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good guidance keep it up.
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A2 ECONOMICS: Guess Paper-4
- Thread starter Qamar Baloch
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sir,when will you be uploading or sending the answers?
so then it will just be a normal demand and supply diagram but except we'll just name the demand curve as MRPL?
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normally you'll write DL=MRPL
okay thanks and also did Sir send u any of the essay answers yet,I am still waiting for his reply.
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I a
m sending those on email. send your request there. Also keep on watching here. I will post the answers which are without gaphs here.
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sir i'm still waiting for answer for question 3...already send ur request
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Dear check your mail. refrsh your inbox
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Note: Solve these questions by yourself and if there is any problem then
I will send you the solution tonight. Essay questions will be given to you 1 by 1 so that you must practice them to get good results.
1. The North Sea oil industry
The UK drills for oil in the North Sea. In 1999, production was at 4.5 million barrels a day. However, as the oil in the easily accessible oil fields was used up, production fell steadily from 1999 until it reached 3.3 million barrels a day in 2005.
Nevertheless, in 2006, many in the oil industry did not consider it to be in decline. Indeed, some of the industry’s problems were associated with an expanding industry, not a declining one. The managers complained, for example, about the shortage of skilled labour and the high rents of the oil rigs. Investment increased by 30% in 2006 and it was hoped that production would rise in 2007.
The UK government was keen to keep production high as the industry supported 250 000 jobs and had a large impact on the trade balance of the UK. One way to keep production high is to explore for new oil fields. Another way is to use every drop of oil from the existing oil fields. Sometimes a large company leaves an oil field which still has substantial amounts of oil because although it is technically possible to extract the oil, it is not profitable to do so. However, a smaller company is often able to drill profitably for the oil when it is unprofitable for a large company.
In view of this, the UK government encouraged smaller and more enterprising firms. In 2005, 152 licences to drill were given to 99 companies. These new licences gave companies exclusive rights to develop the more inaccessible oil fields for six years rather than four years as before.
Furthermore, the government also changed the rules on access to pipelines – which are often owned by large companies – so that smaller companies could get their oil to the market more easily.
The Chancellor of the Exchequer (Minister of Finance) also made changes. In 2002, he raised the tax on oil company profits to 40% from the usual company rate of 30%, and raised it again in 2005 to 50%. The justification given was that the oil companies made huge profits.
The industry is more dependent than ever on large expensive technological advances and innovation. Most of the government’s reforms recognised this.
(a) How might the North Sea oil industry have an impact on the national income of the UK? [4]
(b) From the information given, consider whether the North Sea oil industry appears to be declining or expanding. [6]
(c) What evidence is there that might explain why the North Sea oil industry is still prepared to increase investment? [4]
(d) Discuss whether the increase in the number of small firms drilling for oil contradicts the usual economic explanation of the existence of small firms. [6]
2. Income, Spending and Prices in the US
Consumer spending in the US fell by 0.8% in November 2008 and by a further 1% in December. December 2008 was the sixth consecutive month in which consumers cut back on their spending. Between October and December 2008 spending fell by a record 8.9%. Consumers were in a mood to increase their savings but not to go out and spend. Generally, that’s a good thing, but not when everyone does it at the same time.
By January 2009, the savings rate in the US had reached the highest it had been for 14 years. This increase in savings was caused by low consumer confidence and the fear of higher unemployment.
Declining consumer spending is a particularly troubling sign for the US economy, because spending accounts for more than two-thirds of GDP. GDP fell by 3.9% between October and December 2008, the sharpest decline in 26 years.
This decline in spending resulted in
– a proposed $888 billion stimulus plan from the government, including about
$278 billion in tax cuts,
– companies reducing their workforce to cut costs because of falling revenue,
– the expectation that business investment, which accounts for about one-tenth
of US GDP, would decline during 2009.
(a) What evidence is there in the data that the economic situation in the US improved after December 2008? [3]
(b) How far is there any consistent link in the data between
(i) changes in personal income and consumer spending and
(ii) changes in overall prices and consumer spending? [5]
(c) Explain why a fall in spending might be expected to lead to a fall in business investment. [4]
(d) Do you agree that a rise in savings is generally ‘a good thing, but not when everyone does it at the same time’ (line 5)? [8]
3. The Success of Supermarkets
In some countries supermarkets dominate food shopping. In the UK 75% of the food bought forhome use comes from supermarkets. A third of that comes from one supermarket, Tesco. Tesco makes billions of pounds profit, one third of which goes to the government in taxes. It employs 110 000 people in the UK and many more in developing countries.
