PMT

Mark Scheme (Results)

Summer 2022

Pearson Edexcel GCE AS Level

In Economics A (8EC0)
Paper 01 Introduction to Markets and Market
Failure
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Summer 2022
Question Paper Log Number 66112
Publications Code 8EC0_01_2206_MS
All the material in this publication is copyright
© Pearson Education Ltd 2022
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General Marking Guidance

• All candidates must receive the same treatment.

Examiners must mark the first candidate in exactly the
same way as they mark the last.
• Mark schemes should be applied positively. Candidates
must be rewarded for what they have shown they can
do rather than penalised for omissions.
• Examiners should mark according to the mark scheme
not according to their perception of where the grade
boundaries may lie.
• There is no ceiling on achievement. All marks on the
mark scheme should be used appropriately.
• All the marks on the mark scheme are designed to be
awarded. Examiners should always award full marks if
deserved, i.e. if the answer matches the mark scheme.
Examiners should also be prepared to award zero marks
if the candidate’s response is not worthy of credit
according to the mark scheme.
• Where some judgement is required, mark schemes will
provide the principles by which marks will be awarded
and exemplification may be limited.
• When examiners are in doubt regarding the application
of the mark scheme to a candidate’s response, the team
leader must be consulted.
• Crossed out work should be marked UNLESS the
candidate has replaced it with an alternative response.
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Question Answer Mark

Number
1(a) The only correct answer is C

A is not correct because it is a quasi-public good

B is not correct because it is a public good

D is not correct because it is a quasi-public good

(1)

Question Answer Mark

Number
1(b) Knowledge 1 Application 1 Analysis 1

Knowledge and Analysis up to 2 marks e.g.

Recognition that flood defences are public goods (1)

• Non-excludable (1)
• Non-rival (1)
• Public sector provision funded by taxation is more
effective (1)
• Free rider problem (1) (3)

Application 1 mark e.g.

• Government investment of £74m in the Calder Valley

(1)
• Individuals may refuse to pay but still use services
leading to insufficient funds to build flood defences
(1)
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Question Answer Mark

Number
2 (a) Knowledge 1

Knowledge
1 mark for accurate definition e.g.
A minimum price is the lowest price that can legally be set
(1)

The price floor below which cannot be charged (1)

(1)

Question Answer Mark

Number
2(b) The only correct answer is B

A is not correct because it is the loss of consumer surplus

resulting from the minimum price

C is not correct because it is the gain in producer surplus

resulting from the minimum price

D is not correct because it is the amount spent by the

consumer and the EU
(1)

Question Answer Mark

Number
2(c) Knowledge 2

Knowledge

1 mark for identifying likely problem and 1 mark for linked

development. One problem e.g.
• At P2 there is a surplus/ excess supply (1) which has (2)
to be paid for through higher taxes (1)
• This surplus may have to be stored (1) The surplus
storage will cost money to maintain the facilities (1)
• Opportunity cost of the intervention buying (1) e.g.
spending on education (1)
• Unintended consequences (1) e.g. firms increase
supply (1)
• Reference to 'underground markets'
• Higher prices for consumers
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Question Answer Mark

Number
3(a)
The only correct answer is B

A is not correct because difficulty in counterfeiting is an

attribute of money

C is not correct because divisibility is an attribute of money

D is not correct because durability is an attribute of money

(1)

Question Answer Mark

Number
3(b) Knowledge 1 Application 2

Award one function e.g.

A measure of value (1) e.g. prices can be measured in

satoshis (1) people can compare prices of goods and
services (1)

OR

A store of value (1) when an individual saves bitcoin (1)

they are confident they will receive the equivalent value
back (1)

OR

A standard of deferred payment (1) when an individual

loans another person bitcoin (1) they are confident they will (3)
receive the equivalent value back (1)
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Question Answer Mark

Number
4(a) Knowledge 1, Application 1, Analysis 1

Positive statements are value free/ based on facts/ can be

verified and/or

Normative statements contain value judgements/ not based

on facts/ cannot be supported with evidence (1)

The reference to ‘should’ in the statement suggests it is

normative as this is a person’s value judgement or
vaccination can be good for an entire population (1)

