2024_AQA: A-level ECONOMICS Paper 3 Economic Principles and Issues (Merged Question paper and marking scheme): Friday 7 June 2024

2024_AQA: A-level ECONOMICS Paper 3 Economic Principles and Issues (Merged Question paper and marking scheme): Friday 7 June 2024 Please write clearly in block capitals. Centre number Surname Forename(s) Candidate number Candidate signat ure A-level I declare this is my own work. ECONOMICS Paper 3 Economic Principles and Issues Friday 7 June 2024 Materials For this paper you must have:  the Insert  a calculator. Instructions  Answer all questions. Morning Time allowed: 2 hours For Examiner’s Use Section Mark A B  Use black ink or black ball-point pen. Pencil should only be used for drawing.  Fill in the boxes at the top of this page. TOTAL  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 answer book. Cross through any work that you do not want to be marked. Information  The maximum mark for this paper is 80.  The marks for questions are shown in brackets.  No deductions will be made for wrong answers. A-level Economics Paper 3 – Economic Principles and Issues Key Areas to Revise for Friday 7 June 2024 Overview: Paper 3 will focus on the application of economic theory to real-world issues. You will be expected to analyze and evaluate key economic principles and issues, drawing upon your understanding of both microeconomic and macroeconomic concepts. The key to success in this paper is demonstrating your ability to apply economic models and concepts to practical problems and to think critically about the implications of these issues. Key Areas to Revise: 1. Application of Economic Principles:  Microeconomic Principles: o Market Structure: Understand the characteristics of different market structures such as perfect competition, monopolistic competition, oligopoly, and monopoly. Be able to discuss how firms behave in each type of market and the economic outcomes (prices, output, efficiency) they lead to. o Market Failure: Revise the causes and consequences of market failure, including externalities (both positive and negative), public goods, merit and demerit goods, and information failure. Be able to evaluate the role of government intervention in correcting market failures. o Elasticities: Understand how price elasticity of demand (PED), price elasticity of supply (PES), income elasticity (YED), and cross elasticity (XED) influence market outcomes and how businesses and governments can use this information.  Macroeconomic Principles: o Aggregate Demand and Aggregate Supply: Review the components of AD (consumption, investment, government spending, and net exports) and the factors influencing both AD and AS. Be able to explain how changes in AD and AS impact the economy, such as shifts in economic equilibrium, inflation, and unemployment. o Fiscal and Monetary Policy: Understand how the government uses fiscal policy (taxation and government spending) and how the central bank uses monetary policy (interest rates, money supply) to manage the economy, control inflation, and address unemployment. 2. Economic Issues:  Inequality and Poverty: o Understand the causes and consequences of income inequality and poverty, and the policies that can address these issues (e.g., progressive taxation, welfare programs, minimum wage). o Be familiar with the debates surrounding income distribution, wealth inequality, and the trade-offs that policymakers face when trying to reduce inequality without discouraging growth or efficiency.  Unemployment: o Review the different types of unemployment (cyclical, structural, frictional) and the factors that lead to high levels of unemployment. Be able to analyze the consequences of unemployment for individuals and the economy as a whole and the policies that can address unemployment.  Global Issues and International Trade: o Trade Theories: Review the concepts of absolute advantage, comparative advantage, and the benefits of free trade. Understand how international trade leads to specialization, efficiency, and global economic integration. o Trade Barriers: Be aware of different trade barriers such as tariffs, quotas, and subsidies, and understand the arguments for and against these measures. 3. Evaluation of Economic Policies: 4. Real-World Application of Economic Theory: 5. Policy and Evaluation in the Context of National and International Economics: 7136/3 IB/G/Jun24/G4001/E9 2 Do not write outside the box Section A IB/G/Jun24/7136/3 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 consequence of the basic economic problem of limited resources and unlimited wants? [1 mark] A All goods and services will have a market price B Employment of factors of production has an opportunity cost C Markets are unable to allocate resources efficiently D There will not be an excess supply in markets 0 2 A profit-maximising firm, in the service sector, needs to recruit a new employee. Which one of the following explains why asymmetric information could mean that the most suitable person is not chosen? [1 mark] A It is difficult to calculate the marginal revenue productivity of workers in the service sector B Occupational immobility of labour means that there is a limited supply