below before entering your candidate information

Candidate surname Other names

Centre Number
Hazique
Candidate Number
Jezaul Khair

Pearson Edexcel International Advanced Level

Wednesday 11 October 2023
Afternoon (Time: 1 hour 45 minutes) Paper
reference WEC11/01
Economics  

International Advanced Subsidiary

UNIT 1: Markets in Action

You must have: Total Marks

Source Booklet (enclosed)

Instructions
•• Use black ink or ball-point pen.
Fill in the boxes at the top of this page with your name,
centre number and candidate number.
•• Answer
SolvedO
ALL questions in Sections A, B and C.
Answer ONE question in Section D.
• Answer the questions in the spaces provided
– there may be more space than you need.

Information
•• The total mark for this paper is 80.
The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
• Read each question carefully before you start to answer it.
• Check your answers if you have time at the end.

Turn over

P75610A
©2023 Pearson Education Ltd.
Z:1/1/1/
*P75610A0128*
SECTION A
Answer ALL questions in this section.

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Questions must be answered with a cross in a box . If you change your mind about an answer,
put a line through the box and then mark your new answer with a cross .
1 Which one of the following is an example of government failure?

A Market forces eliminating excess supply of a product by enabling its price

to fall
B A market bubble emerging in the value of shares on the stock exchange
C The introduction of a tax that causes a decrease in external costs

D The introduction of a tax that causes an increase in smuggling

(Total for Question 1 = 1 mark)

2 The table shows the maximum production possibilities for a country in 2021

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and 2022.

Year Consumer goods Capital goods

2021 220 OR 105

2022 195 OR 96

Which one of the following might have caused this change in the country’s
production possibilities?

A A natural disaster

B A rise in the rate of unemployment

C An improvement in technology
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D An increase in the number of immigrants

(Total for Question 2 = 1 mark)

2
*P75610A0228* 
3 The table shows the estimated price elasticity of demand for different car types
in Norway.
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Car type Price elasticity of demand

Diesel –0.99

Petrol –1.08

Electric –1.27

Which one of the following can be deduced from the table?

A Demand for all three car types is price inelastic

B Demand for all three car types is price elastic

C An increase in the price of diesel cars will result in an increase in the total
revenue for diesel car manufacturers
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D An increase in the price of electric cars will result in an increase in the total
revenue for electric car manufacturers

(Total for Question 3 = 1 mark)

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3
 *P75610A0328* Turn over
4 The diagram shows the market for museum visits in Spain.

Costs and Y

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benefits
MSC =
MPC
X

P2 W

P1 U

Z V
MSB
MPB
O Q1 Q2 Quantity of visits
to museums

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Which one of the following can be deduced from this diagram?

A The market equilibrium quantity is at Q2

B The social optimum quantity is at Q1

C The welfare gain area would be equal to UVW

D The welfare gain area would be equal to UWX

(Total for Question 4 = 1 mark)

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4
*P75610A0428* 
5 Before the global financial crisis of 2008, commercial banks expected that their
governments would not allow them to fail because of the threats to the rest of the
economy. This meant that some staff at banks took excessive risks when lending
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and investing.
Which one of the following concepts best describes the behaviour of staff at
these banks?

A Inertia

B The free-rider problem

C Moral hazard
D Market bubble
(Total for Question 5 = 1 mark)

6 The diagram illustrates the relationship between the price of PlayStation 5 games
consoles and the quantity demanded of Xbox Series X games consoles.

Price per
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PlayStation 5
games console
D

O Quantity of XBox Series X games consoles

Which one of the following can be deduced from the diagram about the relationship
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between PlayStation 5 games consoles and Xbox Series X games consoles?

A They are substitutes

B They are complements

C They are unrelated goods

D They are inferior goods
(Total for Question 6 = 1 mark)

TOTAL FOR SECTION A = 6 MARKS

5
 *P75610A0528* Turn over
SECTION B
Answer ALL questions in this section in the spaces provided.

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7 In Laos consumers’ real incomes decreased by 12.32% during 2021. The income
elasticity of demand for a domestic holiday was +1.36.
Draw a diagram to illustrate the likely impact of this change in consumers’ real
incomes on the equilibrium price and quantity for domestic holidays in Laos.