In the past, UK shoppers queued to buy expensive food from many small shops with limited choice and restricted opening times. Now, in supermarkets, they have the benefit of a wide choice, reasonable prices, international dishes, organic produce, fair trade items, clear labels of the contents of the products and, because of intense competition between the supermarkets, some open 24 hours.
However, the media complain that supermarkets are not competitive but monopolies. They say their profits are too high, they have caused small shops to close and forced suppliers in developing countries to accept low prices and to pay low wages.
It must be remembered that supermarkets grew because they gave the customer what they wanted and aimed at certain types of shoppers. One supermarket, which started as a small shop, insisted on selling only high quality products while another offered customers low prices.
Supermarkets also adapted to changing market trends. One began to supply products with its own brand name which were sold more cheaply because there were no advertising costs. A further brilliant idea in expanding their business was the introduction of a store loyalty card. Shoppers with a loyalty card are given discounts which encourages them to continue to shop in the same supermarket.
The most successful supermarkets expanded their businesses by buying large sites to build hugestores. (They are criticised for such building, especially if it destroys parts of the countryside or environment.) They expanded into non-food products to fill these stores, making it possible for consumers to buy many household items from clothes to kitchen utensils to electrical goods in the same shop. Supermarkets have also recently introduced on-line shopping and home deliveries.
Many small shops have closed. There are bound to be casualties in retailing. How can the blame for that be the fault of the supermarket? Their size should not be a concern. It is, after all, the consumer who decides where to shop and what to buy.
(a) How has the type of market structure in food retailing in the UK changed? [3]
(b) To what extent does the article support the view that the consumer is sovereign in food retailing? [4]
(c) Explain what the various objectives of a firm might be. [5]
(d) Do you agree with the conclusion of the article that the size of a firm should not be a source of concern? [8]
I will send you the solution tonight. Essay questions will be given to you 1 by 1 so that you must practice them to get good results.
Join me: on facebook as further guidance will be available there. Thank you. [email protected]
Data Responses:
1. The North Sea oil industry
The UK drills for oil in the North Sea. In 1999, production was at 4.5 million barrels a day. However, as the oil in the easily accessible oil fields was used up, production fell steadily from 1999 until it reached 3.3 million barrels a day in 2005.
Nevertheless, in 2006, many in the oil industry did not consider it to be in decline. Indeed, some of the industry’s problems were associated with an expanding industry, not a declining one. The managers complained, for example, about the shortage of skilled labour and the high rents of the oil rigs. Investment increased by 30% in 2006 and it was hoped that production would rise in 2007.
The UK government was keen to keep production high as the industry supported 250 000 jobs and had a large impact on the trade balance of the UK. One way to keep production high is to explore for new oil fields. Another way is to use every drop of oil from the existing oil fields. Sometimes a large company leaves an oil field which still has substantial amounts of oil because although it is technically possible to extract the oil, it is not profitable to do so. However, a smaller company is often able to drill profitably for the oil when it is unprofitable for a large company.
In view of this, the UK government encouraged smaller and more enterprising firms. In 2005, 152 licences to drill were given to 99 companies. These new licences gave companies exclusive rights to develop the more inaccessible oil fields for six years rather than four years as before.
Furthermore, the government also changed the rules on access to pipelines – which are often owned by large companies – so that smaller companies could get their oil to the market more easily.
The Chancellor of the Exchequer (Minister of Finance) also made changes. In 2002, he raised the tax on oil company profits to 40% from the usual company rate of 30%, and raised it again in 2005 to 50%. The justification given was that the oil companies made huge profits.
The industry is more dependent than ever on large expensive technological advances and innovation. Most of the government’s reforms recognised this.
(b) From the information given, consider whether the North Sea oil industry appears to be declining or expanding. [6]
(c) What evidence is there that might explain why the North Sea oil industry is still prepared to increase investment? [4]
(d) Discuss whether the increase in the number of small firms drilling for oil contradicts the usual economic explanation of the existence of small firms. [6]
2. Income, Spending and Prices in the US
Table 1 Some economic indicators for the US economy
By January 2009, the savings rate in the US had reached the highest it had been for 14 years. This increase in savings was caused by low consumer confidence and the fear of higher unemployment.
