A Level H1 Economics Practice Paper 5

Answer Key – TuitionGoWhere Practice Paper Economics H1 A-Level (Version 5)

Total Marks: 60
Section A: 21 marks | Section B: 21 marks | Section C: 18 marks

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Section A Answers (Q1–Q7)

Q1 [2 marks]

• Both primary and university expenditure per student increased from 2020 to 2024. [1]
• University spending remained higher in absolute terms ($21,500→$24,000) than primary ($8,200→$10,000), and the gap widened slightly. [1]
  Teaching note: Compare both sectors with connective "both… but". Avoid stating only one row.

Q2 [2 marks]

• Online retail sales increased substantially from $4.2b (2021) to$7.8b (2024). [1]
• This is an increase of approx. 86% over three years, showing rapid growth. [1]
  Marking: Direction [1], magnitude/rate [1].

Q3 [2 marks]

• Both countries' real GDP growth fell over the period. [1]
• Country A fell from 3.5% to 1.2%, Country B from 2.1% to 0.7%; Country A stayed above B but both declined. [1]

Q4 [2 marks]

• Unemployment rose in both: A 4.0%→5.5%, B 6.5%→8.0%. [1]
• B had persistently higher unemployment than A throughout. [1]

Q5 [2 marks]

• PED is likely elastic (|PED|>1) because 80% switched due to price differences, showing high responsiveness. [1]
• Many substitutes available among platforms increase elasticity. [1]
  Formula: PED = %ΔQd / %ΔP; value interpreted via extract.

Q6 [2 marks]

• PES for preschool likely inelastic (|PES|<1) in short run. [1]
• 2-year training limits quick supply expansion despite demand. [1]

Q7 [3 marks]
Working:
% increase = (10,000 – 8,200) / 8,200 × 100
= 1,800 / 8,200 × 100
= 21.95% ≈ 22.0% [3 for correct method and answer, 2 if minor calc error, 1 for formula only]
Teaching: %Δ = (new−old)/old ×100.

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Section B Answers (Q8–Q14)

Q8 [3 marks]

• PPC shows max combos of X and Y with full resource use. [1]
• 2020 curve inside 2019 shows under-utilisation (unemployment). [1]
• Points inside PPC = resources idle, e.g. labour not employed. [1]

Q9 [2 marks]

• 2020→2024 curve moved outward partially (from (80,0) to (90,0)). [1]
• Indicates recovery in productive capacity, not full 2019 level. [1]

Q10 [3 marks]

• Diagram: D downward, S upward, intersect at P_e,Q_e. [1]
• P_max horizontal below P_e. [1]
• Shortage = Qd – Qs at P_max, shaded. [1]

Q11 [3 marks]

• AD = C+I+G+(X−M); fall in I shifts AD left. [1]
• New equilibrium at lower real GDP and price. [1]
• Diagram shows AD1→AD2 left, output falls. [1]

Q12 [2 marks]

• GDP growth fell (3.5→1.2%) so firms hire less. [1]
• Cyclical unemployment rose as demand contracted. [1]

Q13 [3 marks]

• Subsidy lowers producer cost, S shifts right. [1]
• Equilibrium price falls, quantity rises. [1]
• Diagram with S1→S2 right, P↓ Q↑. [1]

Q14 [3 marks]

• B's unemployment rose to 8%, GDP growth fell to 0.7% → likely worse living std. [1]
• But no income/health data; material living std proxy only. [1]
• Evaluation: multi-indicator needed; partial conclusion. [1]

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Section C Answers (Q15–Q20)

Q15 [3 marks]

• Tax internalises externality, MSB=MSC nearer social optimum. [1]
• Revenue funds correction; but may hit low-income. [1]
• Effectiveness needs enforcement, inelastic demand limits effect. [1]

Q16 [3 marks]

• Equity: primary gap smaller, fair access. [1]
• Efficiency: university yields higher skilled return. [1]
• Trade-off: budget limit means prioritisation; evaluate both. [1]

Q17 [3 marks]

• Elastic demand: price cut raises total revenue (%Qd↑ > %P↓). [1]
• Platform competition forces price cuts, revenue may rise if volume grows. [1]
• But if all cut, margin falls; eval. [1]

Q18 [2 marks]

• Parents may lack info on quality → over/under demand. [1]
• Market fails to allocate efficient preschool places. [1]

Q19 [3 marks]

• Quota: direct limit, fast but rigid. [1]
• Subsidy: incentivises supply, slow due training. [1]
• Trade-off: cost, speed, distortion. [1]

Q20 [4 marks]

• A: unemployment up but lower than B, GDP growth positive. [1]
• B: higher unemployment, near-zero growth. [1]
• A managed stability better on both indicators. [1]
• Caveat: no inflation/data depth; conclusion qualified. [1]

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End of Answer Key. Marks sum: 60.