E S
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Pe
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

P1
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

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D
DI
Quantity of
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

QI Qe domesticholidays
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
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. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

(Total for Question 7 = 4 marks)

6
*P75610A0628* 
8 In the USA 96 million consumers have never switched banks. 39% of consumers had
accounts at the same bank as their parents. 13% of consumers said that the process
of switching involved too much time and effort.
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With reference to switching banks, explain the difference between ‘herding’

and ‘inertia’.

Herding is where consumers make

choices on the decision of others friends family

In this had case 39 of consumers

accounts at the same bank as their

parents
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Consumer inertia occurs when people

think that the effort of switining

is too great
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

In this case 131 of consumers said that

the of switching involved too

process much
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

time and effort

(Total for Question 8 = 4 marks)

7
 *P75610A0728* Turn over
9 In Thailand 10% of household income was saved during 2022.
In October 2022 banks in Thailand made loans to the private sector amounting to

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THB 4 809 billion.
With reference to Thailand, explain one role of financial markets.

One role of financial markets is to make

funds available to businesses consumers government

In this case in Thailand 101 of household

income was saved in 2022 In Oct 22

banks in Thailand made loans to the

private sector amounting to THB 4809 bn

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As such via this role of financial market
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

it will allow firms to borrow money

The funds can be used firms to

by
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

make investments in new capital goods

and equipments This can help the business

grow
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

(Total for Question 9 = 4 marks)

8
*P75610A0828* 
10 The table shows the average world price of cocoa per metric tonne and the quantity
supplied globally in 2020 and 2021.
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Average world price of Quantity of cocoa

Year
cocoa per metric tonne supplied, metric tonnes

2020 $ 2 131 OldPrice 4 741 000 Old

Qs
5 242 000New
2021 $ 2 770 NewPrice
Qs
Ceteris paribus, calculate the price elasticity of supply for cocoa. Show your working.

1 Ain Qs
PES
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

1 A in Price
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

52420 700
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

4104247000
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2770 2131
100
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

2131
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

10.57 1
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

29.99 1
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

0.35
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Total for Question 10 = 4 marks)

9
 *P75610A0928* Turn over
11 In January 2022 Vietnam’s Government introduced an indirect tax on online sales.
This was charged at 10% on all online transactions.

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Explain the impact of the introduction of this indirect tax on the market for
paperback books sold online in Vietnam.
Illustrate your answer with an appropriate diagram.

Indirect tax is an expenditure tax levied by

the government on
goods services e.g GST
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

In this case in Jan 22 Vietnam's Government

introduced an indivert tax charged at 101

online transactions This tax is ad valorem

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on
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

St tax
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

s
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

P
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Pe I M
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Px H
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

D
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

A
Quantity of
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Q1 Qe Paper
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

P1GJPe
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Consumer incidence
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Producer incidence PeJHPx

Government PIGHPX earnings

Consumer surplus falls from PeMB to PIGB

Producer surplus fallsfrom Pema to PIGA

(Total for Question 11 = 4 marks)

TOTAL FOR SECTION B = 20 MARKS

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*P75610A01028* 
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
BLANK PAGE

*P75610A01128*
Turn over
11
SECTION C

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Study Figure 1 and Extracts A, B and C in the Source Booklet before answering Question 12.
Write your answers in the space provided on the following pages.
12 (a) Define the term ‘tradeable pollution permit scheme’. (Extract B, line 16)
(2)
(b) With reference to Extract B, explain whether the supply of phosphate rock is likely
to be price elastic or price inelastic.
(4)
(c) With reference to Figure 1 and Extract A, analyse one demand factor and one
supply factor that caused the price of fertiliser to increase between January 2021
and April 2022.
Illustrate your answer with a supply and demand diagram.
(6)
(d) With reference to Extract C, examine two likely effects of the subsidies paid by

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Canada’s Government to farmers who use more organic farming methods.
(8)
(e) With reference to Extract B, discuss the external costs associated with the
production and the use of fertiliser.
Illustrate your answer with an appropriate diagram.
(14)

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12
*P75610A01228* 
12 (a) Define the term ‘tradeable pollution permit scheme’. (Extract B, line 16)
(2)
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A tradeable pollution permit scheme brings

together regulation and market forces whereby

firms would be permitted to pollute up to

a certain level Any excess permits can be

sold or firms can buy additional permits when

needed
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

(b) With reference to Extract B, explain whether the supply of phosphate rock is likely
to be price elastic or price inelastic.
(4)

PES is the responsiveness of Qs to a change

in price
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Supply is price inelastic when a change in price

leads toless than proportionate change in Qs a

Supply is price elastic when a change in price

leads to a more than proportionate change in Qs

The supply of phosphate rock is price inelastic

This means its PEST 1 This is because it is

a finite resource and 851 of supply of

phosphate rock comes from just 5 countries

with Morock supplying 701 of total

production
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Price of a s
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

phosphate
rock

Quantity of phosphate rock

13
 *P75610A01328* Turn over
(c) With reference to Figure 1 and Extract A, analyse one demand factor and one
supply factor that caused the price of fertiliser to increase between January 2021
and April 2022.