The idea that those who are not vaccinated will benefit is a
positive statement as evidence will exist that shows others
will benefit from others being vaccinated or if enough of its
members are vaccinated, even those who are not will
receive a measure of protection (1)

(3)

Question Answer Mark

Number
4(b) The only correct answer is C

A is not correct because this is government failure

B is not correct because this is the incentive function of the

price mechanism

D is not correct because this is the rationing function of the

price mechanism

(1)
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Question Answer Mark

Number
5(a) Knowledge 1 Application 1 Analysis 1

Knowledge
1 mark for e.g.
• Recognition that supply is price inelastic
• It takes time for firms to respond

Application
1 mark for, e.g.
• Flour producers cannot process the wheat into flour
quickly enough
• It takes time for wheat to grow
• It is difficult to store wheat because it is bulky and
perishable

Analysis
1 mark for linked development e.g. a diagram showing
inelastic supply or an explanation of a small quantity
response to a change in price using numerical or other
explanation

(3)

Question Answer Mark

Number
5(b) The only correct answer is D

A is not correct because the decimal place is in the wrong

place

B is not correct because the decimal place is in the wrong

place

C is not correct as the price change would need to be

33.33%

(1)
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Question Answer Mark

Number
6(a) Knowledge 1, Application 2, Analysis 2

Knowledge
1 mark for original supply and demand diagram with
original equilibrium

Application
2 marks for using source data explaining change in supply
e.g.
• Cod catch limits cut (1) by 50% (1)
• Reduced limited TACs agreed for Celtic Sea/Irish
Sea/west of Scotland (1)
• Relevant use of data from Figure 1 (1+1) e.g.
Identifying the country that is overfishing (1)
Identifying the amount of overfishing (1)

Analysis
Accurate diagram – showing price rise or candidate states
price rise (1) correct shift in supply (1) e.g.

Price

P2

P1

(5)

0 Q2 Q1 Quantity of cod
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Question Indicative content Mark

Number
6(b) Knowledge 2, Application 2, Analysis 2

Reasons why fishing as much as possible is rational

• This is completely rational from the perspective of a

fishing company, which has revenues clearly linked to
size of catch.

• Shows an understanding of profit maximising

behaviour. ‘Private producers will act in their own self-
interest and exploit common access resources to
maximise profit.’
• Figure 1 shows Sweden fishing at an excess of 52.4% in
excess of TAC.
• Using techniques to increase the size of the catch will
help to minimise costs

• ‘Common access resources provide an opportunity for

individuals to create profit, while spreading negative (6)
externalities to everyone else.’
NB KAA can be treated as Evaluation and vice versa

Level Mark Descriptor

0 A completely inaccurate response.
Level 1 1–2 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no link between causes and
consequences.
Level 2 3–4 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or the answer may lack balance.
Level 3 5–6 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
relevant and focused examples which are fully integrated.
Economic ideas are applied appropriately to the broad
elements of the question.
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Question Indicative content Mark

Number
6(b) Evaluation 4
continued
Reasons why fishing as much as possible is irrational:

• ‘Exploitation is unsustainable and will lead to the

depletion of resources; this is known as the tragedy of
the commons.’
• Short run profits means that stocks are rapidly
depleted so in the long run there are no resources for
them to fish e.g. individual firms find that dwindling
fish stocks mean their own revenue base is contracting.
(4)
‘90% of fish stocks are depleted.’

• It may be rational for firms to behave this way but also

it is harmful to society of which those firms are a part
e.g. negative externalities impact society as a whole

Level Mark Descriptor

0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/ reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evaluative comments supported by chains of reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question.
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Question Answer Mark

Number
6(c) Knowledge 2, Application 2 Analysis 2

Knowledge and Analysis (1+1)x2

• Excludability (1) e.g. private ownership enables
individuals to charge for the use of an asset (1)
• Private ownership of resources (1) e.g. land, labour,
capital and enterprise may be exploited by private
individuals or firms (1)
• Rivalry (1) e.g. private owners of resources can choose
to buy and sell resources in order to generate profit (1)
• Private ownership in a free market economy may lead to
wage disparities or other inequalities (1+1)

Application (1+1)
1 mark for use of Extract B e.g.

