A-level
Economics A-level
Paper 1 Markets and Market Failure
ECONOMICS
Monday 11 May 2026 Morning Time allowed: 2 hours 7136/1
Materials Paper 1 Markets and Market Failure
For t per you must have:
• an 12-page answer book
• ac tor. Mark scheme
Instructions June 2026
• 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. Version: 1.0 Final
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
MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2026
Section A
Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant
Answer EITHER Context 1 OR Context 2.
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’
EITHER 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
Context 1 Total for this context: 40 marks 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
The UK farming sector required to refer these to the Lead Examiner.
Study Extracts A, B and C and then answer all parts of Context 1 which follow. It must be stressed that a mark scheme is a working document, in many cases further developed and
Extract A: 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
Figure 1: UK real total farm income, Figure 2: UK real average farm income, 2011–2023, assessment remain constant, details will change, depending on the content of a particular examination
2011–2023, 2023 prices (£m) 2023 prices (£) paper.
Income type 2011 2023 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.
Crops & animal
28 988 31 219 A consistent use of ‘they/them’ as a singular and pronouns beyond ‘she/her’ or ‘he/him’ will be credited in
products
exam responses in line with existing mark scheme criteria.
Subsidies 4 773 2 953
Other farm
2 742 3 500
activities Further copies of this mark scheme are available from
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
information
prices rise.
retains the on all its publications. Ho r, registered schools/colleges for are permitted to copy material from this booklet for their own
al use, wit ing important exception: cannot give permission to schoo leges to photocopy any material that is acknowledged to a
third party even for internal use within the centre.
and its licensors. All rights reserved.
2
IB/M/Jun26/7136/1
, 3
MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2026
Before the UK left the European Union (EU), British farms received EU subsidies which mainly 15
depended on the size of the farm. The UK Government is phasing out this system and replacing
it with a more complicated set of subsidies that rewards farmers for improving the natural Level of response marking instructions
environment while maintaining overall food production. In practice, most farmers are facing a
50% cut to their subsidies. Level of response mark schemes are broken down into levels, each of which has a descriptor. The
Source: News reports, 2024 descriptor for the level shows the average performance for the level. There are marks in each level.
Extract C: Responses to the farming crisis 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.
The National Farmers’ Union points out that business confidence amongst farmers is at an all-
time low, with 65% saying that their profits were declining. The Department for Environment,
Food and Rural Affairs (Defra) revealed that all farm types, except those farming pigs and Step 1 Determine a level
poultry, registered a drop in average income last year. Cereal farmers have seen their income
fall by 73%, while the income of dairy farmers fell 68% compared to the year before. The 5 Start at the lowest level of the mark scheme and use it as a ladder to see whether the answer meets the
combination of reduced subsidies, high energy and other costs, and poor harvests will drive descriptor for that level. The descriptor for the level indicates the different qualities that might be seen in
many farms into bankruptcy. Some farmers are switching away from producing food towards the student’s answer for that level. If it meets the lowest level then go to the next one and decide if it
rewilding (where fields are returned to natural landscapes) or planting biofuel crops for industrial meets this level, and so on, until you have a match between the level descriptor and the answer. With
and transport use. Such actions will impact on the UK’s ability to feed itself. 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.
Since 2019, 8000 farms have closed, more than 5% of the total. Some farmers have sold their 10
land to larger farms that have capital to reinvest in technology to boost efficiency. Mergers and When assigning a level you should look at the overall quality of the answer and not look to pick holes in
mechanisation may have serious implications for rural economies, which rely on farming as a small and specific parts of the answer where the student has not performed quite as well as the rest. If
source of employment. 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
Farming groups are calling for the new subsidy regime to be more generous to farmers and the level, ie if the response is predominantly level 3 with a small amount of level 4 material it would be
simpler to claim. They are pushing for more assistance to help farmers affected by floods and 15 placed in level 3 but be awarded a mark near the top of the level because of the level 4 content.
other natural disasters. More generous subsidies would enable farmers to experiment with
nature-friendly farming methods, such as using fewer pesticides, without sacrificing their income. Step 2 Determine a mark
However, the UK Government has so far resisted such calls, referring to the tight fiscal position
and the opportunity cost of spending more on the sector. Once you have assigned a level you need to decide on the mark. The descriptors on how to allocate
Source: News reports, 2024 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
0 1 Using the data in Extract A (Figure 1), calculate the nominal value of total farm income in answer will have been awarded a mark by the Lead Examiner. You can compare the student’s answer
2011, given that the consumer price index was 79 in 2011 and 100 in 2023. 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.
Give your answer to the nearest million pounds.
[2 marks] 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.
0 2 Explain how the data in Extract A (Figure 2) show that income from ‘Crops and animal
products’ is the most variable of all income sources for a typical farm. Indicative content in the mark scheme is provided as a guide for examiners. It is not intended to be
[4 marks] 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.
0 3 Extract B (lines 5–6) states: ‘Much of the income from a farm is dependent on the
weather, which is becoming more unpredictable and extreme due to climate change.’ An answer which contains nothing of relevance to the question must be awarded no marks.
Using a diagram, explain how changes in the weather can affect the income of farmers.
[9 marks]
0 4 Extract C (lines 14–16) states: ‘Farming groups are calling for the new subsidy regime to
be more generous to farmers and simpler to claim. They are pushing for more assistance
to help farmers affected by floods and other natural disasters.’
Evaluate the view that the Government should provide more financial support for
agriculture.
