Edexcel A-Level Economics Paper 1 - Unofficial Mark Scheme - 18 May 2023

A-level students have compiled this list of questions - and their answers - from the Edexcel A-level Economics Paper 1

Following the Edexcel A-level Economics Paper 1 on 18 May 2023, The Student Room community has created an unofficial markscheme of questions and answers.

This has been put together by students who sat the exam today based on the questions they remember from the exam and their consensus on the likely answers.

Kudos to The Student Room member Nicholson1882 for starting this off - as well as dozens of other members who contributed.

Question number 





Explain one benefit of a free-market economy

Free market definition 

Efficient allocation. Competition and innovation.

My answer was an increase in employment as per the provided information as firms try to push down their costs and compete better. + 1

I put more consumer sovereignty? 


My answer was Free Markets allow for increased levels of private ownership(As the blurb at the top was about a country expanding their small private businesses) 


My answer was an increase in private resource allocation. Businesses are more catered to consumer interests which increases consumer choice

Consumer sovereignty so consumer welfare is maximised

4 Marks


Which economist advocated for a command economy

Karl Marx

1 Mark





2 Marks


Loss-making monopolistic competition diagram in the SHORT-RUN



4 Marks


i used a different diagram tbh it’s the same but i included avc

Should be fine as long as making losses  


YED of a luxury good is likely to be? 

D +3.50

1 Mark


Loss to producer surplus 

It was the trapezium above the triangle, the letters were G,E,Pe,P1

Think it was C +1 +1 +1 +1


Think it was A


I think this diagram suggests it was A


Can sum1 actually answer this once and for all ffs ( A or C?)

Cant be C because the firm is not going to produce all the way up to the end of supply (400 on diagram^) so A?

Bro i dont facking know anymore. I put A i think but i was calculating for consumer surplus so im hella confused
Pretty sure it is A since you had to find the change 2nd diagram - 1st diagram u get A 


DWL is still a loss to producer surplus even if it isn’t a consumer surplus gain so that diagram image is misleading, pretty sure I put C, but was the question not producer surplus gain? I’m so confused

Yes im definitely sure it was a GAIN to producer surplus not loss?

Honestly I thought every answer was wrong and put A


Bro this questions was just bull. Im pretty sure most would be able to  state the producer surplus of the diagram, but i was running out of time and the question was so complicated for no reason




1 Mark


opportunity cost of producing at X instead of Y?

2-1  = 1 unit of oats (It didn't say show your working out did it?)


Surely if they gave you the diagram there was no need for working out as it is primarily visualising it 

2 Marks


what would lead to production at point Z?

B - An investment in modern farming technology.

1 Mark


What is point W on the PPF

Wrong question

It was an inefficient allocation of resources. Factors of production are not being fully utilised. I put productive inefficiency due to an underutilisation of factors of production.

2 Marks


Effect of a price increase on consumer surplus  

Consumer surplus decreases as the amount the consumer actually pays increases 

2 marks


Why do public sector nurses earn less than private sector nurses (monopsony)?

Monopsonies describe when there is one buyer in a market like the NHS. Nurses might be earning less because monopsonies profit maximise at MC = MRP instead of offering the competitive salary of AC = MRP.


I think you had to talk about how the NHS was the sole buyer of the healthcare market so monopsony. Since it’s a monopsony, workers dont have much bargaining power so the burden of higher cost cause of diseconomies of scale like bureaucracy, meant that the NHS gave the burden of costs by lowering wages. And private sector competitive market so they have to stand out so they offer higher wages compared to public sector.


could you also say that private firms are incentivised by profit, and therefore earn more profits so pay their workers more? idk i was struggling to remember shit lol - someone help lol did i make this up

Isn’t that monopoly?- no the question spoke about MONOPOSNY power, ur answer needs to talk about monposny power 


Gov is monopsony buyer of nurses

Yeah NHS 


Did anyone mention that public services are often subject to harsher rules on industrial action like minimum service levels or is that irrelevant? Total price takers 


MC curve of monopsony means they have to pay all nurses a higher wage, too costly to do so. Private sector firms don’t employ that many nurses so they can afford to increase wages much faster, as it costs much less



Just a note on the above diagram - don’t worry if you didn’t use it! It’s not actually on the Edexcel spec 

4 marks


Ratio of public to private


Ratio of private to public

1.04 VS 0.97

(heavily debated - do not change)

does anyone remember the wording  of the 


I remember the private curve was above the public one if that triggers any recollections 

Almost certain the wording was public to private as i double checked - If it was public to private the answer would be 0.97 im pretty sure


I checked the question several times, I am almost certain it’s 1:1.04. 1 should always be the lowest number in a ratio right?


The answer was 1:0.97 as the question asked private sector vs public: the private sector was 118 and public was 114. As all the ratios began with 1, this means that 114 needed to be divided by 118, 114/188 gives you 0.96 recurring: thus the ratio would have been 1:0.97


Just talked to a bunch of my friends and they put down C (1:1.04) so im pretty sure its 100% C

1 mark



What is the likely market structure of streaming services in the UK?