‘private producers will act in their own self-interest’

individuals ‘maximise profit’

1 mark for use of own knowledge e.g. private ownership of a

resource means someone is accountable for it (1) If someone
owns something then they legally stop other people from
using it (1) (6)

Question Answer Mark

Number
6(d) Knowledge 2, Application 2

1 mark for e.g.

Identifies the correct formula (1) e.g. the formula for XED is
%∆QD Good A/%∆P Good B

-8 = x/2% (1)

-8 x 2% = -16% (1) (decrease in quantity demanded of

bags of chips)

950 000 x 16% = 152 000 (1)

950 000 – 152 000 (1) = 798 000
(4)
If correct answer is given award all 4 marks. Award
up to 3 marks for correct working but overall correct
answer missing.
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Question Indicative content Mark

Number
6(e) Knowledge 3, Application 3, Analysis 3

Impacts can be positive or negative.

• Understanding of specialisation.

The number of workers in the fishing industry relative to

other workers will be more in Scotland relative to the
rest of the UK:
People working in non-fishing
related industries

People working in fishing

related industries

NB If there is no valid diagram - maximum level 2

KAA
(9)
Advantages might include:

• Fishing fleets develop expertise based on

years of experience
• This will be the case for both labour and
capital
• Fishing ports have the infrastructure to
process the catch and to distribute it to
markets in the UK and overseas
• Employment opportunities will be available
and will grow as the industry develops
• Specialisation enables training providers to
specialise in developing skills for workers in
the region - more resources can go in to
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preparing for fishing industry without having

to invest in training in other areas.
• Spillover effects - skilled labour more freely
available so if a new worker is needed they
can benefit from training with a different
company
• Efficient use of resources – a region that
specialises in fishing due to availability of
resources e.g. good fishing grounds.
• Creates jobs – people of Scotland will be able
to find employment in the fishing industry
• Scotland specialising in the production of fish
can catch more and then trade with other
countries who specialise in the production of
other goods.
• By catching more fish the economy can sell
these, increasing income in the Scottish
economy
• By specialising and division of labour
increasing output/ reducing costs of
production the economy can improve income,
living standards.

NB KAA can be treated as Evaluation and vice versa

Level Mark Descriptor

0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response; chains of reasoning are developed but
the answer may lack balance.
Level 3 7–9 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
relevant and focused examples which are fully integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.
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Question Indicative content Mark

Number
6(e) Evaluation 6
continued
There are many disadvantages of specialising in the
production of goods and services to trade:

• Over-exploitation of resources leaves economic

agents over-exposed, leading to possible business
failures and job losses

• The reduction of the cod TAC could lead to major

issues for Scottish fishing

• External costs related to congestion and pollution

• Demand for fish falls with the increased trend

towards vegetarianism and veganism, the (6)
economy would be at risk

• Workers could find it difficult to transfer to other

industries if they are over-specialised

• Current consumption may be unsustainable

leading to reduced incomes for future generations

Level Mark Descriptor

0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant chain of
reasoning and appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question.
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Question Indicative content Mark

Number
6(f) Knowledge 4, Application 4, Analysis 6

Overfishing is a negative externality in production.

Diagram e.g.

NB If there is no appropriate diagram - maximum

level 3 KAA

Figure 1 shows the scale of the overfishing for different

nations, e.g. Sweden’s TAC is 52.4% above what the
scientists advise.
Multiple external costs are referred to in the Extracts.
Extract B states that ‘90% of fish stocks are depleted.’

The cod TAC should be reduced in order to reduce the

extent of the overfishing. This would reduce the
quantity caught from QE to Q*.
(14)
Possible external costs/third parties that might be
affected

• Fishing nets can damage wildlife, costing wildlife

charities to rescue and rehabilitate animals
• Fishing boats spill oil which has a negative impact
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on those swimming in the sea or wildlife, clear up

for Environment Agency etc
• Fishing industry throws any over catch back in to
the sea, this can pollute the water
• Smell from fishing industry can have a negative
impact on those that live near the ports
• Overfishing increases supply - lowers price and this
has negative impact on manufacturers of other food
items.