[25 marks]
3
IB/M/Jun26/7136/1 Turn over ►
Economics A-level
Paper 1 Markets and Market Failure
ECONOMICS
Monday 11 May 2026 Morning Time allowed: 2 hours 7136/1
Materials Paper 1 Markets and Market Failure
For t per you must have:
• an 12-page answer book
• ac tor. Mark scheme
Instructions June 2026
• 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. Version: 1.0 Final
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
MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2026
Section A
Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant
Answer EITHER Context 1 OR Context 2.
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’
EITHER 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
Context 1 Total for this context: 40 marks 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
The UK farming sector required to refer these to the Lead Examiner.
Study Extracts A, B and C and then answer all parts of Context 1 which follow. It must be stressed that a mark scheme is a working document, in many cases further developed and
Extract A: 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
Figure 1: UK real total farm income, Figure 2: UK real average farm income, 2011–2023, assessment remain constant, details will change, depending on the content of a particular examination
2011–2023, 2023 prices (£m) 2023 prices (£) paper.
Income type 2011 2023 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.
Crops & animal
28 988 31 219 A consistent use of ‘they/them’ as a singular and pronouns beyond ‘she/her’ or ‘he/him’ will be credited in
products
exam responses in line with existing mark scheme criteria.
Subsidies 4 773 2 953
Other farm
2 742 3 500
activities Further copies of this mark scheme are available from
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
information
prices rise.
retains the on all its publications. Ho r, registered schools/colleges for are permitted to copy material from this booklet for their own
al use, wit ing important exception: cannot give permission to schoo leges to photocopy any material that is acknowledged to a
third party even for internal use within the centre.
and its licensors. All rights reserved.
2
IB/M/Jun26/7136/1
, 3
MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2026
Before the UK left the European Union (EU), British farms received EU subsidies which mainly 15
depended on the size of the farm. The UK Government is phasing out this system and replacing
it with a more complicated set of subsidies that rewards farmers for improving the natural Level of response marking instructions
environment while maintaining overall food production. In practice, most farmers are facing a
50% cut to their subsidies. Level of response mark schemes are broken down into levels, each of which has a descriptor. The
Source: News reports, 2024 descriptor for the level shows the average performance for the level. There are marks in each level.
Extract C: Responses to the farming crisis 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.
The National Farmers’ Union points out that business confidence amongst farmers is at an all-
time low, with 65% saying that their profits were declining. The Department for Environment,
Food and Rural Affairs (Defra) revealed that all farm types, except those farming pigs and Step 1 Determine a level
poultry, registered a drop in average income last year. Cereal farmers have seen their income
fall by 73%, while the income of dairy farmers fell 68% compared to the year before. The 5 Start at the lowest level of the mark scheme and use it as a ladder to see whether the answer meets the
combination of reduced subsidies, high energy and other costs, and poor harvests will drive descriptor for that level. The descriptor for the level indicates the different qualities that might be seen in
many farms into bankruptcy. Some farmers are switching away from producing food towards the student’s answer for that level. If it meets the lowest level then go to the next one and decide if it
rewilding (where fields are returned to natural landscapes) or planting biofuel crops for industrial meets this level, and so on, until you have a match between the level descriptor and the answer. With
and transport use. Such actions will impact on the UK’s ability to feed itself. 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.
Since 2019, 8000 farms have closed, more than 5% of the total. Some farmers have sold their 10
land to larger farms that have capital to reinvest in technology to boost efficiency. Mergers and When assigning a level you should look at the overall quality of the answer and not look to pick holes in
mechanisation may have serious implications for rural economies, which rely on farming as a small and specific parts of the answer where the student has not performed quite as well as the rest. If
source of employment. 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
Farming groups are calling for the new subsidy regime to be more generous to farmers and the level, ie if the response is predominantly level 3 with a small amount of level 4 material it would be
simpler to claim. They are pushing for more assistance to help farmers affected by floods and 15 placed in level 3 but be awarded a mark near the top of the level because of the level 4 content.
other natural disasters. More generous subsidies would enable farmers to experiment with
nature-friendly farming methods, such as using fewer pesticides, without sacrificing their income. Step 2 Determine a mark
However, the UK Government has so far resisted such calls, referring to the tight fiscal position
and the opportunity cost of spending more on the sector. Once you have assigned a level you need to decide on the mark. The descriptors on how to allocate
Source: News reports, 2024 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
0 1 Using the data in Extract A (Figure 1), calculate the nominal value of total farm income in answer will have been awarded a mark by the Lead Examiner. You can compare the student’s answer
2011, given that the consumer price index was 79 in 2011 and 100 in 2023. 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.
Give your answer to the nearest million pounds.
[2 marks] 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.
0 2 Explain how the data in Extract A (Figure 2) show that income from ‘Crops and animal
products’ is the most variable of all income sources for a typical farm. Indicative content in the mark scheme is provided as a guide for examiners. It is not intended to be
[4 marks] 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.
0 3 Extract B (lines 5–6) states: ‘Much of the income from a farm is dependent on the
weather, which is becoming more unpredictable and extreme due to climate change.’ An answer which contains nothing of relevance to the question must be awarded no marks.
Using a diagram, explain how changes in the weather can affect the income of farmers.
[9 marks]
0 4 Extract C (lines 14–16) states: ‘Farming groups are calling for the new subsidy regime to
be more generous to farmers and simpler to claim. They are pushing for more assistance
to help farmers affected by floods and other natural disasters.’
Evaluate the view that the Government should provide more financial support for
agriculture.
[25 marks]
3
IB/M/Jun26/7136/1 Turn over ►
