: Pearson Edexcel past-paper questions pack

Market failure and externalities

Past-paper questions pack

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Questions are numbered; the mark schemes (the answer key) follow on separate pages so the question pages can be handed out alone. www.economicsaleveltutor.com

Pearson Edexcel AS and A-level Economics past-paper questions since 2016 · 38 parts · mark schemes follow the questions · www.economicsaleveltutor.com · Questions and mark schemes © Pearson Edexcel

1. June 2025 · AS Paper 1 · Q3(b) · 1 marks ·

(b) Which one of the following is the most likely reason why a free market fails to achieve the social optimum position? (1) A Public goods are provided free of charge to users B There is overproduction of goods with external benefits C There is underconsumption of goods with external benefits D There is underproduction of goods with external costs

2. June 2025 · Paper 1 · Q3(b) · 4 marks · AO1=2,AO2=2

(b) The government subsidises dental care in the UK through the National Health Service (NHS). There has been a large decrease in the work carried out by NHS dentists. Up to 90% of practices are not accepting new NHS patients. (Source: adapted from https://www.theguardian.com/society/2023/jul/14/ mps-demand-urgent-reform-nhs-dental-services-report) Draw an externalities diagram to identify the welfare gain area from the consumption of dental care in the UK. (4)

3. June 2025 · AS Paper 1 · Q6(e) · 15 marks · AO1=3,AO2=3,AO3=3,AO4=6

(e) With reference to Extract A, discuss the likely private costs and external costs caused by meat farming. Use an appropriate diagram in your answer. (15)

4. June 2025 · Paper 1 · Q7 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

7 High Speed 2 (HS2) was a £100 billion UK government rail project designed to expand the existing network. The journey time between London and Manchester would take just 1 hour and 11 minutes, 54 minutes quicker than today’s fastest time. Almost 900 homes, 1 000 businesses and around 60 ancient woodlands would be destroyed by its construction. (Source: adapted from https://www.independent.co.uk/climate-change/news/ hs2-railway-route-houses-demolish-woodland-destroy-environment- impact-london-birmingham-manchester-a8582316.html) Evaluate the likely microeconomic effects of building major infrastructure projects.

5. June 2025 · Paper 1 · Q8 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

8 In 2023, the UK prime minister Rishi Sunak said that he wanted to see all students in England study some form of mathematics until they reach the age of 18 to ‘ensure that they leave school better equipped for the jobs of the future’. This would require additional spending on education. Just half of all 16 to 19 year-olds study mathematics. Yet in a world where data is everywhere and statistics are vital in every job, the workforce will require more analytical skills than ever before. (Source: adapted from https://educationhub.blog.gov.uk/2023/01/04/ studying-maths-to-18-what-you-need-to-know/) Evaluate the likely microeconomic effects of increased spending on education.

6. June 2025 · Paper 3 · Q1(a) · 5 marks · AO1=2,AO2=2,AO3=1

(a) Explain one reason why consumers buy less than the social optimum quantity of healthy food. (5)

7. June 2024 · AS Paper 1 · Q3(b) · 3 marks · AO1=1,AO2=1,AO3=1

The education system in Singapore produces some of the highest achieving students in international education rankings, with its teenagers coming top in tests in mathematics, reading and science. (b) Singapore’s education system is provided by the state. With reference to the information above, explain why education is normally provided by the state. (3)

8. June 2024 · AS Paper 1 · Q6(e) · 15 marks · AO1=3,AO2=3,AO3=3,AO4=6

(e) Discuss the likely private costs and external costs of the production of plastic. (15)

9. June 2024 · Paper 1 · Q6(e) · 15 marks · AO1=3,AO2=3,AO3=3,AO4=6

(e) With reference to Extract D, discuss possible methods of government intervention to reduce electronic waste. (15)

10. June 2024 · Paper 3 · Q1(b) · 8 marks · AO1=2,AO2=2,AO3=2,AO4=2

(b) Examine one likely externality that arises when a producer generates electricity by burning gas. Use a diagram to show the external costs of production. (8)

11. June 2023 · AS Paper 1 · Q6(b) · 6 marks · AO1=2,AO2=2,AO3=2

(b) With reference to Extract B, explain two external benefits associated with the consumption of ‘public service broadcasting’ (line 2). (6)

12. June 2023 · Paper 1 · Q6(d) · 12 marks · AO1=2,AO2=2,AO3=4,AO4=4

(d) With reference to Extract C, discuss the likely private and external benefits of viewing educational websites and TV programmes. (12)