Declining consumer spending is a particularly troubling sign for the US economy, because spending accounts for more than two-thirds of GDP. GDP fell by 3.9% between October and December 2008, the sharpest decline in 26 years.
This decline in spending resulted in
– a proposed $888 billion stimulus plan from the government, including about
$278 billion in tax cuts,
– companies reducing their workforce to cut costs because of falling revenue,
– the expectation that business investment, which accounts for about one-tenth
of US GDP, would decline during 2009.
(a) What evidence is there in the data that the economic situation in the US improved after December 2008? [3]
(b) How far is there any consistent link in the data between
(i) changes in personal income and consumer spending and
(ii) changes in overall prices and consumer spending? [5]
(c) Explain why a fall in spending might be expected to lead to a fall in business investment. [4]
(d) Do you agree that a rise in savings is generally ‘a good thing, but not when everyone does it at the same time’ (line 5)? [8]
3. The Success of Supermarkets
In some countries supermarkets dominate food shopping. In the UK 75% of the food bought forhome use comes from supermarkets. A third of that comes from one supermarket, Tesco. Tesco makes billions of pounds profit, one third of which goes to the government in taxes. It employs 110 000 people in the UK and many more in developing countries.
In the past, UK shoppers queued to buy expensive food from many small shops with limited choice and restricted opening times. Now, in supermarkets, they have the benefit of a wide choice, reasonable prices, international dishes, organic produce, fair trade items, clear labels of the contents of the products and, because of intense competition between the supermarkets, some open 24 hours.
However, the media complain that supermarkets are not competitive but monopolies. They say their profits are too high, they have caused small shops to close and forced suppliers in developing countries to accept low prices and to pay low wages.
It must be remembered that supermarkets grew because they gave the customer what they wanted and aimed at certain types of shoppers. One supermarket, which started as a small shop, insisted on selling only high quality products while another offered customers low prices.
Supermarkets also adapted to changing market trends. One began to supply products with its own brand name which were sold more cheaply because there were no advertising costs. A further brilliant idea in expanding their business was the introduction of a store loyalty card. Shoppers with a loyalty card are given discounts which encourages them to continue to shop in the same supermarket.
The most successful supermarkets expanded their businesses by buying large sites to build hugestores. (They are criticised for such building, especially if it destroys parts of the countryside or environment.) They expanded into non-food products to fill these stores, making it possible for consumers to buy many household items from clothes to kitchen utensils to electrical goods in the same shop. Supermarkets have also recently introduced on-line shopping and home deliveries.
Many small shops have closed. There are bound to be casualties in retailing. How can the blame for that be the fault of the supermarket? Their size should not be a concern. It is, after all, the consumer who decides where to shop and what to buy.
(a) How has the type of market structure in food retailing in the UK changed? [3]
(b) To what extent does the article support the view that the consumer is sovereign in food retailing? [4]
(c) Explain what the various objectives of a firm might be. [5]
(d) Do you agree with the conclusion of the article that the size of a firm should not be a source of concern? [8]
- Messages
- 1,260
- Reaction score
- 676
- Points
- 123
3. The Success of Supermarkets
In some countries supermarkets dominate food shopping. In the UK 75% of the food bought forhome use comes from supermarkets. A third of that comes from one supermarket, Tesco. Tesco makes billions of pounds profit, one third of which goes to the government in taxes. It employs 110 000 people in the UK and many more in developing countries.
In the past, UK shoppers queued to buy expensive food from many small shops with limited choice and restricted opening times. Now, in supermarkets, they have the benefit of a wide choice, reasonable prices, international dishes, organic produce, fair trade items, clear labels of the contents of the products and, because of intense competition between the supermarkets, some open 24 hours.
However, the media complain that supermarkets are not competitive but monopolies. They say their profits are too high, they have caused small shops to close and forced suppliers in developing countries to accept low prices and to pay low wages.
It must be remembered that supermarkets grew because they gave the customer what they wanted and aimed at certain types of shoppers. One supermarket, which started as a small shop, insisted on selling only high quality products while another offered customers low prices.
