surname names
Number Number
Paper
A ■ ■
Advanced
PAPER 3: Microeconomics and Macroeconomics
Pearson Edexcel GCE A Level In Economics A (9EC0)
Paper 03 Micro and Macro Economics
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.
In Section A, answer all questions 1(a) to 1(c) and one question from 1(d) or 1(e).
• Answer the questions in the spaces provided
In Section B, answer all questions 2(a) to 2(c) and one question from 2(d) or 2(e). – there may be more space
than you need.
Information
•• The marks for each question are shown in brackets
The total mark for this paper is 100.
•
– use this as a guide as to how much time to spend on each question. Calculators may be used.
Advice
•• Check your answers if you have time at the end.
Read each question carefully before you start to answer it.
Turn over
, SECTION A
Read Figures 1 and 2 and the following extracts (A to C) before answering Question 1.
DO NOT WRITE IN THIS AREA
Answer ALL Questions 1(a) to 1(c), and EITHER Question 1(d) OR 1(e).
Write your answers in the spaces provided.
You are advised to spend 1 hour on this section.
Question 1
The energy market
Figure 1: UK wholesale gas prices per therm, 2021, in pence
500p
Price per
therm
400p
DO NOT WRITE IN THIS AREA
352p
300p
200p
100p
0p Feb Apr Jun Aug Oct Dec
Figure 2: Number of firms supplying gas and electricity in the UK, 2004–2021
80
60
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40
20
0
2004 06 08 10 12 14 16 18 21
Gas and electricity Electricity
Gas
2
■■■■
, Extract A
Rising gas prices
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UK consumers are some of the biggest users of gas. 85% of homes use gas central heating, and gas generates a
third of the country’s electricity. North Sea gas is running out – and as Britain has replaced coal-fired energy production
with wind power in order
to reduce carbon emissions, it has become dependent on gas imports. 5
Almost all UK businesses face significant rises in fuel costs over the next few months, and there is no substitute for energy, at
least in the short run – an almost perfect example of price inelastic demand.
(Source: adapted from https://www.theecoexperts.co.uk/
blog/reasons-for-uk-gas-price-increase)
Extract B
The UK gas market is broken
During the past decade the government has allowed new entrants into the retail energy market with business models that
left them ill-prepared to achieve long term business growth. Now the UK must choose between letting its energy market
collapse and offering large subsidies for energy retailers.
5
DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA
The problem began in the 1980s and 1990s, when privatisation created an oligopolistic energy market dominated by the
“Big Six”, which paid their shareholders high dividends and their bosses excessive salaries. The government responded
to anger over high energy bills with further liberalisation. Some of the new entrants were innovative, such as Bulb, which
offered consumption-tracking apps, and Octopus, which discouraged consumption when demand was high with
dynamic pricing. But most were under- capitalised and produced no energy, merely buying it on global wholesale
markets
and selling it on. Some paid little attention to ensuring continuity of supply or forward buying of gas. 10
The constraints on energy retailers worsened in 2017 with the closure of a big
gas-storage facility, which left the UK able to store just 2% of its annual demand. Other big gas importing countries, by
contrast, can store 20%–30%. The risks rose further
in 2019, when the government capped consumer prices in response to continued complaints about high energy bills.
The perfect storm came in the summer of 2021. As economies opened up, global demand for energy rose. Gas supply 15
in Russia, a big producer, was disrupted, and unusually calm weather reduced UK wind turbine energy production to 11%
of capacity. In August Ofgem, the industry regulator, said that from October the firms would be able to raise prices for
households by 54%. But since then the wholesale price of gas paid by UK energy firms has risen by more than 70%. The
result is that UK energy firms are tied into contracts to supply gas to households at far less than they must pay to get it.
(Source: adapted from https://www.economist.com/britain/britains-gas-market-is-broken/)
20
25
■■■■
3
Turn over
, Extract C
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The gender pay gap in the oil and gas industry
Despite best efforts to try to attract more women into the oil and gas industry, females are still hugely under-represented in
science, technology, engineering and maths careers, whether school leavers, graduates or experienced workers. Women
hold under 25% of careers in these areas, and typically hold more non-technical roles, which can attract lower salaries than
technical disciplines.
5
There is an even smaller female representation in the offshore workforce (3.6%) e.g. working on rigs in the North Sea, an
area that pays higher salaries than onshore work. Despite continued efforts there is still a lack of female applications. Only
5% of the applications to the technical apprentice programme were female, of which half withdrew their applications at the
first stage of the recruitment process.
There is also a low representation of females in senior leadership roles within the oil and gas industry, especially in technical
positions. Women also generally take up part-time positions which are typically lower paid. This has resulted in the oil and 10
gas industry having an average gap in hourly pay of 25%.
In the majority of developed countries, women have made substantial progress in the labour market since the 1970s, with
both wages and labour force participation increasing relative to that for men. Notwithstanding these large improvements,
women still earn less than ‘comparable’ men in all developed countries and, since the 2000s, progress for women in the
labour market seems to have slowed.
15
(Source: adapted from https://www.harbourenergy.com/media/2a2nmavb/chr-18311- 01-gender-
DO NOT WRITE IN THIS AREA
pay-gap-2020-v6-final.pdf and https://ftp.iza.org/dp10975.pdf)
20
DO NOT WRITE IN THIS AREA
4
■■■■
Number Number
Paper
A ■ ■
Advanced
PAPER 3: Microeconomics and Macroeconomics
Pearson Edexcel GCE A Level In Economics A (9EC0)
Paper 03 Micro and Macro Economics
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.