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Illustrate your answer with a supply and demand diagram.
(6)

As per Figure 1 the price of fertiliser in Jan 21

400 per tonne and

was just above by April22
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

the price rose to over 950 per tonne

As per Extract A one demand factor could be

government paying subsidies to farmers during the

global health crisis This incentivised more farmers

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to increase crop predation and since it requires
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

the use of fertilisers the demand for fertilisers

increased
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

One supply fanfer could be the poor weather

Winter storms and Hurricane Ida causing some

factories which manufacture fertilisers to shut

down for some weeks This have caused

may
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

constraints
supply
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

52
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
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Dr
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Q1Qe FEI
14
*P75610A01428* 
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

15
 *P75610A01528* Turn over
(d) With reference to Extract C, examine two likely effects of the subsidies paid by
Canada’s Government to farmers who use more organic farming methods.
(8)

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Subsidy monetary grant given by the is a
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

government to the producers This incentivises

producers to increase due to a fall

supply
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

in cost of production
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

As per Extract C Fertilisers have celounted for

101 of Canada's greenhouse gas emissions since

1990 To reach its 2030 greenhouse gas emissions

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target fertiliser usage needs to be reduced As
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

such a subsidy amounting to CA 750 million

is given to farmers over ten years to encourage

them to use more organic farming methods

As a consequence farmers will be encouraged to

adopt more organic production methods due

to the fall in cost of production from the

subsidy received
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
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In addition the subsidy will reduce usage of

fertiliser which would minimise external costs

but there could also be job losses in the

fertiliser industry as QD for fertiliser falls

16
*P75610A01628* 
However CA 750m subsidy may be too small
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

to have a substantial impact on changing

farmer's behaviour and obviously the subsidy

paid incurs opportunity cost The Canadian

government could have used the funds to

invest behind key sectors such as healthcare

and or education
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

17
 *P75610A01728* Turn over
(e) With reference to Extract B, discuss the external costs associated with the
production and the use of fertiliser.
key term

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Illustrate your answer with an appropriate diagram.
(14)

External lost refers to the negative spill over effects

on to the third parties arising from the production

or consumption of a good or a service MSC MPC

As per Extract B between 7960 and 2019 there

was a 10 fold increase in the use of fertilisers

The production of fertiliser requires substantial use

of non renewable resources s in as gas and coal

It is responsible for 1 of all global energy use

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and 1.41 of all carbon emissions this leads to

greenhouse effect and global warming This

may
lead toPolite caps melting and floods This
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

could damage crops negatively affecting the

of farmer
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
earnings
The extract further mentions that fertilisers is produced
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

acids to phosphate rock a finiteresource

by applying
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

These acids leak into the environment causing

may
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additional health costs The government

illness and
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

then needs to spend more behindhealthcare whim has

its own opportunity lost

Moreover fertilisers that are used farmland are on

often washed into rivers and lakes This causes

algae to develop and oxygen levels to decrease

resulting in decline in fish stocks

Thizan
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

18
*P75610A01828* 
negatively effect upon earnings of current and
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

future fishermen
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
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MSC
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
Priya n MPC
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Psm weifa
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

. .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ...MPB
. . .. .. . .. . .. ..production .. ... .. ... .. ... ... .. ... .. ...MSB
over .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

hkiii.seive
Quantity
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

a an
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However the magnitude of the external costs

from fertiliser production is substantial

arising
101 of carbon emission in Canada is generated
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

from fertiliser production

On the Flipside fertiliser production accounts for

just 7.41 of total global carbon emissions As

sun in relative terms other sectors might be

contributing move towards carbon emissions

Also fertiliser use has helped increase crop production

four fold This increased revenues for crop growers

and manufacturers Additionally fertiliser produition

results in external benefits in terms of increased

food supply and employment opportunities

It must be noted that is i difficult to

measure precisely the value of external costs

19
 *P75610A01928* Turn over
To add to it production of phosphate rock
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

is focused mainly in five countries with 701

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produced in Morocco As sain the external
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

costs will be more concentrated in these countries

Furthermore crop production using fertiliser is

used farmers globally thus the negative

externality implications is also global

the EU's traceable pollution

In conclusion
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

fertiliser manufiturers if the

permit scheme applies to
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

EU reduces the number of permits available then

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this will reduce predation of fertiliser and its

associated external costs

(Total for Question 12 = 34 marks)