Supermarkets also adapted to changing market trends. One began to supply products with its own brand name which were sold more cheaply because there were no advertising costs. A further brilliant idea in expanding their business was the introduction of a store loyalty card. Shoppers with a loyalty card are given discounts which encourages them to continue to shop in the same supermarket.
The most successful supermarkets expanded their businesses by buying large sites to build hugestores. (They are criticised for such building, especially if it destroys parts of the countryside or environment.) They expanded into non-food products to fill these stores, making it possible for consumers to buy many household items from clothes to kitchen utensils to electrical goods in the same shop. Supermarkets have also recently introduced on-line shopping and home deliveries.
Many small shops have closed. There are bound to be casualties in retailing. How can the blame for that be the fault of the supermarket? Their size should not be a concern. It is, after all, the consumer who decides where to shop and what to buy.
(a) How has the type of market structure in food retailing in the UK changed? [3]
(b) To what extent does the article support the view that the consumer is sovereign in food retailing? [4]
(c) Explain what the various objectives of a firm might be. [5]
(d) Do you agree with the conclusion of the article that the size of a firm should not be a source of concern? [8]
In some countries supermarkets dominate food shopping. In the UK 75% of the food bought forhome use comes from supermarkets. A third of that comes from one supermarket, Tesco. Tesco makes billions of pounds profit, one third of which goes to the government in taxes. It employs 110 000 people in the UK and many more in developing countries.
In the past, UK shoppers queued to buy expensive food from many small shops with limited choice and restricted opening times. Now, in supermarkets, they have the benefit of a wide choice, reasonable prices, international dishes, organic produce, fair trade items, clear labels of the contents of the products and, because of intense competition between the supermarkets, some open 24 hours.
However, the media complain that supermarkets are not competitive but monopolies. They say their profits are too high, they have caused small shops to close and forced suppliers in developing countries to accept low prices and to pay low wages.
It must be remembered that supermarkets grew because they gave the customer what they wanted and aimed at certain types of shoppers. One supermarket, which started as a small shop, insisted on selling only high quality products while another offered customers low prices.
Supermarkets also adapted to changing market trends. One began to supply products with its own brand name which were sold more cheaply because there were no advertising costs. A further brilliant idea in expanding their business was the introduction of a store loyalty card. Shoppers with a loyalty card are given discounts which encourages them to continue to shop in the same supermarket.
The most successful supermarkets expanded their businesses by buying large sites to build hugestores. (They are criticised for such building, especially if it destroys parts of the countryside or environment.) They expanded into non-food products to fill these stores, making it possible for consumers to buy many household items from clothes to kitchen utensils to electrical goods in the same shop. Supermarkets have also recently introduced on-line shopping and home deliveries.
Many small shops have closed. There are bound to be casualties in retailing. How can the blame for that be the fault of the supermarket? Their size should not be a concern. It is, after all, the consumer who decides where to shop and what to buy.
(a) How has the type of market structure in food retailing in the UK changed? [3]
(b) To what extent does the article support the view that the consumer is sovereign in food retailing? [4]
(c) Explain what the various objectives of a firm might be. [5]
(d) Do you agree with the conclusion of the article that the size of a firm should not be a source of concern? [8]
- Messages
- 1,260
- Reaction score
- 676
- Points
- 123
Note: Guess means something predicted based on experience and evaluation skills. It can never be the actual keep it in mind. According to my speculation Examiner will ask the same questions but with different statements. But the same knowledge will be tested InshaAllah. Those who are very week in studies are advised to learn at least Q.1, 3 and 5.
V.V.V.V.V Important questions 1, 3 and 5. Don’t forget to revise them. I wish all of you best of luck!
and that its central bank, through its interest rate policy, had prevented an
increase in inflation despite a sharp rise in oil prices.
(a) Explain what might cause unemployment. [12]
(b) Discuss how interest rate policy might prevent a rise in inflation. [13]
2. (a) Explain the factors influencing the level of investment in an economy. [10]
(b) Discuss the extent to which national income is determined by private
investment. [15]
3. Discuss how far the GDP figure might be used to determine whether one country
has higher living standards than another. [25]
4 Airbus, a large aircraft manufacturing company, announced in 2007 that its goal
was to increase its $475 million research budget by 25 % in order to try to develop
a more environmentally friendly aircraft that had lower fuel consumption.