In Section A, answer all questions 1(a) to 1(c) and one question from 1(d) or 1(e).
• Answer the questions in the spaces provided
In Section B, answer all questions 2(a) to 2(c) and one question from 2(d) or 2(e). – there may be more space
than you need.
Information
•• The marks for each question are shown in brackets
The total mark for this paper is 100.
•
– use this as a guide as to how much time to spend on each question. Calculators may be used.
Advice
•• Check your answers if you have time at the end.
Read each question carefully before you start to answer it.
Turn over
, SECTION A
Read Figures 1 and 2 and the following extracts (A to C) before answering Question 1.
DO NOT WRITE IN THIS AREA
Answer ALL Questions 1(a) to 1(c), and EITHER Question 1(d) OR 1(e).
Write your answers in the spaces provided.
You are advised to spend 1 hour on this section.
Question 1
The energy market
Figure 1: UK wholesale gas prices per therm, 2021, in pence
500p
Price per
therm
400p
DO NOT WRITE IN THIS AREA
352p
300p
200p
100p
0p Feb Apr Jun Aug Oct Dec
Figure 2: Number of firms supplying gas and electricity in the UK, 2004–2021
80
60
DO NOT WRITE IN THIS AREA
40
20
0
2004 06 08 10 12 14 16 18 21
Gas and electricity Electricity
Gas
2
■■■■
, Extract A
Rising gas prices
DO NOT WRITE IN THIS AREA
UK consumers are some of the biggest users of gas. 85% of homes use gas central heating, and gas generates a
third of the country’s electricity. North Sea gas is running out – and as Britain has replaced coal-fired energy production
with wind power in order
to reduce carbon emissions, it has become dependent on gas imports. 5
Almost all UK businesses face significant rises in fuel costs over the next few months, and there is no substitute for energy, at
least in the short run – an almost perfect example of price inelastic demand.
(Source: adapted from https://www.theecoexperts.co.uk/
blog/reasons-for-uk-gas-price-increase)
Extract B
The UK gas market is broken
During the past decade the government has allowed new entrants into the retail energy market with business models that
left them ill-prepared to achieve long term business growth. Now the UK must choose between letting its energy market
collapse and offering large subsidies for energy retailers.
5
DO NOT WRITE IN THIS AREA DO NOT WRITE IN THIS AREA
The problem began in the 1980s and 1990s, when privatisation created an oligopolistic energy market dominated by the
“Big Six”, which paid their shareholders high dividends and their bosses excessive salaries. The government responded
to anger over high energy bills with further liberalisation. Some of the new entrants were innovative, such as Bulb, which
offered consumption-tracking apps, and Octopus, which discouraged consumption when demand was high with
dynamic pricing. But most were under- capitalised and produced no energy, merely buying it on global wholesale
markets
and selling it on. Some paid little attention to ensuring continuity of supply or forward buying of gas. 10
The constraints on energy retailers worsened in 2017 with the closure of a big
gas-storage facility, which left the UK able to store just 2% of its annual demand. Other big gas importing countries, by
contrast, can store 20%–30%. The risks rose further
in 2019, when the government capped consumer prices in response to continued complaints about high energy bills.
The perfect storm came in the summer of 2021. As economies opened up, global demand for energy rose. Gas supply 15
in Russia, a big producer, was disrupted, and unusually calm weather reduced UK wind turbine energy production to 11%
of capacity. In August Ofgem, the industry regulator, said that from October the firms would be able to raise prices for
households by 54%. But since then the wholesale price of gas paid by UK energy firms has risen by more than 70%. The
result is that UK energy firms are tied into contracts to supply gas to households at far less than they must pay to get it.
(Source: adapted from https://www.economist.com/britain/britains-gas-market-is-broken/)
20
25
■■■■
3
Turn over
, Extract C
DO NOT WRITE IN THIS AREA
The gender pay gap in the oil and gas industry
Despite best efforts to try to attract more women into the oil and gas industry, females are still hugely under-represented in
science, technology, engineering and maths careers, whether school leavers, graduates or experienced workers. Women
hold under 25% of careers in these areas, and typically hold more non-technical roles, which can attract lower salaries than
technical disciplines.
5
There is an even smaller female representation in the offshore workforce (3.6%) e.g. working on rigs in the North Sea, an
area that pays higher salaries than onshore work. Despite continued efforts there is still a lack of female applications. Only
5% of the applications to the technical apprentice programme were female, of which half withdrew their applications at the
first stage of the recruitment process.
There is also a low representation of females in senior leadership roles within the oil and gas industry, especially in technical
positions. Women also generally take up part-time positions which are typically lower paid. This has resulted in the oil and 10
gas industry having an average gap in hourly pay of 25%.
In the majority of developed countries, women have made substantial progress in the labour market since the 1970s, with
both wages and labour force participation increasing relative to that for men. Notwithstanding these large improvements,
women still earn less than ‘comparable’ men in all developed countries and, since the 2000s, progress for women in the
labour market seems to have slowed.
15
(Source: adapted from https://www.harbourenergy.com/media/2a2nmavb/chr-18311- 01-gender-
DO NOT WRITE IN THIS AREA
pay-gap-2020-v6-final.pdf and https://ftp.iza.org/dp10975.pdf)
20
DO NOT WRITE IN THIS AREA
4
■■■■