of workers with the right skill set C The firm may have to recruit the worker from the local area because labour is often geographically immobile D The firm is unlikely to know everything about job applicant’s skills, abilities and motivation 3 Do not write outside the box IB/G/Jun24/7136/3 0 3 Figure 1 shows the production possibility boundary for petrol-powered cars and electric- powered cars in a country's car industry. Figure 1 If production has moved from Point A to Point B, which one of the following must be true? [1 mark] A Allocative efficiency in the car industry is unchanged B Demand for electric-powered vehicles has increased C Productive efficiency in the car industry is unchanged D Static efficiency in the car industry has improved 0 4 A household's annual income increases from £35 000 to £38 500. All other things being equal, if the household's income elasticity of demand for Good X is –0.2 and its income elasticity of demand for Good Y is 0.4, which one of the following statements is correct? [1 mark] A Spending on Good X will fall by £70 and spending on Good Y will increase by £140 B Spending on Good X will fall by £700 and spending on Good Y will increase by £1400 C Spending on Good X will fall by 2% and spending on Good Y will increase by 4% D Spending on Good X will fall by 20% and spending on Good Y will increase by 40% Turn over ► 4 Do not write outside the box Table 1 shows the effect of cash benefits and taxes on household incomes in the UK in IB/G/Jun24/7136/3 2020–21. Table 1 Income of top quintile (£s) Income of bottom quintile (£s) Ratio of top to bottom quintile Original income .1 plus cash benefits .4 Gross income .1 less direct taxes .1 Disposable income .9 less indirect taxes .4 Post-tax income .0 Source: Office for National Statistics Which one of the following can be concluded from the data in Table 1 regarding the distribution of income between the top and bottom quintile of households? [1 mark] A Cash benefits were less effective than direct taxes in redistributing income from the bottom quintile of households to the top quintile B Direct taxes made the distribution of income more unequal C Indirect taxes made the distribution of income more unequal D Indirect taxes were more effective than cash benefits in redistributing income from the top quintile of households to the bottom quintile 0 5 5 Do not write outside the box Table 2 shows the UK's balance of trade in goods and services in successive quarters. IB/G/Jun24/7136/3 Table 2 Quarter 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 Balance of trade (£bn) –8.5 3.6 0.9 –12.1 –4.7 –25.3 –25.0 What was the UK's median quarterly balance of trade over the period shown in Table 2? [1 mark] A –£12.1bn B –£10.2bn C –£8.5bn D £11.4bn 0 7 Which one of the following is an injection into the circular flow of income? [1 mark] A Factor incomes B Government borrowing C Investment D Savings Turn over for the next question Turn over ► 0 6 6 Do not write outside the box IB/G/Jun24/7136/3 0 8 Figure 2 shows the total utility that a consumer derives from their daily consumption of bananas. Figure 2 Based on the information in Figure 2, which one of the following statements is correct? [1 mark] A A rational consumer will choose to consume 3 bananas each day B Diminishing marginal utility sets in with the consumption of the 4th banana C Marginal utility is maximised with the consumption of the 3rd banana D Marginal utility from consuming the 3rd banana is less than the 2nd 7 Do not write outside the box IB/G/Jun24/7136/3 0 9 A government introduces a number of supply-side policies that increase the size of the country's working population and labour productivity. All other things being equal, which one of the following statements identifies the most likely effects of the policies on the country's economy? [1 mark] A An increase in real national income and a reduction in the balance of payments deficit B An increase in short-run economic growth and inflation C An increase in the trend rate of economic growth and a growing balance of payments deficit D A reduction in unemployment and an increase in inflation 1 0 Figure 3 shows how the markets for Good X and Good Y are affected by an increase in the demand for Good X. Figure 3 It can be concluded that Good X and Good Y are in [1 mark] A competitive demand. B composite demand. C derived demand. D joint supply. Turn over ► 8 Do not write outside the box IB/G/Jun24/7136/3 1 1 Figure 4 shows the short-run average costs (AC), marginal costs (MC), average revenue (AR) and marginal revenue (MR) curves for a typical firm in a monopolistically competitive market. Figure 4 In the long run, market forces are most likely to cause the firm's revenue curves to [1 mark] A shift left and become flatter. B shift left and become steeper. C shift right and become flatter. D shift right and become steeper. 