(a) Explain why Airbus is likely to be in an imperfect rather than a perfect market
structure. [10]
(b) Economics textbooks sometimes criticise firms in imperfect competition as being
against the public interest. What does this mean, and how far does the Airbus
announcement prove the textbooks wrong? [15]
5. Discuss what might cause inequalities in wage rates in an economy. [25]
6. In 2009 there were huge fires in Australia which destroyed much property and
countryside.
The government promised to allocate a large amount of money and resources to
help with the restoration of the area.
(a) With the help of diagrams explain what is meant by efficiency in the use of
resources. [12]
(b) Discuss the economic implications of the government’s approach to the situation. [13]
7. Most governments aim for full employment and stable prices. Which of those two aims should your government seek to achieve in the coming year and how might this choice affect the other aim? [25]
V.V.V.V.V Important questions 1, 3 and 5. Don’t forget to revise them. I wish all of you best of luck!
Section B
1. In 2006 it was reported that a country’s unemployment rate had remained steady and that its central bank, through its interest rate policy, had prevented an
increase in inflation despite a sharp rise in oil prices.
(a) Explain what might cause unemployment. [12]
(b) Discuss how interest rate policy might prevent a rise in inflation. [13]
2. (a) Explain the factors influencing the level of investment in an economy. [10]
(b) Discuss the extent to which national income is determined by private
investment. [15]
3. Discuss how far the GDP figure might be used to determine whether one country
has higher living standards than another. [25]
4 Airbus, a large aircraft manufacturing company, announced in 2007 that its goal
was to increase its $475 million research budget by 25 % in order to try to develop
a more environmentally friendly aircraft that had lower fuel consumption.
(a) Explain why Airbus is likely to be in an imperfect rather than a perfect market
structure. [10]
(b) Economics textbooks sometimes criticise firms in imperfect competition as being
against the public interest. What does this mean, and how far does the Airbus
announcement prove the textbooks wrong? [15]
5. Discuss what might cause inequalities in wage rates in an economy. [25]
6. In 2009 there were huge fires in Australia which destroyed much property and
countryside.
The government promised to allocate a large amount of money and resources to
help with the restoration of the area.
(a) With the help of diagrams explain what is meant by efficiency in the use of
resources. [12]
(b) Discuss the economic implications of the government’s approach to the situation. [13]
7. Most governments aim for full employment and stable prices. Which of those two aims should your government seek to achieve in the coming year and how might this choice affect the other aim? [25]
- Messages
- 1,260
- Reaction score
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Fazila
perfect product market refers to the perfect competition in market structure where entery of new firms into the market is free, exit is free, prices are same all shops. and products are homogeneous etc.
Perfect factor market is perfect competition in labour market where labour is a factor (factor of production) where entry and exit of labour is free and wage rate is same and labour is taken as a homogeneous factor means all workers are considered to be equally efficient etc.
perfect product market refers to the perfect competition in market structure where entery of new firms into the market is free, exit is free, prices are same all shops. and products are homogeneous etc.
Perfect factor market is perfect competition in labour market where labour is a factor (factor of production) where entry and exit of labour is free and wage rate is same and labour is taken as a homogeneous factor means all workers are considered to be equally efficient etc.
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i only got solution for question 7....
- Messages
- 1,260
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- 123
Fazila
You have to explain types/causes of unemplyment in 1a. those are;
1. Cyclical
2. Transitional or frictional
3. structural
4. seasonal
5. Technological
6. Residual
7. Classical
8. voluntary and
9. Hidden etc
You have to explain types/causes of unemplyment in 1a. those are;
1. Cyclical
2. Transitional or frictional
3. structural
4. seasonal
5. Technological
6. Residual
7. Classical
8. voluntary and
9. Hidden etc
- Messages
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Ok dear I will check it
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@ hychrisitne
I would be posting answer for q3 on xtremepapers. It includes no graph.
I would be posting answer for q3 on xtremepapers. It includes no graph.
- Messages
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@chiristine
Keep watching here.
Keep watching here.
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@ chiristine
I think you have done all other questions. If not then do those first which are provided to you to save your time.
I think you have done all other questions. If not then do those first which are provided to you to save your time.
please upload them quickly sir,exam less than 24 hours away.
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@ fazila
Its good that you have got the concept easily. It shows that you are a good student. Nice
Its good that you have got the concept easily. It shows that you are a good student. Nice
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