Level Mark Descriptor

0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or superficial, two stage chains of
reasoning only.
Level 3 7–10 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to apply economic concepts and relate them directly to
the broad elements of the question with evidence integrated
into the answer.
Analysis is clear and coherent, although it may lack balance.
Chains of reasoning are developed but the answer may lack
balance.
Level 4 11–14 Demonstrates precise knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
appropriate examples. Analysis is relevant and focused with
evidence fully and reliably integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.
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Question Indicative content Mark

Number
6(f) Evaluation 6
continued
• Hard to put a value on external costs - how do you
value harm to wildlife
• Some impacts are slow to emerge
• External benefits may exist - jobs in fish food
processing plants, boat building and net making
industries
• Technology improves meaning risk of oil spills
reduces
• Net manufacturers are developing safer nets -
fishing industry more aware of the need to dispose
of nets appropriately
• New method of fishing are reducing the external
costs
• TACs have helped to reduce the external costs

(6)

Level Mark Descriptor

0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced leading to unsubstantiated judgements.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question, leading to a substantiated judgement.
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Question Indicative content Mark

Number
6(g) Knowledge 4, Application 4, Analysis 6

Do not award policies involving changes in the total

allowable catch (TAC) per country

There are a range of policy options available to reduce over-

fishing:

Ways might include:

• Provision of information, so that consumers can be
encouraged to consume sustainably
• Regulation e.g. designated areas for fishing
allowing stocks to recover
• Extension of property rights to international
waters
• Agreements on shares of fish that can be caught
• Imposing indirect tax on fish to reduce
consumption
• Subsidy paid to firms to use safer technology
• Minimum price for fish
• Government permits awarded to fishing companies
may be tradable
• The answer may be supported using a relevant (14)
diagram e.g.

NB If there is no appropriate diagram - maximum

level 3 KAA
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Level Mark Descriptor

0 A completely inaccurate response.
Level 1 1–3 Displays isolated or imprecise knowledge and understanding
of terms, concepts, theories and models.
Use of generic or irrelevant information or examples.
Descriptive approach which has no chains of reasoning or
links between causes and consequences.
Level 2 4–6 Displays elements of knowledge and understanding of
economic principles, concepts and theories.
Applies economic ideas and relates them to economic
problems in context, although does not focus on the broad
elements of the question.
A narrow response or superficial, two stage chains of
reasoning only.
Level 3 7–10 Demonstrates accurate knowledge and understanding of the
concepts, principles and models.
Ability to apply economic concepts and relate them directly to
the broad elements of the question with evidence integrated
into the answer.
Analysis is clear and coherent, although it may lack balance.
Chains of reasoning are developed but the answer may lack
balance.
Level 4 11–14 Demonstrates precise knowledge and understanding of the
concepts, principles and models.
Ability to link knowledge and understanding in context using
appropriate examples. Analysis is relevant and focused with
evidence fully and reliably integrated.
Economic ideas are carefully selected and applied
appropriately to economic issues and problems. The answer
demonstrates logical and coherent chains of reasoning.
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Question Indicative content Mark

Number
6(g) Evaluation 6
continued

Evaluation of policies might include;

• Unintended consequences, such as illegal fishing

• Excessive administrative costs

• Information gaps, with consumers unaware of the

extent of the damage being caused by over-fishing,
not knowing level of tax to implement etc.

• UK may increasingly over-fish since leaving the EU

• Relative benefits/costs of government intervention

versus market-based solutions

• Government unaware of the right level of intervention (6)

Level Mark Descriptor

0 No evaluative comments.
Level 1 1–2 Identification of generic evaluative comments without
supporting evidence/reference to context.
No evidence of a logical chain of reasoning.
Level 2 3–4 Evidence of evaluation of alternative approaches which is
unbalanced leading to unsubstantiated judgements.
Evaluative comments with supporting evidence/reference to
context and a partially developed chain of reasoning.
Level 3 5–6 Evaluative comments supported by relevant reasoning and
appropriate reference to context.
Evaluation is balanced and considers the broad elements of
the question, leading to a substantiated judgement.
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