TOTAL FOR SECTION C = 34 MARKS

20
*P75610A02028* 
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
BLANK PAGE

*P75610A02128*
Turn over
21
SECTION D
Answer ONE question from this section.

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Write your answer in the space provided.
EITHER
13 In the UK the maximum price for a unit of electricity for domestic consumers was
£0.28 per kilowatt hour in September 2022. This was increased by the Government to
£0.34 per kilowatt hour in October 2022.
Evaluate the microeconomic effects of an increase in the maximum price
of electricity.
(Total for Question 13 = 20 marks)

OR
14 Many consumers do not buy travel insurance before going on holiday abroad, despite
the likely substantial costs if they need medical care.
Many car drivers do not provide complete and accurate information to car insurance

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companies when insuring their cars.
Evaluate the microeconomic effects of imperfect information on insurance markets.
(Total for Question 14 = 20 marks)

Indicate which question you are answering by marking a cross in the box . If you change your
mind, put a line through the box and then indicate your new question with a cross .

Chosen question number: Question 13 Question 14

Write your answer here:

Information failure is where economic agents lack the information

to make optimal choices.

Asymmetric information is where economic agents have different

levels of information.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Market failure is where the market leads to an inef cient

allocation of resources.
22
*P75610A02228* 
Many consumers holiday abroad without travel insurance despite
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

substantial costs when they need medical care. For instance, many
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .
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are unaware of the possible large costs if they need to be

returned home in an emergency. This leads to underconsumption of
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

travel insurance.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Moreover, when taking out health insurance policies, many

consumers fail to declare all information. This means the policy

offered does not take account of the risks for the individual. This
means that the insurance company may end up paying out more in
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

claims. Incomplete information may result in claims being rejected.

For example, on medical or health insurance, consumers may not

declare they smoke or drink alcohol regularly, which increases the

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risk of a claim.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Also, car drivers do not tell the whole truth in their applications.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

This means that the driver is a higher risk and is more likely to
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

claim.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

When making claims the consumer may leave information out that
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

would result in a lower payout or no payout. For example, they

left the car or house unlocked or without the security alarm set.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Thus, imperfect information results in insurance companies making

larger payouts which increases their costs. These higher costs may
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mean that the insurance companies charge consumers with higher

premiums. As such, the low risk individuals may decide to not to

take the insurance which means only the high risk individuals are
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

driven to take the insurance policy resulting in adverse selection

and insurance policies being under-consumed and under-provided.

23
 *P75610A02328* Turn over
However, market failure may be reduced as the insurance
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

company can gain permission to nd medical records/contact

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doctor.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

Also, information can be provided about costs of medical

evacuation. More consumers being aware of these substantial

costs may now decide to take on insurances such as travel

insurance.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

On another perspective, consumers indeed may have full

information regarding the costs they may need to incur without

insurance but they may believe that the probability of that

happening is too low and it is a risk worth taking and instead

save the money and use it for other purposes such as tourists
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

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saving on premiums and using the money to visit more places.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

To add to it, it may be the case that consumers taking out

medical/health/travel insurance may not have the budget to pay

for the premiums.

Additionally, the internet may help close the information gap

that results in market failure.

In conclusion, market failure in insurance markets may not be as

a result of imperfect information. The main reason could be

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“irrational behavior”. Consumers seeing their family and friends

not taking out insurance policy may be tempted to do the same

(herding), also, consumers are often poor at computational skills

and can not gure out the costs and bene ts of taking out
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

policies. Plus, there could be inertia, whereby, consumers do not

want to face the hassle of completing so many paperworks in

order to take out an insurance policy.
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

24
*P75610A02428* 
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

25
 *P75610A02528* Turn over
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

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26
*P75610A02628* 
. . .. .. . .. . .. .. . .. .. . .. .. . .. .. . .. . . .. . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . ... .. ... .. ... .. ... .. ... .. ... ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... .. ... .. ... .. ... ... .. ... .. ... .. ... .. ... . .. . .. . .. .. . .. . . .. . . . . . . . . . .. . . . . . .. . . . . .. . . .