13. June 2023 · AS Paper 1 · Q6(f) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(f) Evaluate possible methods of government intervention to reduce the environmental damage caused by the consumption of television content. (20)

14. June 2023 · AS Paper 1 · Q6(g) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(g) Evaluate the possible disadvantages of a free market approach to the provision of television content. (20)

15. June 2023 · Paper 1 · Q8 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

8 Using 2021 estimates of carbon emissions, it is estimated that a petrol car journey from London to Glasgow emits approximately 3.3 times more carbon dioxide per passenger than the equivalent journey by train. (Source adapted from: https://www.gov.uk/government/statistics/transport-and- environment-statistics-autumn-2021/transport-and-environment-statistics-autumn-2021) Evaluate possible methods of government intervention to reduce carbon emissions caused by road transport in the UK.

16. June 2022 · Paper 1 · Q3(a) · 4 marks · AO1=2,AO2=2

(a) Draw an externalities diagram to show the likely impact of the sewage discharge on the local tourist industry. (4)

17. June 2022 · AS Paper 1 · Q4(b) · 1 marks ·

(b) Which one of the following explains how market failure might occur in a free market economy? (1) A A net welfare loss results from intervention by the government B Firms enter the market in response to higher prices C Goods with positive externalities are underprovided D Prices rise when there is excess demand

18. June 2022 · AS Paper 1 · Q6(f) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(f) Some economists suggest that the market price of cod does not result in the socially optimum level of output. Evaluate the likely external costs from the over-fishing of cod. Use an appropriate diagram in your answer. (20)

19. June 2022 · Paper 3 · Q1(a) · 5 marks · AO1=2,AO2=2,AO3=1

(a) Using the information provided, explain one externality that arises in the food delivery market. (5)

20. November 2021 · Paper 1 · Q6(b) · 8 marks · AO1=2,AO2=2,AO3=2,AO4=2

(b) Examine the likely impact of Thomas Cook’s plan ‘to reduce their airline emissions’ (Extract B, line 6) on the social optimum position. Use an appropriate externalities diagram in your answer. (8)

21. October 2020 · Paper 1 · Q2(a) · 4 marks · AO1=2,AO2=2

(a) Draw an externalities diagram to show the likely impact of the consumption of higher education. (4)

22. October 2020 · Paper 1 · Q2(b) · 1 marks · AO3=1

(b) On average, in the UK, a working-age graduate earns approximately £10 000 more per year than a non-graduate. (Source adapted from: https://assets.publishing.service.gov.uk/government/uploads/ system/uploads/attachment_data/file/701720/GLMS_2017.pdf) This suggests a university degree provides a substantial (1) A external benefit B external cost C private benefit D social cost

23. October 2020 · AS Paper 1 · Q5(b) · 2 marks · AO1=2

(b) Explain one likely microeconomic reason why the government is using taxpayers’ money to fund HS2. (2)

24. October 2020 · AS Paper 1 · Q6(c) · 6 marks · AO1=2,AO2=2,AO3=2

(c) With reference to Extract A, explain one likely private benefit to students and one likely external benefit of higher education. (6)

25. October 2020 · AS Paper 1 · Q6(g) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(g) Evaluate whether government intervention is able to correct market failure in education. (20)

26. October 2020 · Paper 1 · Q7 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

7 The International Energy Agency has predicted that oil use by cars will peak in 2025 because of the increasing number of drivers switching to electric vehicles. (Source adapted from: https://www.thetimes.co.uk) Evaluate the likely microeconomic consequences of consumers shifting from vehicles powered by fuel obtained from oil to electric‑powered vehicles.

27. October 2020 · Paper 3 · Q1(c) · 12 marks · AO1=2,AO2=2,AO3=4,AO4=4

(c) Discuss the likely success of policies to reduce the consumption of single‑use plastic bags in cities such as Istanbul. (12)

28. October 2020 · Paper 3 · Q1(e) · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

(e) Evaluate the microeconomic and macroeconomic impact of large infrastructure projects such as the building of a third airport in Istanbul. (25)

29. June 2019 · AS Paper 1 · Q6(g) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(g) Evaluate the possible disadvantages of a free market approach to providing health care. (20)

30. June 2018 · AS Paper 1 · Q6(f) · 20 marks · AO1=4,AO2=4,AO3=6,AO4=6

(f) Using the concept of external costs, evaluate whether nuclear power is under-provided or over-provided in the energy market. Use an appropriate diagram in your answer. (20)

31. June 2018 · Paper 1 · Q7 · 25 marks · AO1=4,AO2=4,AO3=8,AO4=9

7 In September 2016 the government approved the building of an £18 billion nuclear power station, Hinkley Point C, which will supply 7% of UK electricity for up to 60 years. The power station is funded by Chinese and French investment. Evaluate the likely private costs and external costs involved in such major power station construction projects. Use an appropriate externalities diagram in your answer.

