Free A-Level Economics Essay Questions and Answers (PDF)

This free A-Level Economics essay practice paper follows the style of AQA, Edexcel and OCR extended-writing questions. Question 1 is a context-based question on a supermarket merger with a data table (10 and 25 marks); Question 2 is a macroeconomics essay on supply-side policies and unemployment (15 and 25 marks); Question 3 is a 25-mark essay on taxation and income inequality. The answer version gives indicative content, diagram guidance and level descriptors for every part, written the way examiners write mark schemes.

1. Question 135 marks · Mergers, economies of scale, market power, competition policy
   A proposed supermarket merger. Read Extract A and Table 1, then answer both parts. Extract A (hypothetical data): Valumart and Harlow's, the second- and fourth-largest grocery retailers in a national market worth £150 billion a year, have agreed to merge. The firms say that combining their buying, warehousing and delivery operations would cut the merged firm's costs by about £1 billion a year within three years, roughly 2 per cent of their combined costs, and they have promised to pass “a substantial share” of the savings on to shoppers. The competition authority's first-stage review found 60 local areas in which a Valumart store and a Harlow's store are each other's closest competitor. It also noted that the discount chain Budgetline has doubled its market share in ten years, and that suppliers, many of them small farms and food manufacturers, already complain that the largest grocers use their buying power to push down the prices they are paid. Table 1 shows market shares (per cent of grocery sales).
   $$\begin{array}{l|c|c} \hline \text{Retailer} & \text{Ten years ago} & \text{This year} \\ \hline \text{FreshCo} & 30 & 27 \\ \text{Valumart} & 23 & 22 \\ \text{Northfield} & 17 & 15 \\ \text{Harlow's} & 13 & 12 \\ \text{Budgetline (discounter)} & 4.5 & 9 \\ \text{Other retailers} & 12.5 & 15 \\ \hline \text{Total} & 100 & 100 \\ \hline \end{array}$$
   (a)

   With the help of a cost diagram, examine how the proposed merger could affect the average costs of the merged firm.

   [10]
   (b)

   Using Extract A, Table 1 and your own knowledge, evaluate whether the competition authority should allow the merger to go ahead.

   [25]
2. Question 240 marks · Supply-side policies, LRAS, types of unemployment, demand-side policy
   Supply-side policies and unemployment. Over the past decade, several advanced economies have combined relatively low national unemployment rates with weak productivity growth. At the same time, unemployment has stayed persistently higher in regions where traditional industries such as manufacturing and mining have declined, and many employers report difficulty finding workers with the skills they need.
   (a)

   Using an aggregate demand and aggregate supply diagram, explain how supply-side policies could increase an economy's long-run aggregate supply.

   [15]
   (b)

   Evaluate the view that supply-side policies are the most effective way to reduce unemployment.

   [25]
3. Question 325 marks · Income inequality, progressive taxation, redistribution
   Income inequality and taxation. Evaluate the view that raising income tax rates on high earners is the most effective way for a government to reduce income inequality.

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