TOTAL FOR SECTION D = 20 MARKS

TOTAL FOR PAPER = 80 MARKS

27
 *P75610A02728*
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
*P75610A02828*
BLANK PAGE

28
Pearson Edexcel International Advanced Level
Wednesday 11 October 2023
Afternoon (Time: 1 hour 45 minutes)
Paper
reference WEC11/01
Economics
 

International Advanced Subsidiary

UNIT 1: Markets in Action

Source Booklet
Do not return this Booklet with the question paper.

Turn over

P75610A
©2023 Pearson Education Ltd.
Z:1/1/1/
*P75610A*
Sources for use with Section C
The market for fertiliser
Figure 1 World price of fertiliser, $ per tonne, January 2021 to September 2022

1200

1000

800

$ 600

400

200

0
Jan–21
Feb–21
Mar–21
Apr–21
May–21
Jun–21
Jul–21
Aug–21
Sep–21
Oct–21
Nov–21
Dec–21
Jan–22
Feb–22
Mar–22
Apr–22
May–22
Jun–22
Jul–22
Aug–22
Sep–22
Extract A Demand and supply
Higher crop prices in 2021 provided an incentive for farmers to increase the quantity
of crops that they grew. As a result, the demand for fertiliser increased by 6.3%

mini
compared with 2020. on
Another reason for the increase in demand for fertiliser was that governments paid 5
subsidies to farmers during the global health crisis. These subsidies encouraged
farmers to grow more crops.
Poor weather caused some factories that manufacture fertiliser to shut down for
several weeks. For example, winter storms and Hurricane Ida disrupted production in

it_
the USA. Costs of production also rose as a result of a significant increase in the world 10
price of gas.

2 P75610A

Extract B Fertiliser production and its use
Between 1960 and 2019 there was a ten-fold increase in the use of fertiliser by
farmers to increase agricultural output. Over the same period crop production
I I I
increased four-fold. Fertiliser is produced by applying acids to phosphate rock.
Phosphate rock is a finite resource and the amount available is decreasing. 5
In addition, the production of fertiliser requires the substantial use of non-renewable
resources such as gas and coal. This results in greenhouse gas emissions.
Consequently, fertiliser production is responsible for 1% of total global energy use
and 1.4% of total carbon emissions.
The fertilisers that are used on farmland are often washed into rivers and lakes. 10
This causes algae to develop and oxygen levels to decrease, resulting in a decline in

III
fish stocks. Fishermer Ctgative in
85% of the world’s supply of phosphate rock comes from just five countries. Morocco

Orin
produces 70% of total production. mum

France and Germany are the largest fertiliser manufacturers in the European Union. 15
The European Union’s tradeable pollution permit scheme applies to fertiliser
manufacturers in these countries.
Extract C Subsidies in Canada
Since 1990 the production and use of fertilisers have accounted for approximately
10% of Canada’s greenhouse gas emissions. To reach its 2030 greenhouse gas
emissions target, Canada needs to reduce its use of fertiliser. Canada’s Government is
providing subsidies of CA$ 750 million to farmers over 10 years to use more organic 5
farming methods to achieve this target.

P75610A 3

Acknowledgements
Figure 1 adapted from:
https://www.indexmundi.com/commodities/?commodity=dap-fertilizer&months=60
Extract A adapted from:
https://www.fertilizer.org/news/why-are-fertilizer-prices-so-high/
https://www.theguardian.com/business/2022/mar/08/surge-in-fertiliser-prices-adds-to-pressure-on-
uk-farmers
Extract B adapted from:
https://www.carbonbrief.org/qa-what-does-the-worlds-reliance-on-fertilisers-mean-for-climate-
change/#:~:text=The%20global%20production%20of%20fertilisers,non-CO2%20greenhouse%20
gas%20emissions.
Extract C adapted from:
‘Government seeks guidance on path towards reducing emissions associated with fertiliser’,
Agriculture and Agri-Food Canada, 3 April 2022, https://www.canada.ca/en/agriculture-agri-food/
news/2022/03/government-seeks-guidance-on-path-towards-reducing-emissions-associated-with-
fertilizer.html
4 P75610A


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