32. June 2018 · Paper 3 · Q1(c) · 8 marks · AO1=2,AO2=2,AO3=2,AO4=2

(c) Examine the advantages of using an indirect tax as a means of reducing the use of disposable coffee cups. (8)

33. June 2017 · AS Paper 1 · Q5(b) · 1 marks ·

(b) Which one of the following statements is correct? (1) A The marginal social benefits exceed the marginal private benefits from university education B University education is an inferior good C University education is a public good D The social optimum equilibrium quantity is less than the market equilibrium quantity for university education

34. June 2017 · Paper 3 · Q1(b) · 8 marks · AO1=2,AO2=2,AO3=2,AO4=2

(b) Examine the likely impact of externalities of copper mining on firms and communities within Chile. (8)

35. June 2016 · AS Paper 1 · Q2(a) · 1 marks · AO1=1

(a) Define the term ‘external benefits’. (1)

36. June 2016 · AS Paper 1 · Q2(b) · 1 marks ·

Diagram A shows the market for nursery school places. Diagram A Costs/ benefits £ MPC=MSC V R P1 Pe T MSB S MPB 0 Qe Q1 Quantity of nursery school places (b) Which one of the following measures could a government introduce to achieve the social optimum consumption of nursery school places? It could introduce a: (1) A maximum price of 0P1 per unit B subsidy of RS per unit C tax of VT per unit D minimum price of 0P1 per unit

37. June 2016 · AS Paper 1 · Q2(c) · 2 marks · AO2=2

(c) Annotate on Diagram A the welfare gain area and the new social optimum output resulting from successful government intervention in the market for nursery places. (2)

38. June 2016 · AS Paper 1 · Q3(a) · 1 marks ·

(a) The impact of the flower industry on workers in the fishing industry is an example of: (1) A private benefits B private costs C external costs D external benefits

Mark schemes

1. June 2025 · AS Paper 1 · Q3(b)

2. June 2025 · Paper 1 · Q3(b)

3. June 2025 · AS Paper 1 · Q6(e)

4. June 2025 · Paper 1 · Q7

5. June 2025 · Paper 1 · Q8

6. June 2025 · Paper 3 · Q1(a)

7. June 2024 · AS Paper 1 · Q3(b)

8. June 2024 · AS Paper 1 · Q6(e)

9. June 2024 · Paper 1 · Q6(e)

10. June 2024 · Paper 3 · Q1(b)

11. June 2023 · AS Paper 1 · Q6(b)

12. June 2023 · Paper 1 · Q6(d)

13. June 2023 · AS Paper 1 · Q6(f)

14. June 2023 · AS Paper 1 · Q6(g)

15. June 2023 · Paper 1 · Q8

16. June 2022 · Paper 1 · Q3(a)

17. June 2022 · AS Paper 1 · Q4(b)

18. June 2022 · AS Paper 1 · Q6(f)

19. June 2022 · Paper 3 · Q1(a)

20. November 2021 · Paper 1 · Q6(b)

21. October 2020 · Paper 1 · Q2(a)

22. October 2020 · Paper 1 · Q2(b)

23. October 2020 · AS Paper 1 · Q5(b)

24. October 2020 · AS Paper 1 · Q6(c)

25. October 2020 · AS Paper 1 · Q6(g)

26. October 2020 · Paper 1 · Q7

27. October 2020 · Paper 3 · Q1(c)

28. October 2020 · Paper 3 · Q1(e)

29. June 2019 · AS Paper 1 · Q6(g)

30. June 2018 · AS Paper 1 · Q6(f)

31. June 2018 · Paper 1 · Q7

32. June 2018 · Paper 3 · Q1(c)

33. June 2017 · AS Paper 1 · Q5(b)

34. June 2017 · Paper 3 · Q1(b)

35. June 2016 · AS Paper 1 · Q2(a)

36. June 2016 · AS Paper 1 · Q2(b)

37. June 2016 · AS Paper 1 · Q2(c)

38. June 2016 · AS Paper 1 · Q3(a)