A-level
Economics
Paper 1 Markets and Market Failure
Monday 11 May 2026 Morning Time allowed: 2 hours
Materials
For this paper you must have:
• an AQA 12-page answer book
• a calculator.
Instructions
• Use black ink or black ball-point pen. Pencil should only be used for drawing.
• Write the information required on the front cover of your answer book.
The Paper Reference is 7136/1.
• In Section A, answer EITHER Context 1 OR Context 2.
• In Section B, answer ONE essay.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 80.
• There are 40 marks for Section A and 40 marks for Section B.
Advice
• You are advised to spend 1 hour on Section A and 1 hour on Section B.
IB/M/Jun26/G4002/V4 7136/1
, 2
Section A
Answer EITHER Context 1 OR Context 2.
EITHER
Context 1 Total for this context: 40 marks
The UK farming sector
Study Extracts A, B and C and then answer all parts of Context 1 which follow.
Extract A:
Figure 1: UK real total farm income, Figure 2: UK real average farm income, 2011–2023,
2011–2023, 2023 prices (£m) 2023 prices (£)
Income type 2011 2023
Crops & animal
28 988 31 219
products
Subsidies 4 773 2 953
Other farm
2 742 3 500
activities
Total farm
36 503 37 672
income
Note: Other farm activities include income from tourism, Note: Income from ‘Crops and animal products’ is after operating costs (including
retail and energy. energy, fertiliser and animal feed) have been deducted.
Source: Department for Environment, Food & Rural Affairs (Defra), 2024
Extract B: Troubling times for UK farmers
Agriculture contributed £13.7bn to UK GDP in 2023, employing 462 000 people. It is an industry
that is important not only for its contribution to GDP and employment, but also for its role in
contributing to food security (producing 60% of food consumed in the UK) and caring for the
UK’s land and environment.
Farmers are faced with highly variable incomes. Much of the income from a farm is dependent 5
on the weather, which is becoming more unpredictable and extreme due to climate change.
The last 18 months have seen more rainfall in England than any time since 1836, leaving vast
areas of land flooded and farmers struggling to harvest and plant new crops. This has led to a
dramatic drop in the yield from some crops, including wheat and barley, which fell an estimated
21% and 26% respectively compared with the 2023 harvest. Because farms take months to 10
produce their food, production decisions are not closely linked to prices, leading to inelastic
supply. Farmers have limited ability to pass on higher costs to supermarkets and food retailers,
which have monopsonistic power and the option to import food from abroad when domestic
prices rise.
IB/M/Jun26/7136/1
Economics
Paper 1 Markets and Market Failure
Monday 11 May 2026 Morning Time allowed: 2 hours
Materials
For this paper you must have:
• an AQA 12-page answer book
• a calculator.
Instructions
• Use black ink or black ball-point pen. Pencil should only be used for drawing.
• Write the information required on the front cover of your answer book.
The Paper Reference is 7136/1.
• In Section A, answer EITHER Context 1 OR Context 2.
• In Section B, answer ONE essay.
Information
• The marks for questions are shown in brackets.
• The maximum mark for this paper is 80.
• There are 40 marks for Section A and 40 marks for Section B.
Advice
• You are advised to spend 1 hour on Section A and 1 hour on Section B.
IB/M/Jun26/G4002/V4 7136/1
, 2
Section A
Answer EITHER Context 1 OR Context 2.
EITHER
Context 1 Total for this context: 40 marks
The UK farming sector
Study Extracts A, B and C and then answer all parts of Context 1 which follow.
Extract A:
Figure 1: UK real total farm income, Figure 2: UK real average farm income, 2011–2023,
2011–2023, 2023 prices (£m) 2023 prices (£)
Income type 2011 2023
Crops & animal
28 988 31 219
products
Subsidies 4 773 2 953
Other farm
2 742 3 500
activities
Total farm
36 503 37 672
income
Note: Other farm activities include income from tourism, Note: Income from ‘Crops and animal products’ is after operating costs (including
retail and energy. energy, fertiliser and animal feed) have been deducted.
Source: Department for Environment, Food & Rural Affairs (Defra), 2024
Extract B: Troubling times for UK farmers
Agriculture contributed £13.7bn to UK GDP in 2023, employing 462 000 people. It is an industry
that is important not only for its contribution to GDP and employment, but also for its role in
contributing to food security (producing 60% of food consumed in the UK) and caring for the
UK’s land and environment.
Farmers are faced with highly variable incomes. Much of the income from a farm is dependent 5
on the weather, which is becoming more unpredictable and extreme due to climate change.
The last 18 months have seen more rainfall in England than any time since 1836, leaving vast
areas of land flooded and farmers struggling to harvest and plant new crops. This has led to a
dramatic drop in the yield from some crops, including wheat and barley, which fell an estimated
21% and 26% respectively compared with the 2023 harvest. Because farms take months to 10
produce their food, production decisions are not closely linked to prices, leading to inelastic
supply. Farmers have limited ability to pass on higher costs to supermarkets and food retailers,
which have monopsonistic power and the option to import food from abroad when domestic
prices rise.
IB/M/Jun26/7136/1