9 Do not write outside the box IB/G/Jun24/7136/3 1 2 According to the kinked demand curve model of oligopoly, which one of the following would be most likely to explain price stability in an oligopolistic market? [1 mark] A A firm's revenue would fall with any change in price B Collusion between firms is likely to lead to price-fixing C Firms do not seek to maximise their profits D Individual firms do not have the ability to set prices 1 3 Table 3 shows how the price affects the number of shirts a shop sells in a week. Table 3 Price of shirts Number of shirts sold £40 10 £36 11 £33 12 The marginal revenue of the 12th shirt sold is [1 mark] A –£3 B £0 C £33 D £396 Turn over for the next question Turn over ► 10 Do not write outside the box IB/G/Jun24/7136/3 1 4 In 2015, the UK government introduced a tax on firms using landfill sites to dispose of waste. After the tax was introduced, there was a significant rise in illegal dumping of waste. This is most likely to be an example of [1 mark] A a negative externality in consumption. B government failure due to unintended consequences. C market failure resulting from imperfect information. D the tragedy of the commons. 1 5 Which one of the following functions of money is likely to be most effective during a period of deflation? [1 mark] A Measure of value B Standard of deferred payment C Store of value D Unit of account 11 Do not write outside the box IB/G/Jun24/7136/3 1 6 An economy's long-run trend rate of economic growth in real gross domestic product (GDP) is 2.8% per annum. In 2018, the economy's actual real GDP was equal to its trend level of real GDP. Table 4 shows the economy's actual rate of growth in real GDP over a five-year period. Tabl e 4 Year Change in real GDP 2019 2.0% 2020 2.8% 2021 3.5% 2022 3.4% 2023 1.8% All other things being equal, in which year was the economy likely to experience the most inflationary pressure? [1 mark] A 2020 B 2021 C 2022 D 2023 Turn over for the next question Turn over ► 12 Do not write outside the box Table 5 shows a household's income and the amount the household has to pay in tax for IB/G/Jun24/7136/3 three taxes. Table 5 Income (£) Tax F (£) Tax G (£) Tax H (£) 500 500 1 800 000 4 000 Which one of the following statements is correct? [1 mark] A Tax F is a progressive tax and Tax H is a progressive tax B Tax F is a regressive tax and Tax G is a progressive tax C Tax F is a regressive tax and Tax G is a proportional tax D Tax F is a regressive tax and Tax H is a regressive tax 1 7 13 Do not write outside the box IB/G/Jun24/7136/3 1 8 Figure 5 shows the short-run average cost curve (SRAC) for a firm producing electrical components. Figure 5 Which one of the following is most likely to explain the change in short-run average cost when output rises from 5 units to 10 units? [1 mark] A Falling total costs of production B Increasing marginal returns to labour C Increasing returns to scale D Technical economies of scale Turn over for the next question Turn over ► 14 Do not write outside the box IB/G/Jun24/7136/3 1 9 Table 6 shows the national debt and gross domestic product (GDP) for the UK in the second quarters of 2020 and 2022. Table 6 Year National debt GDP (£bn) (£bn) All other things being equal, which one of the following is most likely to help the government manage the impact of the changes shown in Table 6? [1 mark] A Contractionary monetary policy by the Bank of England B Falling demand for government bonds from foreign investors C Rising interest rates in global financial markets D Sustained rises in nominal national income in future years A firm has a downward-sloping average revenue curve and a U-shaped average total cost curve. Which one of the following meets the condition required for the firm to be productively efficient? The firm is producing the quantity at which [1 mark] A average revenue equals average total cost. B average revenue equals marginal cost. C marginal cost equals average total cost. D marginal revenue equals marginal cost. 0 2 15 Do not write outside the box All other things being equal, Table 7 shows how the number of workers employed by a IB/G/Jun24/7136/3 profit-maximising firm affects its total output per hour and the price it is able to charge for the product produced. Table 7 Number of workers Total output per hour Price (£) 1 3 5.00 2 7 4.50 3 15 4.20 4 20 4.10 5 24 4.00 The firm pays its workers £18 per hour. It does not have any other variable costs and its fixed costs are £3 per hour. How many workers will the firm employ? [1 mark] A 2 B 3 C 4 D 5 Turn over for the next question Turn over ► 2 1 16 Do not write outside the box IB/G/Jun24/7136/3 2 2 Figure 6 shows a perfectly competitive labour market. The left-hand diagram shows the supply of labour (SLI) and demand for labour (DLI) for the industry. The right-hand diagram shows the demand for labour (DLF) for one firm in the industry. Figure 6 All other things being equal, which one of the following is most likely to cause an increase in the wage rate paid by the firm? [1 mark] A A decrease in the price of a substitute for the industry's product B A price increase for a good jointly demanded with the industry's product C An increase in the number of workers qualified to work in the industry D An increase in the price of the industry's product caused by changing tastes 17 Do not write outside the box IB/G/Jun24/7136/3 2 3 Figure 7 shows two long-run aggregate supply curves (LRAS) for an economy. Figure 7 Which one of the following is most likely to explain