A-level Economics Paper 1 (Edexcel) unofficial markscheme - 15 May 2024

All the questions and answers from the 2024 Edexcel A-level Economics Paper 1, according to the students who took it

After the Edexcel A-level Economics Paper 1 on 15 May 2024, The Student Room community came together to create an unofficial markscheme of questions and answers.

You can see the whole markscheme below. This is a collaborative effort that is 100% unofficial - there is no guarantee that the questions and answers in this are complete or correct.

It's been created by students who sat the exam, based on the questions they remember from the paper and their consensus on the likely answers.

Hat tip to all of the dozens of members of The Student Room who contributed to this, and good luck with your own A-level Economics studies.

Question number


Answer and discussion


1(a) PED of demand for bus travel (0.7 for studens 18+ / 0.4 for adults) explain difference SIDE NOTE: did anybody else think it was the other way around i'm pretty sure PED for adults was 0.7.. more responsive to changes in price + yes I'm sure it was the other way round The ped for adults was more inelastic than the ped for students. This is because adults have more stable disposable incomes than students. Therefore adults are more likely to afford the bus tickets than students if prices were to increase. 4
1(b) what is the PED of B 1
2(a) PES of housing in New York (inelastic) vs Texas (elastic) explain difference Low PES in New York - Availability of land, restricted land in New York, longer delays in getting planning permission, shortages of skilled labour Texas - Land for housing development is much greater, more elastic supply of labour such as construction workers from Mexico. 4
2(b) pes 1.8 texas, price increases by x amount D 1
3(a) draw a c&r diagram showing the objectives profit max. and rev. max. simple C&R diagram with profit max. at MC=MR and rev. max. at MR=0 4
3(b) changes objective to sales max. --> MCQ A at AC=AR 1
Q5 Likely market struture of the mortgage market oligopoly, calculate 3-5 firm concentration ratio and say few large firms dominate the market/ interdependence
Could also have equally argued monoplositic to due to many firms with small shares of 10% etc
Q4 Max price for unis (Not sure what the multi choice was pls lmk)- pretty sure it was like something about excess supply or distortion of price signals - cant be excess supply as with max prices there is excess demand- answer was distortion of price signals (max. price diagram if needed) increase consumer surplus, lower price for higher education, more people incentivised/able to go to uni, increase occupational mobility of long-term labour- University education is a merit good therefore the benefit to society is greater than the benefit to the individual, this is because by going to university you are getting a better education, resulting in a higher skilled workforce whihc benefits society. Therefore the government want to increase the provision of the good so that more people can access and the benefit to society can be maxmised 4
6b Anyone remember what the CMA question roughly was? type below. Relative wages rates (e.g. software designers can work in different industries), Impact of skilled work visas for a country. i did elasticity, I did skills, I said availability of higher education opportunities to gain qualifications (???) 2. can also add retirement age and non-monetary benefits of the job eg analytical not repetitive. Also the time period / training period to become specialised to produce the "technical" goods. 8
  Analyse why the CMA might have concerns about the merger between the two firms in Extract C Nvida and Arms First Point - Deacreased competition so deacreased choice for firms + potential increases in price with no increases in chip innovation. Second Point - Potential creation of an oligopoly and so collusion as with the merger the only major market players are Intel, AMD and the new merged firm. Evaluation - There are still other firms in the market not just the merged firm, Intel and AMD make general purpose chips whereas Nvidia makes graphical chips so different markets so no collusion 12
6(a) Asses the likely reasons for the change in prices of electronic devices. include a supply and demand diagram in your answer Demand side: growing popularity of home entertainment (tastes and preferences) Supply side: rising costs. So demand shifts out, supply shifts in, higher price 5
6c Do electronic companies benefit from economies of scale 1) i said about the automation casuing technological scales and cause average cost per unit of output to decrease and ev for that was due to engineers need problem solving skills and analysis might cause the production to dealy and communication issues and for the second point i talked about lack of needing of engineers would help cause the cost of production to decrease due to lower wages and eval for that point was high cost for capital intensive production meaning that they would take time to repay the amount back so cost per unit might be high 2) purchasing economies of scale AND external economies - e.g. Epic Games' Unreal Engine means other games developers don't have to make their own engine, positive spillover effects, LRAC shifts downwards

i thought it was the industry of electronic devices or something, am i wrong?

