A Level Economics – essay list

(a) Explain the economic considerations that might have led the company to make
1 ‘The demand for goods and services is often influenced by advertising or involves choices
this decision. [12]
based on impulse. This means that the economic theory of demand is irrelevant.’
(b) How far does this decision indicate that trade unions have very little influence
Discuss whether you agree with this argument. [25] June 02 P4 Q2 over wages and employment? [13] Nov 04 P4 Q4
8 Gillette, the world’s largest razor maker, announced in August 2003 that its annual profits
2 Between 1995 and 2000 there was a change in work patterns in Mauritius. Fewer people
had risen by 15%. In the same period, its sales increased by 11% as there was increased
worked in agriculture and fisheries as the country diversified away from its staple crop,
demand for its Sensor3 and Mach3Turbo razors and a reduction in the price of Duracell
sugar, and more worked in restaurants and hotels as the tourist industry increased.
batteries, which Gillette produces. However, Gillette faces strong competition from
However, in 2000 the government stated that the economy still suffered from an
Energizer Holdings, which sells batteries and Schick razors. Energizer introduced a new
inadequately trained workforce with a lack of skills.
four-blade razor in September 2002 and increased its advertising and product promotion.
How far can the economic theory of wages explain the implications of this situation for Gillette lost US market share and announced it planned to increase expenditure on
the wages of an agricultural labourer and a hotel manager? [25] June 03 P4 Q3 marketing.
3 In 2001 in the UK a widespread disease among cattle and sheep closed off large parts of Explain how firms are said to behave in oligopolistic markets and discuss how far this is
the countryside. The government decided to give aid to agriculture but not to tourism, supported by the above statement. [25] June 05 P4 Q5
both of which were badly affected. Comment on the government’s actions in terms of
9 With the approval of the Malaysian government, the Swedish company IKEA, the world’s
allocative efficiency and equity. [25] Nov 03 P4 Q2
largest retailer of home furnishings, has invested $106 million in Malaysia in the past
4 In 2002 in the UK public sector fire-fighters threatened to go on strike because they stated three years. It now plans to open another large store in the country, employing 450
that their earnings were very low compared with other workers. In the same year Robbie people, with expected sales of approximately $50 million in the first year.
Williams, a singer from the UK, signed the largest ever recording deal in the music (a) Use multiplier analysis to explain what effect this investment might have on the
industry, worth millions of pounds. Malaysian national income. [10]
(b) Discuss whether the activities of multi-national companies are always beneficial. [15]
Discuss whether the economic theory of wages can explain how workers in a vital industry
Nov 05 P4 Q6
such as the fire-fighting service can have lower pay than workers in a less vital industry
10 My higher income will make me happier in the short run. In the long run I will become
such as entertainment. [25] June 04 P4 Q4
accustomed to it and my happiness will return to the previous level. There is no point,
5 ‘The rise in interest rates might not have the desired effect of curbing the existing therefore, in earning higher income.
inflation’ reported a newspaper in 2002.
(a) Explain the Law of Diminishing Marginal Utility and discuss whether it supports the
(a) Explain what effect a rise in interest rates might have on the level of total
idea that higher incomes increase happiness. [12]
expenditure. [12]
(b) Discuss how governments might achieve a more equal distribution of income. [13]
(b) Discuss what policies apart from interest rate changes a government might use to
Nov 06 P4 Q3
control inflation. [13] June 04 P4 Q6
11 In 2004 the Chinese government approved a deal with BAT (formerly British American
6 In Johannesburg in 2002 there was an international conference, the World Summit on
Tobacco) to enable them to become the first foreign manufacturer of cigarettes in China
Sustainable Development, to discuss the use of the world’s resources and the best ways
for at least 50 years. BAT said that it would invest $1.5 million in China and that it would
governments can help to promote environmentally friendly development.
take about two years before the factories were running efficiently. It is estimated that
Analyse how the policies adopted by a developed economy may affect the standard of China has 300 million smokers and is the world’s most important cigarette market.
living in a developing economy. [13] June 04 P4 Q7(b)
(a) Cigarette manufacture takes place in an imperfect market. Distinguish between the
7 In 2002 an electrical goods company in the UK that uses mass production techniques imperfect markets of monopolistic competition and oligopoly. [13]
made many people redundant. It said that there had been meetings with the trade union
(b) Discuss how BAT’s investment might be likely to affect its profits in the short and long
but that it was moving its production to Eastern Europe and would transport the products
run. [12] Nov 06 P4 Q4
from there.