the shift of the long-run aggregate supply curve from LRAS1 to LRAS2? [1 mark] A A reduction in the basic and higher rates of income tax B A reduction in the geographical mobility of labour C An increase in immigration D An increase in imports of goods and services Turn over for the next question Turn over ► 18 Do not write outside the box IB/G/Jun24/7136/3 2 4 Following a reduction in the level of cash reserves required by the regulator, a commercial bank increases its mortgage lending. Which one of the following describes how the bank’s liquidity and profitability are most likely to change? [1 mark] A Liquidity and profitability both improve B Liquidity and profitability both worsen C Liquidity improves and profitability worsens D Liquidity worsens and profitability improves country joins a customs union. Which one of the following is the most likely sequence of its membership? [1 mark] Exports to non-member countries will increase Exports to other member countries will be more expensive Imports from non-member countries will be cheaper Imports from other member countries will increase hich one of the following helps to explain why, in a freely floating exchange rate system, arket forces are likely to automatically reduce a deficit or surplus on a country's balance trade? [1 mark] A deficit will lead to excess demand for the country's currency and a depreciating exchange rate. A deficit will lead to excess supply of the country's currency and an appreciating exchange rate. A surplus will lead to excess demand for the country's currency and an appreciating exchange rate. A surplus will lead to excess supply of the country's currency and a depreciating exchange rate. 2 5 A con A B C D 2 6 W m of A B C D 19 Do not write outside the box IB/G/Jun24/7136/3 2 7 Table 8 shows an index of copper exports for a country during the years 2020 to 2023. Table 8 Year Index of copper exports (2020 = 100) 2020 100.0 2021 106.0 2022 112.1 2023 118.0 Which one of the following statements is correct? [1 mark] A Between 2020 and 2023, the mean annual rate of growth in the country's exports of copper was 6% B In 2022, the country's exports of copper grew by 6.1% C The highest rate of growth in the country's exports of copper was in 2023 D The rate of growth in the country's exports of copper was higher in 2021 than in 2022 Turn over for the next question Turn over ► 20 Do not write outside the box IB/G/Jun24/7136/3 2 8 Table 9 shows the price index for an economy at the end of each of the years from 2019 to 2023. Table 9 Year Price index 2019 110 2020 108 2021 117 2022 123 2023 135 In which year did the economy experience disinflation? [1 mark] A 2020 B 2021 C 2022 D 2023 Which one of the following might be part of a market-based strategy for promoting economic growth and development in a less-developed economy? [1 mark] A Adopting a fixed exchange rate B Encouraging overseas aid C Privatising key industries D Subsidising exports 9 2 21 Do not write outside the box IB/G/Jun24/7136/3 The trade union negotiates an increase in the wage from W2 to W3. All other things being equal, unemployment in this labour market will increase by [1 mark] A 3 000 B 5 000 C 8 000 D 16 000 30 3 0 Figure 8 shows the market demand (DL) and supply (SL) of labour in a labour market with a trade union. The initial trade union negotiated wage is W2. Figure 8 Turn over for Section B Turn over ► 22 Do not write outside the box Section B IB/G/Jun24/7136/3 Answer all questions in this section. Refer to the Insert for Extracts A, B, C and D. Total for this Investigation: 50 marks Regional inequality in the UK INVESTIGATION Scenario You are an economist working for an organisation that was established to promote policies that help to improve the well-being of people living in relative poverty. You have been asked to review the extent to which there are differences between the economic prosperity of people living in different regions of the UK and the policies that might be used to reduce these differences. As part of this investigation, you are to provide answers to three questions. Referring to the Insert, study Extracts A, B and C, then use these and your knowledge of economics to help you answer Questions 31 and 32. There is also a news report, Extract D, which is to be used with the other extracts to help answer Question 33. 3 1 To what extent, if at all, do the data suggest that people living in the South East (SE) of England are better off than people living in the North East (NE) of England? [10 marks] 23 Do not write outside the box IB/G/Jun24/7136/3 Turn over ► 24 Do not write outside the box IB/G/Jun24/7136/3 25 Do not write outside the box IB/G/Jun24/7136/3 Extra space Turn over ► 26 Do not write outside the box IB/G/Jun24/7136/3 3 2 Explain why investment in infrastructure in the less-prosperous regions could help to improve the prosperity of people living in these regions. [15 marks] 27 Do not write outside the box IB/G/Jun24/7136/3 Turn over ► 28 Do not write outside the box IB/G/Jun24/7136/3 29 Do not write outside the box Extra space IB/G/Jun24/7136/3 Turn over ► 30 Do not write outside the box IB/G/Jun24/7136/3 3 3 After considering Extract D, and the original