6e Government intervention to reduce electronic waste   15
  was this a negative externality of consumption or production???????????????????????????????? -BOTH ISTG i talked about how the goverment can increase the taxation (drew the externalities diagram and said that it goverment would get more tax revenue to help internalise the exernalities the evauliation for that point was the the electrical components was inelastic meaning that the firm would push the cost onto consumers cause gov failure another point was that the goverment could increase regulation such as fines that would cause increase in firms incentive to invest into being more efficent to reduce waste and hence cause them to reduce waste eval was they may be less incetivesed and leave the industry causing loss of gov tax revenue and less choice for consumers and the final point was information provision such as provide them with information this would help them recyle and hence reduce waste eval was habitual; behavior

i did your first point - for my second point i talked about subsidising firms to help promote green innovation of components of electronic devices - drew a subsidy diagram said how subsisdy incentivised research and devevlopemnt ,leading to better technology eval was that there is an opportunity cost , and better provision and soedning of funding like info campaigns

    Tax firms to increase their costs to make them operate more effectively by switching to less wastage making the tax more effective. TWE - Firms like Nvidia are Monopolys so can suffer the cost increase. Also Subsidise schemes to decrease wastage through s+d diagram & theory of firm decreasing costs to increase SNP for firms to be reinvested into wastage schemes therefore decreasing EC MSC -> MSC2 which is Government efficiency MSC=MSB. TWE - Firm takes subsidy and uses it for own firm investment rather than the schemes

Me personally despite not referenced in the extract i did minimum price scheme due to the easy eval that it distorts price signals, signalling producers to further create electronics which is government failure and in turn leads to more e waste

    I talked about trade pollution permits is it valid?  
    for evaluation i went on a tangent about how gov int could lead to gov failure regarding negative externalities am i screwed  
6d Concerns over the takeover of Arms by Nvidia   12
  ^ report to edexcel this question stupid, why it makes sense doesnt it? no they aint rivals    
  Edexcel fucked up they aint rivals g - realhttps://www.linkedin.com/pulse/nvda-vs-arm-chad-aitken-1e/ " In summary, while both strong technology companies, Nvidia and Arm operate in very different chip segments making them complements rather than head-to-head competitors" I said that one concern is whether the merger would could a significant decrease in competition and I couldnt finish the second point, but mentioned the exploitation of consumers. Hope its valid  
7 Evaluate the effect of increased energy bills on the hotel industry or any other industry of your choice (25) 1. Inefficiency since cost rises, firm is unable to operate at the lowest cost level (MC=AC), hence productive inefficiency. Feed into that is a shrink in profit, hence firms are disincentivised to operate efficiently. However, firms tend to be profit maximised, so no efficiency initially, offsets the discussed inefficiency arising from increasing billing
2. Market might be prone to being less competitive -> could lead to oligopoly in the long term. Small firms have less procurement ability compared to big firms -> small suffer more; big firms have economies of scale, being able to spread all the costs over more units -> big suffer less. Hence, long-run shut down might happen to small firms -> elimination of firms, deter new entrants -> industry turned oligopoly -> inefficiency, against consumer championship. However, hotel industry is seasonal -> small firms exploiting revenue streams during peak seasons and retaining profit to pay off energy bills during other times of the year might prevent themselves from shutting down and the whole discussed the situation.
Conclu: bla bla those micro effects can happen. However, energy bills might differ between regions -> the discussed effect might not occur to the whole industry. Also, price rise is likely to happen in a certain amount of time -> the discussed long-term effect might not be happening.
    first point was increase in costs (drew c&r diagram with shift up in MC and AC), decrease in SNP, less investment, drop in service quality, or lower consumer satisfaction. eval was larger chains, like HolidayInn have more bargaining power, so can negotiate lower prices. second point was could lead to smaller firms leaving the market due to higher costs and not being able to sustain them, therefore, higher market share for larger firms, and potential monopoly (drew shut-down point diagram with AR<AVC). eval for this was government may subsidise smaller firms in order to prevent anti-competitive ideals and keep competition. someone tell me if this all makes sense?  
    1) Increased cost of energy is variable, therefore mc and ac shift up, this causes reduction in snp, if this carrries on increasing and the firm cannot cover varibale costs in the SR or AC in LR shut down points will occur- Eval:government freezes energy bills with max price 2)Small independent firms leave market as they cannot afford it-results in larger firms who can afford hihgh energyer costs dominating-results in loss of contestability in the market-larger firms gain share and increased revenue, MR and AR curves increase as (i did farming as industry) vegetables have inelastic PED therfore if price increase demand wont change, therfore increased revenue for thes firms. Eval: government porvides subisidies for small firms to encourage contestability within the market Judgment) Increased energy costs negative effect on small firms. However increase use of renewable energy sources will reduce reliance, installing solar panels on farms fields, means they dont fall victim to rising energy costs  
7   I chose healthcare industry. 1.Did one point on nhs and how if energy prices increased the government would have to fund it by increasing tax revenue or cutting spending in other areas. If they didn’t hospitals essential equipment wouldn’t be able to be used cus it needs electricity and how that negatively effects consumers (it’s the public side of the healthcare’s industries goal to look after patients). Did a tax diagram and said they could fund it by taxing cigarettes and other goods that have negative externalities on health. Then showed government revenue on the diagram and how it would increase if vat went from 20% to 30% on de merit goods. 2.Then evaluated that by saying the government could intervene and put a max price on energy. But this has drawbacks to energy firms incentives to be dynamically efficient. Drew max price diagram. 2.Then second KAA was how private healthcare firms would go from making supernormal profits so potential subnormal profits if energy prices kept rising as MRI scanners etc require so much electricity. Did a cost revenue diagram to say they would leave the industry. Showed how variable costs increase both MC and AC on the diagram and the effect of this on consumers surplus (private healthcare would get more expensive).2. Evaluated the impacts may not be as large if private firms have retained profits as they won’t need to shutdown. Also large firms can benefit from economies of scale so the impact of energy prices won’t cause them to shutdown. Then did an externalities diagram and explained the negative consequences of what would happens to consumers welfare (socially optimum point) if hospitals in the private sector shut down. 25
8 Bytedance owning Tiktok - perfume - Evaluate the level of contestibility of the fragrance industry or an industry of your choice Brand loyalty + irrational behaviour // legal barriers // marketing barriers // 25
    i did one paragraph on monopolistic competition and one on monopolies. Am i cooked ?  
    ur so cooked  
    ur cooked bro they asked for one market not two  
    your not alone im cooked ony 25 marker would be over the moon if i got more than 10/25 that was the worst 25 i have ever done was so simple but stress and the universe had other plans my points were valid leading do decrease in allocative efficeny some firms leaving the market but my second point was similar to my evauation of lower levels of contestability eval was 1 line or 2 (didnt make sence when i read it back about firms cross subisidising ) DIDNT EVEN RELATED IT TOO MUCH TO THE CASE STUDY AND DIDNT USE ANOTHER FIRM cook in a understatement to that 25 marker might as say i bottled the chance to get a A just like how arsenal bottle the league LMFAOOOOO this paragraoh is too funny bro

