Summary – Paper 1 (Markets and Market Failure)

Question 1 Committed to improving learner outcomes with teacher-centric digital support. 3 Using the data in Extract A, calculate, to 1 decimal place, the percentage change in the average price of a single ticket from London to Exeter from 1995 to 2013. [2 marks] There are two key steps to this question. Step 1: Identify the important pieces of data from Extract A The question asks about the average price of a single ticket from London to Exeter. Identifying the correct row allows us to pick out the values we need to answer the question. The average price in 1995 was £37.50. The average price in 2013 was £114.50. Committed to improving learner outcomes with teacher-centric digital support. 4 Step 2: Accurately perform percentage change calculation Begin with the correct formula for calculating a percentage change. We are asked to calculate the percentage change from 1995, so that is the original value, to 2013, so that is the new value. It is important to provide the answer accurately. The question asks for the answer to be given to 1 decimal place. As it is a percentage change, a % sign is required. Producing the correct answer will earn 1 mark. Producing the correct answer and giving it to 1 decimal place with a % sign will earn 2 marks. A summary sentence can often be useful to highlight the answer you have given. For example: “The average price of a single ticket from London to Exeter increased by 205.3% between 1995 and 2013.” Question 2 Explain how the data in Extract A show how UK rail passengers have suffered due to the lack of ‘on-rail’ competition in the UK rail industry. [4 marks] Committed to improving learner outcomes with teacher-centric digital support. 5 The evidence is most likely to be an example of train fares rising significantly between 1995 and 2013. It is important to specifically quote data from the extract. The following example does not achieve this: “Extract A shows that rail fares rose sharply on several major UK rail routes” A far better example of providing evidence is: “Extract A shows that the average price of a single ticket on all 4 of the specified rail routes rose significantly between 1995 and 2013. For example, the average price of a single ticket from London to Manchester more than tripled from £50 in 1995 to £154 in 2013.” Quoting any of the 4 price increases would be acceptable. Step 2: Provide a clear explanation Having provided some evidence, your answer needs to explain why this evidence shows that UK rail passengers have suffered from a lack of ‘on-rail’ competition. To achieve top marks, this explanation needs to be clear and logical. If your evidence has effectively identified the significant increase in ticket prices shown by Extract A, then an effective explanatory chain of reasoning might look like: “These higher ticket prices mean that UK rail passengers are having to pay more to travel on trains. Some passengers will continue to buy tickets, forgoing other consumption, whilst others will no longer travel on the trains. Either way, these price increases will have caused a reduction in consumer surplus. A good answer needs to include two key elements. Evidence (data) from Extract A A clear explanation why that evidence shows that passengers have suffered due to a lack of competition Step 1: Include some evidence Committed to improving learner outcomes with teacher-centric digital support. 6 A lack of ‘on-rail’ competition may have contributed to these price increases as in its absence, Train Operating Companies enjoy monopoly power and are able to act as price makers and increase ticket prices.” There are other ways of achieving a good explanation. You would expect them to include: 1. Why higher ticket prices is bad for UK rail passengers. 2. Why a lack of ‘on-rail’ competition may have caused higher ticket prices. It is important to be aware that the command work in this question is ‘Explain’ and therefore detailed analysis and evaluation is not required. This question should take no longer than 6 minutes to answer. Providing accurate evidence is essential for earning marks on this question. Once this has been provided, the mark awarded depends upon the quality and clarity of the explanation.