evidence in Extracts A, B and C, would you recommend that the government intervene in the economy to try to reduce the differences in the economic prosperity of the various regions of the United Kingdom? Justify your recommendation. [25 marks] 31 Do not write outside the box IB/G/Jun24/7136/3 Turn over ► 32 Do not write outside the box IB/G/Jun24/7136/3 33 Do not write outside the box Extra space IB/G/Jun24/7136/3 Turn over ► 34 Do not write outside the box IB/G/Jun24/7136/3 35 Do not write outside the box IB/G/Jun24/7136/3 END OF QUESTIONS 50 36 Do not write outside the box There are no questions printed on this page IB/G/Jun24/7136/3 DO NOT WRITE ON THIS PAGE ANSWER IN THE SPACES PROVIDED 37 Question number Additional page, if required. Write the question numbers in the left-hand margin. IB/G/Jun24/7136/3 Do not write outside the box 38 Question number Additional page, if required. Write the question numbers in the left-hand margin. IB/G/Jun24/7136/3 Do not write outside the box 39 Question number Additional page, if required. Write the question numbers in the left-hand margin. IB/G/Jun24/7136/3 Do not write outside the box 40 Do not write outside the box There are no questions printed on this page IB/G/Jun24/7136/3 DO NOT WRITE ON THIS PAGE ANSWER IN THE SPACES PROVIDED Copyright information For confidentiality purposes, all acknowledgements of third-party copyright material are published in a separate booklet. This booklet is published after each live examination series and is available for free download from . Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright-holders may have been unsuccessful and AQA will be happy to rectify any omissions of acknowledgements. If you have any queries please contact the Copyright Team. Copyright © 2024 AQA and its licensors. All rights reserved. A-level ECONOMICS 7136/3 Paper 3 Economic Principles and Issues Mark scheme June 2024 Version: 1.0 Final MARK SCHEME – A-LEVEL ECONOMICS – 7136/3 – JUNE 2024 Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all associates participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the students’ responses to questions and that every associate understands and applies it in the same correct way. As preparation for standardisation each associate analyses a number of students’ scripts. Alternative answers not already covered by the mark scheme are discussed and legislated for. If, after the standardisation process, associates encounter unusual answers which have not been raised they are required to refer these to the Lead Examiner. It must be stressed that a mark scheme is a working document, in many cases further developed and expanded on the basis of students’ reactions to a particular paper. Assumptions about future mark schemes on the basis of one year’s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. No student should be disadvantaged on the basis of their gender identity and/or how they refer to the gender identity of others in their exam responses. A consistent use of ‘they/them’ as a singular and pronouns beyond ‘she/her’ or ‘he/him’ will be credited in exam responses in line with existing mark scheme criteria. Further copies of this mark scheme are available from Copyright information AQA retains the copyright on all its publications. However, registered schools/colleges for AQA are permitted to copy material from this booklet for their own internal use, with the following important exception: AQA cannot give permission to schools/colleges to photocopy any material that is acknowledged to a third party even for internal use within the centre. Copyright © 2024 AQA and its licensors. All rights reserved. 2 MARK SCHEME – A-LEVEL ECONOMICS – 7136/3 – JUNE 2024 SECTION A KEY LIST 1 B 11 A 21 C (Employment of factors of production has an opportunity cost) (shift left and become flatter.) (4) 2 D 12 A 22 D (The firm is unlikely to know everything about job applicants' skills, abilities and motivation) (A firm's revenue would fall with any change in price) (An increase in the price of the industry's product caused by changing tastes) 3 C 13 B 23 B (Productive efficiency in the car industry is unchanged) (£0) (A reduction in the geographical mobility of labour) 4 C 14 B 24 D (Spending on Good X will fall by 2% and spending on Good Y will increase by 4%) (government failure due to unintended consequences.) (Liquidity worsens and profitability improves) 5 C 15 C 25 D (Indirect taxes made the distribution of income more unequal) (Store of value) (Imports from other member countries will increase) 6 C 16 C 26 C (–£8.5bn) (2022) (A surplus will lead to excess demand for the country's currency and an appreciating exchange rate) 7 C 17 C 27 D (Investment) (Tax F is a regressive tax and Tax G is a proportional tax) (The rate of growth in the country's exports of copper was higher in 2021 than in 2022) 8 D 18 B 28 C (Marginal utility from consuming the 3rd banana is less than the 2nd) (Increasing marginal returns to labour) (2022) 9 A 19 D 29 C (An increase in real national income and a reduction in the balance of payments deficit) (Sustained rises in nominal national income in future years) (Privatising key industries) 10 D 20 C 30 C (joint supply) (marginal cost equals average total cost.) (8 000) 3 MARK SCHEME – A-LEVEL ECONOMICS – 7136/3 – JUNE 2024 Level of response marking instructions Level of response mark schemes are broken down into levels, each of which has a descriptor. The descriptor for the level shows the average performance for the level. There are marks in each level. Before you apply the mark scheme to a student’s answer read through the answer and annotate it (as instructed) to show the qualities that are being looked for. You can then apply the mark scheme. Step 1 Determine a level Start at the lowest level of the mark scheme and use it as a ladder to see whether the answer meets the descriptor for that level. The descriptor for the level indicates the different qualities that might be seen in the student’s answer for that level. If it meets the lowest level then go to the next one and decide if it meets this level, and so on, until you have a match between the level descriptor and the answer. With practice and familiarity you will find that for better answers you will be able to quickly skip through the lower levels of the mark scheme. When assigning a level you should look at the overall quality of the answer and not look to pick holes in small and specific parts of the answer where the student has not performed quite as well as the rest. If the answer covers different aspects of different levels of the mark scheme you should use a best fit approach for defining the level and then use the variability of the response to help decide the mark within the level, ie if the response is predominantly level 3 with a small amount of level 4 material it would be placed in level 3 but be awarded a mark near the top of the level because of the level 4 content. Step 2 Determine a mark Once you have assigned a level you need to decide on the mark. The descriptors on how to allocate marks can help with this. The exemplar materials used during standardisation will help. There will be an answer in the standardising materials which will correspond with each level of the mark scheme. This answer will have been awarded a mark by the Lead Examiner. You can compare the student’s answer with the example to determine if it is the same standard, better or worse than the example. You can then use this to allocate a mark for the answer based on the Lead Examiner’s mark on the example. You may well need to read back through the answer as you apply the mark scheme to clarify points and assure yourself that the level and the mark are appropriate. Indicative content in the mark scheme is provided as a guide for examiners. It is not intended to be exhaustive and you must credit other valid points. Students do not have to cover all of the points mentioned in the Indicative content to reach the highest level of the mark scheme. An answer which contains nothing of relevance to the question must be awarded no marks. 4 MARK SCHEME – A-LEVEL ECONOMICS – 7136/3 – JUNE 2024 SECTION B INVESTIGATION Total for this investigation: 50 marks 3 1 To what extent, if at all, do the data suggest that people living in the South East (SE) of England are better off than people living in the North East (NE) of England? [10 marks] Level of response Response Max 10 marks Level 3 A good response that:  is well organised and includes at least three relevant, well-developed issues  makes effective use of the numerical/statistical data in Extract B  shows some appreciation of the limitations of the data  includes a supported final judgement concerning the extent to which the data support the view that people living in the South East (SE) of England are better off than people living in the North East (NE) of England. 8–10 marks Level 2 A reasonable response that:  is fairly well organised and includes at least two relevant and fairly well-developed issues  includes some satisfactory use of the numerical/statistical data in Extract B  may show some appreciation of the limitations of the data  at the top of the level, is likely to include a final judgement regarding the extent to which the data support the view that people living in the South East (SE) of England are better off than people living in the North East (NE) of England. 4–7 marks Level 1 A weak response that:  is very brief and/or lacks coherence  may include one or more superficial points regarding the extent to which the data suggest that people living in the South East (SE) of England are better off than people living in the North East (NE) of England.  contains very limited or poor use of the data in Extract B  doesn’t show any appreciation of the limitations of the data  may include an unsupported judgement concerning the extent to which people living in the South East (SE) of England are better off than people living in the North East (NE) of England. 1–3 marks When assessing the extent to which the data support the view that people living in the South East (SE) of England are better off than people living in the North East (NE) of England, most students are likely to base their assessment on the data in Extract B. However, they can also be rewarded for making relevant use of the other extracts and their own knowledge. 