2025 Pearson Edexcel Level 3 GCE Economics Advanced Subsidiary PAPER 1: Introduction to Markets and Market Failure
Combined Question Paper and Marking Scheme
Please check the examination details below before entering your candidate information
Candidate surname Other names
Centre Number Candidate Number
Pearson Edexcel Level 3 GCE
Tuesday 13 May 2025
Morning (Time: 1 hour 30 minutes) Paper
reference 8EC0/01
Economics A
Advanced Subsidiary
PAPER 1: Introduction to Markets and Market Failure
You must have: Total Marks
Source Booklet (enclosed)
Instructions
•• Use black ink or ball-point pen.
Fill in the boxes at the top of this page with your name,
centre number and candidate number.
• There are two sections in this question paper. Answer all questions in Section A.
In Section B, answer all of questions 6(a) to 6(e) and one question from either
6(f) or 6(g).
• Answer the questions in the spaces provided
– there may be more space than you need.
Information
•• The total mark for this paper is 80.
The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
•• Read each question carefully before you start to answer it.
Check your answers if you have time at the end.
Turn over
P72018A
©2025 Pearson Education Ltd.
Y:1/1/1/1/1/1/1/1/1/1/1/1
, SECTION A
Answer ALL questions. Write your answers in the spaces provided.
DO NOT WRITE IN THIS AREA
Some questions must be answered with a cross in a box . If you change your mind about an
answer, put a line through the box and then mark your new answer with a cross .
You are advised to spend 25 minutes on this section.
Use the data to support your answers where relevant. You may annotate and
include diagrams in your answers.
1 (a) Spending on capital goods in the UK rose by 4.8% in Quarter 4, 2022.
Which one of the following is an example of a capital good?
(1)
A A computer
B Savings in the bank
C Shares in a company
D Underground reserves of oil
DO NOT WRITE IN THIS AREA
(b) Using an example from your own knowledge, explain the distinction between
renewable and non-renewable resources.
(3)
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(Total for Question 1 = 4 marks)
2
, 2 (a) In 2021, a bakery sold 2.5 million sausage rolls per week at the price of £1.00 each.
In 2022 the price increased to £1.20. The price elasticity of demand was estimated
to be −0.2.
DO NOT WRITE IN THIS AREA
Calculate the new quantity of sausage rolls sold per week in 2022 after the price
increased, ceteris paribus.
(3)
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(b) Which one of the following is the most appropriate description of the price
elasticity of demand of −0.2?
(1)
DO NOT WRITE IN THIS AREA
A Perfectly inelastic
B Relatively elastic
C Relatively inelastic
D Unitary elastic
(Total for Question 2 = 4 marks)
3
Turn over
, 3 (a) The economy of Singapore is a highly developed free market economy with some
elements of government intervention.
DO NOT WRITE IN THIS AREA
Define the term ‘free market’.
(1)
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(b) Which one of the following is the most likely reason why a free market fails to
achieve the social optimum position?
(1)
A Public goods are provided free of charge to users
B There is overproduction of goods with external benefits
DO NOT WRITE IN THIS AREA
C There is underconsumption of goods with external benefits
D There is underproduction of goods with external costs
(c) Explain why public goods may not be provided by the private sector.
(2)
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(Total for Question 3 = 4 marks)
4
Combined Question Paper and Marking Scheme
Please check the examination details below before entering your candidate information
Candidate surname Other names
Centre Number Candidate Number
Pearson Edexcel Level 3 GCE
Tuesday 13 May 2025
Morning (Time: 1 hour 30 minutes) Paper
reference 8EC0/01
Economics A
Advanced Subsidiary
PAPER 1: Introduction to Markets and Market Failure
You must have: Total Marks
Source Booklet (enclosed)
Instructions
•• Use black ink or ball-point pen.
Fill in the boxes at the top of this page with your name,
centre number and candidate number.
• There are two sections in this question paper. Answer all questions in Section A.
In Section B, answer all of questions 6(a) to 6(e) and one question from either
6(f) or 6(g).
• Answer the questions in the spaces provided
– there may be more space than you need.
Information
•• The total mark for this paper is 80.
The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
•• Read each question carefully before you start to answer it.
Check your answers if you have time at the end.
Turn over
P72018A
©2025 Pearson Education Ltd.
Y:1/1/1/1/1/1/1/1/1/1/1/1
, SECTION A
Answer ALL questions. Write your answers in the spaces provided.
DO NOT WRITE IN THIS AREA
Some questions must be answered with a cross in a box . If you change your mind about an
answer, put a line through the box and then mark your new answer with a cross .
You are advised to spend 25 minutes on this section.
Use the data to support your answers where relevant. You may annotate and
include diagrams in your answers.
1 (a) Spending on capital goods in the UK rose by 4.8% in Quarter 4, 2022.
Which one of the following is an example of a capital good?
(1)
A A computer
B Savings in the bank
C Shares in a company
D Underground reserves of oil
DO NOT WRITE IN THIS AREA
(b) Using an example from your own knowledge, explain the distinction between
renewable and non-renewable resources.
(3)
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
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DO NOT WRITE IN THIS AREA
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(Total for Question 1 = 4 marks)
2
, 2 (a) In 2021, a bakery sold 2.5 million sausage rolls per week at the price of £1.00 each.
In 2022 the price increased to £1.20. The price elasticity of demand was estimated
to be −0.2.
DO NOT WRITE IN THIS AREA
Calculate the new quantity of sausage rolls sold per week in 2022 after the price
increased, ceteris paribus.
(3)
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
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DO NOT WRITE IN THIS AREA
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(b) Which one of the following is the most appropriate description of the price
elasticity of demand of −0.2?
(1)
DO NOT WRITE IN THIS AREA
A Perfectly inelastic
B Relatively elastic
C Relatively inelastic
D Unitary elastic
(Total for Question 2 = 4 marks)
3
Turn over
, 3 (a) The economy of Singapore is a highly developed free market economy with some
elements of government intervention.
DO NOT WRITE IN THIS AREA
Define the term ‘free market’.
(1)
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
(b) Which one of the following is the most likely reason why a free market fails to
achieve the social optimum position?
(1)
A Public goods are provided free of charge to users
B There is overproduction of goods with external benefits
DO NOT WRITE IN THIS AREA
C There is underconsumption of goods with external benefits
D There is underproduction of goods with external costs
(c) Explain why public goods may not be provided by the private sector.
(2)
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
............................................................................................................................... ............................................................................................................................... ......................
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DO NOT WRITE IN THIS AREA
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(Total for Question 3 = 4 marks)
4
