2024 AQA AS ECONOMICS 7135/1 Paper 1 The
Operation of Markets and Market Failure Verified
Question paper and Marking Scheme Attached
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2024 AQA AS ECONOMICS 7135/1 Paper 1 The Operation of
Markets and Market Failure
Verified Question paper and Marking Scheme Attached
AS
ECONOMICS
Paper 1 The Operation of Markets and Market Failure
Monday 13 May 2024 Morning Time allowed: 1 hour 30 minutes
Materials
For Examiner’s Use
For this paper you must have:
• the Insert Section Mark
• a calculator.
A
Instructions B
• Use black ink or black ball-point pen. Pencil should only be used for drawing. TOTAL
• Fill in the boxes at the top of this page.
• Answer all questions in Section A.
• Answer either Context 1 or Context 2 in Section B.
• You will need to refer to the Insert provided to answer Section B.
• You must answer the questions in the spaces provided. Do not write outside
the box around each page or on blank pages.
• If you need extra space for your answer(s), use the lined pages at the end of
this book. Write the question number against your answer(s).
• Do all rough work in this book. Cross through any work you do not want to be
marked.
Information
• The maximum mark for this paper is 70.
• The marks for questions are shown in brackets.
• No deductions will be made for wrong answers.
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2
Do not write
outside the
Section A box
Answer all questions in this section.
Only one answer per question is allowed.
For each question completely fill in the circle alongside the appropriate answer.
CORRECT METHOD WRONG METHODS
If you want to change your answer you must cross out your original answer as shown.
If you wish to return to an answer previously crossed out, ring the answer you now wish to select
as shown.
0 1 Which one of the following is a function of prices in a market economy?
[1 mark]
A Allocating resources to the production of public goods
B Ensuring that the distribution of goods and services is fair
C Incentivising firms to produce the goods consumers want
D Providing a measurement of positive and negative externalities
0 2 Which one of the following is a normative statement?
The price of petrol
[1 mark]
A fell in real terms last year.
B is affected by supply.
C is now too high.
D will rise next year.
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3
Do not write
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0 3 Figure 1 shows the demand curve for Economics textbooks. box
Figure 1
Which one of the following could have caused the movement along the demand curve from
L to M?
[1 mark]
A A fall in the number of people studying Economics
B A fall in the price of Economics textbooks
C An increase in consumer incomes
D An increase in the price of paper
0 4 Partial market failure occurs when
[1 mark]
A prices fall causing firms to make losses.
B there are no positive externalities in consumption.
C there is a missing market for the product.
D there is immobility of factors of production.
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4
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0 5 The price of carrots falls from 60p to 54p per kilo. As a result of this fall in price, the box
quantity supplied falls by a quarter.
What is the price elasticity of supply?
[1 mark]
A 0.25
B 0.4
C 2.5
D 4
0 6 In a perfectly competitive market, a firm is most likely to
[1 mark]
A charge the same price as other firms.
B earn large profits in the long run.
C produce the same output as its competitors.
D spend large amounts of money on advertising.
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5
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0 7 box
A firm aims to make as much profit as possible.
This means the firm should aim to
[1 mark]
A maximise the difference between its total revenue and total cost.
B maximise the total revenue it receives from selling its output.
C minimise the average total cost of each unit it produces.
D minimise the total cost of producing its output.
0 8 The market for barley is no longer in equilibrium due to an increase in demand for barley.
This is most likely to lead to
[1 mark]
A a fall in the price of barley and a leftward shift of the supply curve.
B a fall in the price of barley and a movement along the supply curve to the left.
C a rise in the price of barley and a movement along the supply curve to the right.
D a rise in the price of barley and a rightward shift of the supply curve.
Turn over for the next question
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6
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0 9 box
Which one of the following is most likely to be used to help identify the market structure of
an industry?
[1 mark]
A The extent to which barriers to entry exist
B The number of workers employed in the industry
C The shape of a typical firm’s average cost curve
D Whether firms sell luxury goods or necessities
1 0 Figure 2 shows the original demand (D) and supply (S) curves for pints of milk. To help
farmers, the government introduces a minimum price of 80p for a pint of milk.
Figure 2
Which one of the following is most likely to result from the imposition of this minimum
price?
[1 mark]
A Profits of farmers from selling milk will increase by £1 million
B The revenue received by farmers will increase by 30p per pint
C There will be excess demand of 40 million pints
D Total revenue from the sales of milk will increase by £100 million
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7
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1 1 An inequitable distribution of income may result in market failure because box
[1 mark]
A government action to reduce inequality may lead to government failure.
B it affects an individual’s ability to consume goods and services.
C it provides the incentive for people to work hard.
D the government will not be able to provide as many merit goods.
1 2 Kim has £100 to spend and is considering three options. She would rather spend the
m ney on clothes than shoes but believes she would gain most benefit from spending
£100 on an evening out.
As suming that she spends the money to gain the most benefit, what is the opportunity cost
of her decision?
[1 mark]
A The clothes
B The clothes and the shoes
C The evening out
D The shoes
Turn over for the next question
Turn over ►
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1 3 Table 1 shows the private benefit, private cost, social benefit and social cost of four box
different redevelopment projects.
Table 1
Grants to new Marketing New bus
Pedestrianisation
retailers campaign station
Private benefit £5m £3m £2m £4m
Private cost £15m £4m £20m £12m
Social benefit £10m £5m £50m £30m
Social cost £15m £4m £30m £14m
A local authority has a maximum of £15 million to spend on the redevelopment.
Which one of the projects in Table 1 should the local authority choose to maximise social
welfare, given the limited funding available?
