Oxford Cambridge and RSA
GCE
Economics
H460/01: Microeconomics
*1354546427*
A Level
Monday 12 May 2025 – Morning
INSTRUCTIONS
• Use black ink. You can use an HB pencil, but only for graphs and diagrams.
• Write your answer to each question in the space provided. If you need extra space use
the lined pages at the end of this booklet. The question numbers must be clearly shown.
• Answer all the questions in Section A, one question in Section B and one question in
Section C.
INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document has 20 pages.
ADVICE
• Read each question carefully before you start your answer.
© OCR 2025 [601/4799/4] DC (ST/CB) 361904/8
OCR is an exempt Charity
Turn over
Section A
Read the stimulus material and answer all the parts of Question 1.
Bottled water in the UK
Opinions often differ as to which is better, bottled or tap water? Bottled water has seen a
huge increase in its popularity in the last 50 years. Bottled water consumption in the UK
has increased from just one 300ml bottle per head in the mid-1970s to 37 litres a head
in 2021, according to Retail Economics’ chief executive.
It was often assumed that the biggest reason for the rise in sales of bottled water was its 5
convenience but studies have shown that over half of the plastic bottles were consumed in the
home. The consumption of plastic bottles creates external costs. Their production creates CO2
emissions and this environmental impact continues from their transportation right through to
when they are discarded. Some plastic bottles take over 500 years to decompose in landfill sites.
They are one of the most common items found in the stomachs of sea life such as dolphins and
, 2
whales. 10
With the UK having some of the cleanest tap water in the world, it is understandable why
environmental groups campaign against the use of plastic bottles for water. This would appear to
be an example of information failure in the consumption of water.
Branded water has been the driving force behind the growth in sales with Britons spending £1bn
out of a total market spend of £1.6bn on brands such as Evian and Volvic. 3.5 billion plastic water 15
bottles are consumed each year and 2.5 billion of these are from branded water bottles. Some
economists predict that with the trend in increased advertising by these water brands, this could
rise to 2.8bn bottles in 2028.
The UK Water industry
Both the market power and the environmental impact of the water industry have been a topic of
much debate in the UK recently. Water companies are permitted by the regulator to release 20
untreated sewage into the UK’s network of rivers and the sea when there are high levels of
rainfall. United Utilities recently paid out over £300m in dividends to its shareholders, yet,
according to data from the Environment agency it is one of England’s most polluting water
companies.
Fig. 1
Pollution incidents by water companies 2020
Incidents per 10,000 km (6,214 miles) of sewers in 2020
South West 131
Southern 102
Anglian 28
Thames 27
Wessex 25
Yorkshire 24
Severn Trent 21
United Utilities 19
North 1
umbr 4
ian
Over 200 2
000 people 5
work in the
industry
itself, or in
related
employment.
The industry 3
0
has been
striving to
achieve a
net zero
carbon
emission
target by
2030 with
initiatives
such as
increased
© OCR 2025
, 3
renewable
energy
generation,
planting
trees to
restore
original
woodland
habitats and
encouraging
consumers
to reduce
water
consumption
.
The English
and Welsh
water industry
was privatised
in 1989. Most
water and
sewage
companies act
as regional
monopolies.
Each has their
own dedicated
set of pipes
providing
water into
their area.
Fig. 2
Overflowing
with cash
Oper
Rev atin
Comp
enu g
any
e (£) profi
t (£)
Anglia 1.4b 392
n n m
Water
North 758 195
umbri m m
an
Water
Sever 1.7b 458
n n m
Trent
Water
© OCR 2025 Turn over
, 4
South 820 139
ern m m
Water
South 544 198
West m m
Water
Tham 2.1b 489
es n m
Water
United 1.8b 602
Utilitie n m
s
Wess 517 160
ex m m
Water
Yorks 1.1b 241
hire n m
Water
Total 10.7 2.8b
bn n
Regulation of
the water
industry
The
industry is
regulated
by the
office of
the water
regulator
(OFWAT)
which is
responsibl
e for
ensuring
that the
industry
delivers
good
value for
consumer
s and the
environme
nt. Where
appropriat
e they will
also
promote
competitio
n in the
market.