5 MARK SCHEME – A-LEVEL ECONOMICS – 7136/3 – JUNE 2024 Relevant issues include:  explanation of what is meant by ‘better off’ and factors that might indicate whether some households are better off than others, eg real income, wealth, health, education, opportunity, the social and natural environment in which people live  the data in Figure 2 show that a significantly higher proportion of people aged between 16 and 64 are in employment in the SE (78.2%) than in the NE (71.7%) and that the unemployment rate is lower, SE (3.0%) and the NE (4.2%), supporting the proposition that people living in the SE are better off than people in the NE  economic inactivity is also significantly lower in the SE (19.4%) than the NE (25.2%)  explanation of why the data for employment and unemployment support the proposition that people living in the SE are better off than people in the NE  all three measures of average income, shown in Figure 3, support the proposition that people living in the SE are better off than people in the NE. GDP per head is 49% higher (SE = £34 516, NE = £23 109). GDHI per head is 41% higher (SE = £24 551, NE = £17 416). Median weekly earnings are 18% higher (SE = £685, NE = £580).  explanation of why the data for average income support the proposition that people living in the SE are better off than people in the NE  recognition that the data are in nominal and not real terms, but that data published in 2016, although out-of-date, suggests differences in the price level may not be very significant  Figure 5 shows that average house prices are substantially lower in the NE (£163 000) than in the SE (£402 000), this is means that typical mortgage repayments for people buying a house in the NE are likely to be lower than in the SE, partially offsetting the differences in average nominal incomes  relative house prices reflect different demand and supply conditions and the lower house prices in the NE give some support to the view that people in the SE are better off than people in the NE  explaining why a net outflow of people from a region may suggest it is not a very prosperous location  Figure 1 shows that both the SE (17 683) and NE (4 628) experienced a net inflow of people in 2020 and although, as a proportion of the population, the net inflow for the SE (0.19%) is greater than for the NE (0.17%), this does not suggest that the SE is significantly more prosperous than the NE  Figure 4 shows that public spending per head in the NE (£16 662) is higher than in the SE (£15 650), but not markedly so, perhaps indicating that the government may be spending more per head in the NE to try to reduce regional disparities  explanation of why higher public spending per head in the NE than the SE may help to raise living standards in the NE compared to the SE  Figure 4 also shows that public sector revenue per head in the NE (£8 699) is significantly lower than in the SE (£14 013), probably reflecting the lower levels of income, spending and economic activity in the region  the net fiscal deficit per head in the NE (£7 963) is significantly higher than in the SE (£1 637), perhaps indicating an attempt by the government to reduce regional inequality  the share of employment in the public sector is higher in the NE (21.2%) than the SE (14.9%) showing that the NE is more dependent on the government for employment than the SE  the share of employment in manufacturing is higher in the NE (8.8%) than the SE (5.7%) but this does not necessarily reflect differences in how well-off people are in the NE compared to the SE  limitations of the data might, for example, include: o the difference in the price level in the two regions is not given and hence it is not possible to judge the extent to which average real incomes differ o some of the indicators are averages for the region and hide differences within each region o there is no indication of environmental factors that might affect how well-off people are o there are no social indicators, eg crime rates, life expectancy, housing quality, hours worked/leisure time o the data showing average house prices does not give any indication of the size or quality of the ‘average house’ in the two regions  an overall assessment of the extent to which the data support the view that people living in the South East of England are better off than people living in the North East of England. 6 MARK SCHEME – A-LEVEL ECONOMICS – 7136/3 – JUNE 2024 As indicated in the level of response mark grid, a good response will include a supported final judgement concerning the extent to which the data support the view that people living in the South East of England are better off than people living in the North East of England. A good response will quote relevant data to support the judgement, the data will be quoted accurately and why the data helps to indicate whether people are better off in the SE than the NE will be explained. It is likely that good answers will conclude that the data supports the view that, on average, people living in the South East of England are better off than people living in the North East of England. However, they should not be penalised for a different conclusion, provided it is well supp