Monopoly - Amazon had 25.9% Market Share.

CMA definition is over 25%


Not a monopoly it was an oligpoly as the three firm concerntration in 2022 was 57% ish, making it an oligolpoly as the higher the CR the more barriers to entry, 

4 firm concentration ratio of 68.4%

5 firm was like 72 but THE TABLE WAS NOT IN ORDER OF MARKET SHARE GUYS. Probs two application marks for correct calculation of a high concentration ratio 



What is likely cross elasticity of demand between streaming services in the UK?

Give a numerical value

The XED is likely to be a positive greater than one as streaming services are close substitutes.


Argument they might not be close substitutes due to exclusivity agreements and niches (ie. Britbox). Might be positive but less than one.


Point 1 - XED will be positive as they are substitutes

Point 2 - XED is likely to be a higher number as overlap of services - suggests they are close substitutes

Eval - Differentiation - not close substitutes - could be complements as people who watch more TV are likely to have subscriptions to more than 1, whereas people who watch less TV may have neither



Are Netflix subscribers likely to be rational?

To be rational is to act in a way that maximizes one's own utility.


Yes - 200,000 cancellations after costs of living rose.

No - many forget to cancel subscriptions (computational weakness) I wrote they forget to cancel and due to inertia.

Yes - Netflix may have higher quality (higher choice of films) extra cost and therefore justifiable to pay 

No - Many had to turn their back on Netflix because of the cost of living crisis, not necessarily because they didn't like it - may decrease utility thus not maximising utility and acting rationally (IS THIS GOOD? THIS IS WHAT I COUNTERED WITH)

     - Many stick with Netflix despite AppleTV / Amazon offering lower prices and there being little to no differences in quality of services. (consumer inertia due to “binge-watching”) Diminishing marginal utility as they watch more shows 

Eval was: the data relates to changes in demand relate to quality, not price. So we can’t make a statement on XED. Agree?

EV: not rational as despite amazon offering a lower price, consumers may still remain with netflix


Does anyone agree with the evaluative point that many cancelled Netflix but switched to Disney? Perceived better value for money but still irrational for luxury goods in cost of living crisis? I wrote something similar talking about maximising utility as Disney+ was lower price but with higher satisfaction rates


I wrote 

KAA as no they are not rational as they have weakness at computation (not reading the terms and conditions/ small print) thus not understanding that they would acc pay for a subscription cause they forget to cancel it thus not maximising utility.

EVAL as yes they are rational as they are switching from netflix to disney plus (disney plus market share when from 21.5??? To higher while netflix went from 15 to 4.5. Showing they are actually acting rationally

Lmk what yous think??



Evaluate external benefits and private benefits of watching educational TV programmes/using educational websites


A private benefit of educational websites like BBC Bitesize is a reduction in information gaps/asymmetric information as many students are unaware of how to get into elite educational institutions/private schools. Draw costs and benefit diagrams with MPB curve (partial information) and MPB curve (full information). 


MPB: better equipped for exams helping the be successful 


External benefit = increased consumption of educational websites leads to greater knowledge, better performance on exams like GCSEs -> higher education  -> increased quality of workforce eg doctors etc

HOWEVER, firms usually require qualifications higher than GCSEs. Just because students become more knowledgeable in GCSE subjects and perhaps get higher grades, this does not ensure they will obtain high A-Level grades in new subjects or end up completing and graduating from University. (GOOD?) - (bitesize has stuff for A Levels / Uni too :/ ) FUCK extract said only for ages 5 to late teens so point stands. YEAH BABY.


: Greater awareness of social responsibility such as reducing impact on climate change 


Can it be argued there’s an external benefit from a more efficient and educated workforce? YES Lower costs due to more productive workers with higher MRPL/human capital mean more consumer surplus for all and more money for R&D increasing welfare which has positive externalities in 

production it itself. However, this assumes the money is being reinvested in the public interest and not frittered on an x-inefficient corporate culture of private jets! Not sure if this is right, thoughts? I think so - I said the same thing about costs and then evaluated by saying more educated workers might demand higher wages which if demand was inelastic would lead to higher costs for firms instead of lower. I said the same. 


I said reduced labout market immobility as people will get better grades in their exams therefore more qualified and can get a job more easily - spoke to my teacher and she said that was good


The consumers are children so have bounded rationality as they may not be aware of the potential private benefits?



Price discrimination impact on profits of firms

Distinction between short-run profits and long-run profits. Draw 3 graph price discrimination and explain how total revenue would be greater than market’s total revenue.

  • SNP to reinvest into bettering consumer experience/quality of service -> more and more profits 

  • Cross-subsidisation for lower-earning markets. Can use funds earned in Britain/America/west to increase WIFI access in places like India + take advantage of growing Indian incomes → more netflix demand long term

  • Ethics: some individuals may be fine paying more than others but many consumers will also be put off by price discrimination.

  • Take advantage of rising Indian incomes. Since India has 1.4 billion people, it may be wise to focus on revenue or sales maximisation rather than profit maximisation there since it will reach a large number of people and in the future when people have brand loyalty and habitual buying, prices can be increased.