need west ham masterclass on sunday right before paper 2 - couldnt agree more COYG!

    unlucky mate  
    i did one paragraph on monopolistic competition and one on monopolies. Am i cooked ?  
    i did one paragraph on monopolistic competition and one on monopolies. Am i cooked ?  
    KAA1: I wrote about the supermarket industry and how Tesco is a monopoly with 27%, so they have high barriers to entry and can exploit economies of scale using their bargaining power to lower costs. (also talked about monopsony power negotiation lower wages) which would decrease MC and AC, so smaller supermarkets may not be able to compete with larger ones. Also talked about Aldi Price Match so costs are very low. Smaller rivals cant enter the market or compete with incumbent firms, operate below SR shut down if try to compete so leave market. So high barriers of entry due to large EOS  
    EV: Niche stores have become more popular with Polish corner shops, increased brand loyalty to these shops as more homely?? Inelastic demand? Increase rev increased AR and MR, can easily enter market and compete  
    (icl i was waffling bare does this make sense)?  
    KAA2: Brand loyalty to Large chain supermarkets, habitual behaviour  
    EV: With rise in online distribution, its easier to sell things online without having to worry about high sunk costs like promotion, so barriers to entry low  
    I did supermarkets too!! so glad to see other ppl talking about this cuz I was worried I picked the wrong industry thus got cooked  
    thank god, icl my 25 marker lacked graphs at the end though like i feel like my points arent as strong but just gotta pray now  
    Airline industry was looking more easy to write about though, could have talked about colluding and pay off matrixes  
    I wrote about the sneaker market and how nike has a monopoly which i guessed was 30 percent so close to their acc of 37. I mentioned high barriers to entry because of machinery cost. advertising spend and put in a negative production externalities diagram saying the gov might add tax to incentivise competition also adding that small sustainable sneaker retailers might find some success in the market but may not suceed because of EOS and imperfect info.  
    I didnt use a diagram in 25 am I cooked?  
    i did coffee shop industry how it can be monopolistic and oligopoly is this ok??  
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