Section B case study: Regional inequality in the UK
Extract G: In 2024 median weekly full-time earnings were £850 in London and £610 in the North East. Output per hour worked in London is about 30% above the UK average, while in Wales and the North East it is around 15% below. The UK has some of the largest regional inequalities of any developed economy.
Extract H: Successive governments have promised to 'level up'. Policies have included investment zones with tax breaks, devolution of powers to metro mayors, transport projects and moving civil service jobs out of London. Critics say funding has been small relative to the scale of the gap and spread across too many competing schemes.
Extract I: Economists disagree on the causes. Some stress agglomeration economies in big cities, which attract skilled workers and high-productivity firms. Others emphasise weak transport links in the North, lower levels of educational attainment and decades of under-investment. Housing costs in London limit the mobility of workers from poorer regions.
11 mark
Opportunity cost is:
21 mark
Which would shift a country's production possibility frontier outwards?
31 mark
Price rises from £10 to £12 and quantity demanded falls from 100 to 80. PED is:
41 mark
An inferior good has income elasticity of demand that is:
51 mark
Two goods are complements. Their cross elasticity of demand is:
61 mark
Supply increases while demand is unchanged. Equilibrium:
71 mark
Consumer surplus is the area:
81 mark
Diminishing marginal returns occur when:
91 mark
Marginal cost cuts average cost at:
101 mark
Profit is maximised where:
111 mark
In long-run equilibrium, a perfectly competitive firm earns:
121 mark
A natural monopoly exists when:
131 mark
The four largest firms have market shares of 25%, 20%, 15% and 10%. The four-firm concentration ratio is:
141 mark
Third-degree price discrimination requires:
151 mark
Compared with a competitive labour market, a monopsony employer will usually:
161 mark
A merit good is one that:
171 mark
When there is a negative production externality:
181 mark
Public goods are:
191 mark
A rise in the Gini coefficient from 0.33 to 0.36 shows that income inequality has:
201 mark
Automatically enrolling workers into a pension scheme is an example of:
211 mark
Nominal GDP grows by 6% and the price level rises by 4%. Real GDP grows by approximately:
221 mark
In an economy with no taxes or imports, MPC = 0.8. The multiplier is:
231 mark
When an economy is close to full capacity, an increase in AD mainly causes:
241 mark
Demand-pull inflation is caused by:
251 mark
Which is contractionary fiscal policy?
261 mark
The Bank of England's inflation target is:
271 mark
Quantitative easing involves the central bank:
281 mark
A depreciation of the pound is likely to:
291 mark
A country has a comparative advantage in a good when it:
301 mark
Which is recorded in the current account?
Section B case study: Regional inequality in the UK
Extract G: In 2024 median weekly full-time earnings were £850 in London and £610 in the North East. Output per hour worked in London is about 30% above the UK average, while in Wales and the North East it is around 15% below. The UK has some of the largest regional inequalities of any developed economy.
Extract H: Successive governments have promised to 'level up'. Policies have included investment zones with tax breaks, devolution of powers to metro mayors, transport projects and moving civil service jobs out of London. Critics say funding has been small relative to the scale of the gap and spread across too many competing schemes.
Extract I: Economists disagree on the causes. Some stress agglomeration economies in big cities, which attract skilled workers and high-productivity firms. Others emphasise weak transport links in the North, lower levels of educational attainment and decades of under-investment. Housing costs in London limit the mobility of workers from poorer regions.
314 marks
Using Extract G, calculate how much higher median weekly earnings were in London than in the North East, as a percentage of North East earnings, and explain one reason for the difference.
329 marks
Explain how geographical and occupational immobility of labour can help to explain regional differences in unemployment and wages.
3312 marks
Assess the extent to which agglomeration economies explain the productivity gap between London and other regions.
3425 marks
Using the extracts and your knowledge of economics, evaluate the case for and against large-scale government spending to reduce regional inequality in the UK.
Finished?
Answer every question to finish (34 left), or finish when the time’s up.
Score 0 / 80 · 0 of 34 marked
This paper is written by Plasmo in the style of the AQA A-Level Economics exam. It is not a past paper and is not produced or endorsed by the exam board.
AQA A-Level Economics Mock Exam: Paper 3: Economic principles and issues | Plasmo