Extract 1: Passenger rail journeys in Great Britain fell from 1.74 billion in 2019–20 to 0.39 billion in 2020–21 during the pandemic, then recovered to around 1.6 billion by 2023–24. The government took on most revenue risk from private train operating companies (TOCs) and paid them a management fee instead.
Extract 2: Network Rail, a public body, owns and maintains the track, signals and most stations. TOCs compete for contracts to run services but on most routes there is only one operator. The government caps increases in regulated fares (about 45% of fares), often linking them to inflation.
Extract 3: Supporters of public ownership argue it would end fragmentation, reduce profits paid to shareholders and allow track and trains to be planned together. Opponents warn that nationalised industries in the past suffered from under-investment, political interference and weak incentives to cut costs. The government plans to bring passenger services into public ownership as contracts expire.
1(a)2 marks
The price of a cinema ticket rises from £2.00 to £2.50 at a matinée and quantity demanded falls from 400 to 340. Calculate the price elasticity of demand.
1(b)3 marks
Explain what happens to the cinema's total revenue.
2(a)2 marks
A firm has total fixed costs of £500 and total variable costs of £1500 at an output of 100 units. Calculate average total cost and average variable cost.
2(b)3 marks
The market price falls to £14. Explain whether the firm should continue producing in the short run.
3(a)2 marks
An economy can produce 100 units of food and 0 cars, or 60 food and 20 cars. Calculate the opportunity cost of one car.
3(b)3 marks
Explain one benefit and one cost of the division of labour.
4(a)2 marks
Explain why vaccinations are under-consumed in a free market.
4(b)3 marks
Explain how a government subsidy could correct this market failure.
5(a)2 marks
In a market the five largest firms have shares of 32%, 24%, 18%, 7% and 5%. Calculate the three-firm concentration ratio.
5(b)3 marks
Explain one characteristic of an oligopolistic market.
Section B — Data: The UK rail industry
Extract 1: Passenger rail journeys in Great Britain fell from 1.74 billion in 2019–20 to 0.39 billion in 2020–21 during the pandemic, then recovered to around 1.6 billion by 2023–24. The government took on most revenue risk from private train operating companies (TOCs) and paid them a management fee instead.
Extract 2: Network Rail, a public body, owns and maintains the track, signals and most stations. TOCs compete for contracts to run services but on most routes there is only one operator. The government caps increases in regulated fares (about 45% of fares), often linking them to inflation.
Extract 3: Supporters of public ownership argue it would end fragmentation, reduce profits paid to shareholders and allow track and trains to be planned together. Opponents warn that nationalised industries in the past suffered from under-investment, political interference and weak incentives to cut costs. The government plans to bring passenger services into public ownership as contracts expire.
6(a)5 marks
With reference to Extract 1, calculate the percentage fall in rail journeys between 2019–20 and 2020–21, and explain one reason for the change.
6(b)5 marks
Explain why the rail track network is a natural monopoly.
6(c)8 marks
Examine two objectives, other than profit maximisation, that a train operating company might have.
6(d)12 marks
Discuss the likely impact of capping increases in regulated rail fares.
6(e)20 marks
Evaluate the case for bringing passenger rail services into public ownership.
725 marks
Section C
Evaluate the view that increases in the National Living Wage are likely to reduce employment in the UK.
Finished?
Answer every question to finish (16 left), or finish when the time’s up.
Score 0 / 100 · 0 of 16 marked
This paper is written by Plasmo in the style of the Edexcel A-Level Economics exam. It is not a past paper and is not produced or endorsed by the exam board.
Edexcel A-Level Economics Mock Exam: Paper 1: Markets and business behaviour | Plasmo