[1 mark]
A Grants to new retailers
B Marketing campaign
C New bus station
D Pedestrianisation
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Operation of Markets and Market Failure Verified
Question paper and Marking Scheme Attached
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2024 AQA AS ECONOMICS 7135/1 Paper 1 The Operation of
Markets and Market Failure
Verified Question paper and Marking Scheme Attached
AS
ECONOMICS
Paper 1 The Operation of Markets and Market Failure
Monday 13 May 2024 Morning Time allowed: 1 hour 30 minutes
Materials
For Examiner’s Use
For this paper you must have:
• the Insert Section Mark
• a calculator.
A
Instructions B
• Use black ink or black ball-point pen. Pencil should only be used for drawing. TOTAL
• Fill in the boxes at the top of this page.
• Answer all questions in Section A.
• Answer either Context 1 or Context 2 in Section B.
• You will need to refer to the Insert provided to answer Section B.
• You must answer the questions in the spaces provided. Do not write outside
the box around each page or on blank pages.
• If you need extra space for your answer(s), use the lined pages at the end of
this book. Write the question number against your answer(s).
• Do all rough work in this book. Cross through any work you do not want to be
marked.
Information
• The maximum mark for this paper is 70.
• The marks for questions are shown in brackets.
• No deductions will be made for wrong answers.
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2
Do not write
outside the
Section A box
Answer all questions in this section.
Only one answer per question is allowed.
For each question completely fill in the circle alongside the appropriate answer.
CORRECT METHOD WRONG METHODS
If you want to change your answer you must cross out your original answer as shown.
If you wish to return to an answer previously crossed out, ring the answer you now wish to select
as shown.
0 1 Which one of the following is a function of prices in a market economy?
[1 mark]
A Allocating resources to the production of public goods
B Ensuring that the distribution of goods and services is fair
C Incentivising firms to produce the goods consumers want
D Providing a measurement of positive and negative externalities
0 2 Which one of the following is a normative statement?
The price of petrol
[1 mark]
A fell in real terms last year.
B is affected by supply.
C is now too high.
D will rise next year.
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3
Do not write
outside the
0 3 Figure 1 shows the demand curve for Economics textbooks. box
Figure 1
Which one of the following could have caused the movement along the demand curve from
L to M?
[1 mark]
A A fall in the number of people studying Economics
B A fall in the price of Economics textbooks
C An increase in consumer incomes
D An increase in the price of paper
0 4 Partial market failure occurs when
[1 mark]
A prices fall causing firms to make losses.
B there are no positive externalities in consumption.
C there is a missing market for the product.
D there is immobility of factors of production.
Turn over ►
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4
Do not write
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0 5 The price of carrots falls from 60p to 54p per kilo. As a result of this fall in price, the box
quantity supplied falls by a quarter.
What is the price elasticity of supply?
[1 mark]
A 0.25
B 0.4
C 2.5
D 4
0 6 In a perfectly competitive market, a firm is most likely to
[1 mark]
A charge the same price as other firms.
B earn large profits in the long run.
C produce the same output as its competitors.
D spend large amounts of money on advertising.
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5
Do not write
outside the
0 7 box
A firm aims to make as much profit as possible.
This means the firm should aim to
[1 mark]
A maximise the difference between its total revenue and total cost.
B maximise the total revenue it receives from selling its output.
C minimise the average total cost of each unit it produces.
D minimise the total cost of producing its output.
0 8 The market for barley is no longer in equilibrium due to an increase in demand for barley.
This is most likely to lead to
[1 mark]
A a fall in the price of barley and a leftward shift of the supply curve.
B a fall in the price of barley and a movement along the supply curve to the left.
C a rise in the price of barley and a movement along the supply curve to the right.
D a rise in the price of barley and a rightward shift of the supply curve.
Turn over for the next question
Turn over ►
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6
Do not write
outside the
0 9 box
Which one of the following is most likely to be used to help identify the market structure of
an industry?
[1 mark]
A The extent to which barriers to entry exist
B The number of workers employed in the industry
C The shape of a typical firm’s average cost curve
D Whether firms sell luxury goods or necessities
1 0 Figure 2 shows the original demand (D) and supply (S) curves for pints of milk. To help
farmers, the government introduces a minimum price of 80p for a pint of milk.
Figure 2
Which one of the following is most likely to result from the imposition of this minimum
price?
[1 mark]
A Profits of farmers from selling milk will increase by £1 million
B The revenue received by farmers will increase by 30p per pint
C There will be excess demand of 40 million pints
D Total revenue from the sales of milk will increase by £100 million
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7
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1 1 An inequitable distribution of income may result in market failure because box
[1 mark]
A government action to reduce inequality may lead to government failure.
B it affects an individual’s ability to consume goods and services.
C it provides the incentive for people to work hard.
D the government will not be able to provide as many merit goods.
1 2 Kim has £100 to spend and is considering three options. She would rather spend the
m ney on clothes than shoes but believes she would gain most benefit from spending
£100 on an evening out.
As suming that she spends the money to gain the most benefit, what is the opportunity cost
of her decision?
[1 mark]
A The clothes
B The clothes and the shoes
C The evening out
D The shoes
Turn over for the next question
Turn over ►
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1 3 Table 1 shows the private benefit, private cost, social benefit and social cost of four box
different redevelopment projects.
Table 1
Grants to new Marketing New bus
Pedestrianisation
retailers campaign station
Private benefit £5m £3m £2m £4m
Private cost £15m £4m £20m £12m
Social benefit £10m £5m £50m £30m
Social cost £15m £4m £30m £14m
A local authority has a maximum of £15 million to spend on the redevelopment.
Which one of the projects in Table 1 should the local authority choose to maximise social
welfare, given the limited funding available?
[1 mark]
A Grants to new retailers
B Marketing campaign
C New bus station
D Pedestrianisation
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