  • VPNs: With the 2020s being famous for the rise of VPNs such as NordVPN and ExpressVPN, many people can pay the lower Indian rate instead of their home country’s rate especially as the payment is made online. Wow some of u lot are smart… how tf u think of this → it just came up in my head as I did the exam lol (thank you nordvpn sponsorship ads) LMAO



  • If my points were right but i got elastic and inelastic mixed up, what score will i get? 

  • WDYM? how did you mix them up?

  • Could you say as a point price discrimination may see lower revenues if information failure leads to firms being unable to accurately gauge the elasticities of groups, covid produced abnormal data. Evaluate with the lack of menu costs for digital firms that can alter prices on the fly, and may even gain brand loyalty if they appear to relent to price complaints if they choose to back down? Really not sure on this and I’m worried!- No this isnt correct to use as a KAA; only useful as EV as shows that price discri isnt effective but the question didn’t ask you whether it was effective, just the impact on profit - this is suggesting poorly implemented price discrimination will lower profit. Did you have to argue it would cause profits to rise? I did do that in point 1 (three panel diagram evaluated with costs associated with preventing seepage), this was KAA2. Are you sure this is invalid?

  •   Did anyone mention arbitrage and seepage in terms of sharing passwords and how cracking down on this has cost Netflix admin costs?- yes only as an evalu pint t why price discrim is not effective - YES I DID THIS TOO

  • Anyone else argue it for Netflix not Amazon Prime?????


(3 graphs for price discrimination)

Combined SNP of 2 groups is higher than total market SNP


Amazon Prime gains more profit from inelastic demand of normal subscriptions

H, consumers could avoid paying higher price, e.g family using child’s student email - loss of potential profit


More profit from students as their low income - subscription is high proportion of income - elastic demand - will demand more at student price - increasing profit


H, depends if students see it as a necessity or luxury - Amazon prime may also provide essential goods - so some students may be willing to pay higher goods if necessity - loss of profit



Evaluate government intervention to reduce energy prices.


 K is more for water, no? What’s K 

K stands for investment, OFWAT is just the most famous user 

  • Regulation - Could have used OFGEM FOR APPLICATION AND BRITISH GAS HAVING A MARKET SHARE OF 29.6% (some lee way here) 👍 MAXIMUM PRICE Can introduce price caps which will increase consumer surplus BUT may harm gas firms in long term as they’ll have less supernormal profits to stay dynamically efficient and competitive → many gas firms may shut down which can harm consumers in long run

Nationalisation - Can nationalise gas firms to attempt to make them fairer for consumers BUT may cause X-inefficiencies + may be politically driven

Subsidisation - Subsidising gas can lower prices and it shifts supply to the right BUT will put more burden on taxpayers

Price regulation (RPI-X)- lower price for consumers, reduces fuel poverty. BUT lower supernormal profits, therefore decrease in dynamic efficiency 

Maximum pricing

Cut in indirect taxes on energy bills- for example: VAT reduction rate 

I said information provision so they switch providers leading to more competition and less inertia is this ok?


How fucked am I if I kept referring to excess demand but calling it excess supply? Will it totally invalidate the eval or just drop it a mark or two,

Completely fucked as invalid af, bro.

To be clear, there’s an accompanying diagram so they’ll see what I mean and I elaborate on the impacts of excess demand - I just keep referring it to by the wrong name. Am I definitely fucked?



Evaluate government methods of intervention to reduce carbon emissions from cars in the UK

Indirect tax on consumers’ cars producing carbon emissions. 



Tax shifts MPC curve in line with the output of the social optimum. Reduced quantity, higher price. Some consumers will be unable to afford the tax or be disincentives and have to switch to public transport. (LDN -> GLA 3.3x less emissions) 

HOWEVER - Difficult for government to work out the level of tax that should be imposed. How do you quantify CO2 emissions in monetary value?? Also, government may not have perfect knowledge on the level of emission produced by each car. Volkswagen Emission Scandal - 2015, VW lied about how many emissions their car produced to stay in line with laws and regulations. If governments have asymmetric information then the tax may not be sufficient enough to internalise the negative externalities.  VERY GOOD. ESPECIALLY THE CONTEXT!!!


TPP - increased costs to car manufacturers -> increased incentive to switch production to EVs -> decreased externality of production? -> also could pass on higher costs to consumers so less demand for cars


carbon tax - I used indirect taxation on the production of petrol cars or an increase in fuel duty. Hypothecated

Subsidies to trains - HS2 and other competitive substitutes, less people using cars. 


subsidies to EV - Yeah I wrote this and drew the subsidy diagram of supply shifting to the right and said electric cars would pollute less.


Conclusion - On the  whole, an indirect tax would be more effective than a subsidy as an indirect tax also brings in government revenue. The government can use this to fund subsidies so indirect taxes can be employed in association with subsidies, but indirect taxes are a better standalone policy since they also hike prices. This reduces quantity and improves social welfare by getting rid of the deadweight welfare loss triangle.

25 Marks


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