 A Level Economics – essay list
1 It is sometimes stated that the policies of farm subsidies and international protectionism 7 In many cities worldwide, newspaper publishers compete with each other. Some types of
pursued by developed countries have caused damage to the economies of developing newspapers are sold, but publishers also produce others that are distributed free of
countries. charge. Many people and companies pay to advertise in the free newspapers.
(a) Explain the different ways that economists classify profits and consider whether it is
Discuss whether the policies of governments in developed countries necessarily harm
possible to make a profit from a newspaper that is distributed free. [12]
developing countries. [13] Nov 06 P4 Q5 (b)
(b) Discuss how a firm might compete in a market. [13] June 09 P4 Q2
2 Some people say they are better off living in a rural area, where there is less congestion 8 Airbus, a large aircraft manufacturing company, announced in 2007 that its goal
and pollution. Others prefer cities for the employment and the variety of leisure activities was to increase its $475 million research budget by 25 % in order to try to
available. If there are such differences of opinion of living standards in one country, is develop a more environmentally friendly aircraft that had lower fuel
there ever any chance of accurately comparing living standards between countries? [25] consumption.
June 07 P4 Q4
(a) Explain why Airbus is likely to be in an imperfect rather than a perfect market
3 In 2004 the US Federal Budget deficit rose to a record $412 billion.
(a) Budget deficits are affected by fiscal policy. Explain how multiplier analysis might be
structure. [10]
used to predict the effects of changes in fiscal policy. [12] (b) Economics textbooks sometimes criticise firms in imperfect competition as
(b) Discuss whether a budget deficit should necessarily be a source of concern. [13] being against the public interest. What does this mean, and how far does the
June 07 P4 Q5 Airbus announcement prove the textbooks wrong? [15] June 09 P4 Q4
4 These statements come from the same journal article: 9 In 2007 a report stated ‘classrooms with teachers, clinics with nurses, clean water
World population has grown to 6.5 billion, with an increase of more than 4 billion since and working toilets are the key to ending global poverty. Only governments are in
1950. The number of people starving has increased in the last 10 years. 31.6% of the a position to provide these services on the scale required’.
urban population live in slums and 42 countries face food emergencies. Urbanisation Discuss whether governments should abandon their traditional macroeconomic
could be a solution to poverty, disease and malnutrition owing to economies of scale that aims in favour of the alternatives in the above statement. [25] June 09 P4 Q6
arise. Source: Royal Society of Arts Journal, August 2005 10 BG is a rapidly growing energy company with operations in 25 countries engaged in the
exploration, production and distribution of natural gas and oil. This requires complex
(a) Explain whether the growth of population is likely to have been faster in developing
chains of physical infrastructure, major investment funds and detailed commercial
countries than in developed countries. [10]
agreements with different countries.
(b) Discuss whether you agree with the idea that urbanisation necessarily produces
(a) Explain why economies of scale might be significant in an industry such as gas supply.
economies of scale and is, therefore, a solution to poverty. [15] June 07 P4 Q6
[12]
5 ‘We do not ask consumers what they want. They don’t know. We decide what they will
(b) Discuss whether companies that supply energy are likely to operate in contestable
need and will want.’ Akio Morita, founder of the Sony electronics company.
markets. [13] Nov 09 P41 Q 3
(a) Explain how, according to utility theory, consumers allocate their expenditure 11 By 2007, the telecommunications business had become dominated by fewer organisations.
between different products as prices change. [12] One of them, Cable and Wireless, announced there would be 3000 job losses. Another, Tiscali,
(b) Discuss whether markets are dominated more by the producer or by the consumer. announced 800 job losses and BT, the UK telecoms giant, announced a £450m major
[13] Nov 07 P4 Q2 investment and restructuring resulting in thousands of job cuts. Analyse whether the above is
6 In 2005 London Energy stated that as a company it invested millions of pounds in what marginal revenue product theory predicts will happen when a labour market becomes
improving efficiency to reduce costs. However, as world energy prices had increased less competitive and large investment takes place. [25] Nov 09 P42 Q 3
significantly, it had been forced to increase the price it charged the customer. 12 (a) Explain what is meant by the transactions, precautionary and speculative demands for
(a) Explain how an increase in expensive investment by a company might result in a money. [10]
reduction in costs. [12] (b) An employee moves to another job because it pays more. However, the old job was paid
(b) London Energy has ceased to be a monopoly supplier in its region. Analyse how price weekly and the new job is paid monthly. At the same time interest rates are increased. Discuss
and output might change as a market structure becomes more competitive. how these changes would affect the employee’s transactions, precautionary and speculative
[13] Nov 07 P4 Q3 demands for money. [15] Nov 09 P42 Q 4