Critics of
© OCR 2025
GCE
Economics
H460/01: Microeconomics
*1354546427*
A Level
Monday 12 May 2025 – Morning
INSTRUCTIONS
• Use black ink. You can use an HB pencil, but only for graphs and diagrams.
• Write your answer to each question in the space provided. If you need extra space use
the lined pages at the end of this booklet. The question numbers must be clearly shown.
• Answer all the questions in Section A, one question in Section B and one question in
Section C.
INFORMATION
• The total mark for this paper is 80.
• The marks for each question are shown in brackets [ ].
• Quality of extended response will be assessed in questions marked with an asterisk (*).
• This document has 20 pages.
ADVICE
• Read each question carefully before you start your answer.
© OCR 2025 [601/4799/4] DC (ST/CB) 361904/8
OCR is an exempt Charity
Turn over
Section A
Read the stimulus material and answer all the parts of Question 1.
Bottled water in the UK
Opinions often differ as to which is better, bottled or tap water? Bottled water has seen a
huge increase in its popularity in the last 50 years. Bottled water consumption in the UK
has increased from just one 300ml bottle per head in the mid-1970s to 37 litres a head
in 2021, according to Retail Economics’ chief executive.
It was often assumed that the biggest reason for the rise in sales of bottled water was its 5
convenience but studies have shown that over half of the plastic bottles were consumed in the
home. The consumption of plastic bottles creates external costs. Their production creates CO2
emissions and this environmental impact continues from their transportation right through to
when they are discarded. Some plastic bottles take over 500 years to decompose in landfill sites.
They are one of the most common items found in the stomachs of sea life such as dolphins and
, 2
whales. 10
With the UK having some of the cleanest tap water in the world, it is understandable why
environmental groups campaign against the use of plastic bottles for water. This would appear to
be an example of information failure in the consumption of water.
Branded water has been the driving force behind the growth in sales with Britons spending £1bn
out of a total market spend of £1.6bn on brands such as Evian and Volvic. 3.5 billion plastic water 15
bottles are consumed each year and 2.5 billion of these are from branded water bottles. Some
economists predict that with the trend in increased advertising by these water brands, this could
rise to 2.8bn bottles in 2028.
The UK Water industry
Both the market power and the environmental impact of the water industry have been a topic of
much debate in the UK recently. Water companies are permitted by the regulator to release 20
untreated sewage into the UK’s network of rivers and the sea when there are high levels of
rainfall. United Utilities recently paid out over £300m in dividends to its shareholders, yet,
according to data from the Environment agency it is one of England’s most polluting water
companies.
Fig. 1
Pollution incidents by water companies 2020
Incidents per 10,000 km (6,214 miles) of sewers in 2020
South West 131
Southern 102
Anglian 28
Thames 27
Wessex 25
Yorkshire 24
Severn Trent 21
United Utilities 19
North 1
umbr 4
ian
Over 200 2
000 people 5
work in the
industry
itself, or in
related
employment.
The industry 3
0
has been
striving to
achieve a
net zero
carbon
emission
target by
2030 with
initiatives
such as
increased
© OCR 2025
, 3
renewable
energy
generation,
planting
trees to
restore
original
woodland
habitats and
encouraging
consumers
to reduce
water
consumption
.
The English
and Welsh
water industry
was privatised
in 1989. Most
water and
sewage
companies act
as regional
monopolies.
Each has their
own dedicated
set of pipes
providing
water into
their area.
Fig. 2
Overflowing
with cash
Oper
Rev atin
Comp
enu g
any
e (£) profi
t (£)
Anglia 1.4b 392
n n m
Water
North 758 195
umbri m m
an
Water
Sever 1.7b 458
n n m
Trent
Water
© OCR 2025 Turn over
, 4
South 820 139
ern m m
Water
South 544 198
West m m
Water
Tham 2.1b 489
es n m
Water
United 1.8b 602
Utilitie n m
s
Wess 517 160
ex m m
Water
Yorks 1.1b 241
hire n m
Water
Total 10.7 2.8b
bn n
Regulation of
the water
industry
The
industry is
regulated
by the
office of
the water
regulator
(OFWAT)
which is
responsibl
e for
ensuring
that the
industry
delivers
good
value for
consumer
s and the
environme
nt. Where
appropriat
e they will
also
promote
competitio
n in the
market.
Critics of
© OCR 2025
