2023 AQA A-level ECONOMICS 7136/1 Paper 1 Markets and Market Failure Question Paper & Mark scheme (Merged) June 2023 [VERIFIED]

2023 AQA A-level ECONOMICS 7136/1 Paper 1 Markets and Market Failure Question Paper & Mark scheme (Merged) June 2023 [VERIFIED] A-level ECONOMICS Paper 1 Markets and Market Failure Thursday 18 May 2023 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/G/Jun23/E5 7136/1 2 Section A Answer EITHER Context 1 OR Context 2. EITHER Context 1 Electric cars and battery production Study Extracts A, B and C and then answer Extract A Table 1: Sales of cars by fuel type in the UK, 2020 and 2021 Diesel Petrol Battery Electric Hybrid Electric* Total 181 *Hybrid Electric cars use lithium-ion batteries and diesel/petrol Extract B: The electric vehicle revolution Total for this context: 40 marks all parts of Context 1 which follow. Figure 1: UK demand for lithium-ion batteries, Gigawatt hours (GWh), 2015 to 2030 Sales of electric vehicles (EVs) in Europe have jumped from 198 000 in 2018 to an expected 1.17 million in 2021. They are an alternative to petrol and diesel vehicles, which create damaging emissions through air pollution and contribute to climate change. EVs still only make up about 1% of all cars on the road, but global sales of EVs are forecast to reach 10.7 million by 5 2025 and then 28.2 million by 2030. Carmakers have announced a total of $330 billion of investment into electric and battery technology over the next five years. In fact, several manufacturers have begun to phase out petrol and diesel cars altogether. Why is this happening now? Regulations are becoming tighter. Ambitious plans to expand the use of electric vehicles are one of the most obvious ways to meet emissions targets set by 10 national governments. The UK has already announced plans to ban the sale of petrol and diesel cars by 2035. Meeting this target will require government spending to install the charging points needed to convince consumers to switch to electric vehicles. Another reason for the EV revolution is the improved choice of such vehicles. There are around 330 EV models on sale today, compared with just 86 five years ago. While many are still more 15 expensive than petrol vehicles, they boast substantially lower running costs, even more so as global petrol prices rise. Also, many governments still offer generous financial incentives to encourage people to purchase EVs. IB/G/Jun23/7136/1 3 Driving cars of all fuel types creates environmental problems, traffic congestion and road traffic accidents. Critics have suggested that, instead of governments offering subsidies and tax exemptions for electric vehicles, all vehicle owners should be forced to pay the full costs of their 20 driving. This would incentivise people to consider using public transport, cycling or walking. Source: News reports, 2021 Extract C: Are electric vehicles as green as claimed? Redwood Materials, a US firm, recycles discarded batteries into a fresh supply of metals needed for new cars. Its goal is to solve the most glaring problem for electric vehicles. While they are ‘zero emission’ when being driven, the mining, manufacturing and disposal process for batteries could soon become an environmental disaster. Cobalt, one of the metals used in batteries, typically originates in the Democratic Republic of Congo, where it is extracted in large 5 energy-intensive industrial mines and also dug by hand using basic tools. Then it might be shipped to Finland, home to Europe’s largest cobalt refinery, before heading to China where the majority of the world’s battery production occurs. From there it can be shipped to the US or Europe for packing, then shipped again to car factories. In all, the cobalt can travel more than 20 000 miles before becoming part of a ‘zero emission’ car. 10 Every day, about 60 tonnes of old smartphones, power tools and scooter batteries are delivered to Redwood’s warehouse. The firm then separates out the nickel, cobalt and lithium, so that they can re-enter the supply chain as the building blocks for new lithium-ion batteries. Reclaiming these metals at scale is a massive task: roughly 10 000 smartphones need to be recycled to produce one EV battery. 15 Redwood hope to play a role in the emergence of ‘the circular economy’ – a grand hope born in the 1960s that society can re-engineer the way goods are designed, manufactured and recycled so as to avoid waste. It has been estimated that recycling batteries could account for 30% of the emissions cuts needed to meet the targets set in the Paris climate change agreement and ‘create 10 million safe and sustainable jobs around the world’ by 2030. 20 Source: News reports, 2021 0 1 0 2 0 3 Using the data in Extract A (Table 1), calculate the index of total car sales in 2021 if, in the base year, total car sales were 1.25 million. Give your answer to two decimal places. [2 marks] Explain how the data in Extract A ( Table 1 and Figure 1) show that developments in the car market are the main reason for the changing demand for lithium-ion batteries in the UK. [4 marks] Extract C (lines 3–4) states that ‘the mining, manufacturing and disposal process for batteries could soon become an environmental disaster.’ With the help of a diagram, explain why the production and sale of lithium-ion batteries might lead to market failure