OCR Practice Paper – Set 1 A Level Economics H460/01 Microeconomics. & MARKING SCHEME

Economists describe rivers as common access resources. This means that they have special characteristics. They are rival and non-excludable. The Danube River is the second largest river basin in Europe. It is also the ...

Economists describe rivers as common access resources. This means that they have special characteristics. They are rival and non-excludable. The Danube River is the second largest river basin in Europe. It is also the world’s most international river basin as it flows through 11 countries, these include seven European Union (EU) member states; the two EU candidate countries, of Serbia and Montenegro plus Moldova and the Ukraine. The river basin has a large impact on all of these countries. It has been estimated that 20 million people depend directly on the Danube River for drinking water. The industrial and mining sectors, which account for over 25% of the employment and over 30% of the GDP for the 11 countries, use over 5 billion cubic metres of water every year, much of which is drawn from the river and often returned to it. The chemical, food, and paper industries are amongst the main industrial polluters in the Danube River Basin. Discharges from these industries significantly raise the levels of pollutants in the river network. The degree of industrial development and the pollution caused by the industrial sector varies amongst the countries. The immediate environmental impacts of the inadequate treatment and storage of industrial and mining waste include water pollution and soil contamination. Other longer-term impacts may include the depletion of natural resources, landscape degradation, reductions in biodiversity and health risks. The environmental problems associated with industrial activities and mining are mainly caused by:  the use of outdated production technologies  the use of harmful substances that could be substituted  discharges of waste water into the sewerage systems without pre-treatment  inadequate treatment facilities. Romania, an EU member state since 2007, is one of the countries using the Danube River. The amount of water pollution it has produced over recent years is shown in Fig. 1. Biological oxygen demand (BOD) is a measurement of pollution in a sample of water – the higher the BOD, the higher the amount of pollution. Fig.1 Water pollution in Romania 2000 to 2012. 0 0.5 1 1.5 2 2.5 3 3.5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 BOD YEAR 3 © OCR 2016 PRACTICE PAPER H460/01 Turn over The International Commission for the Protection of the Danube River (ICPDR) is responsible for the implementation of all aspects of the EU Water Framework Directive (WFD). The ICPDR has recommended policies to tackle the environmental problems. They believe that pollution from industry and mining can be significantly reduced through suitable investment in pollution reduction facilities. The ICPDR estimates that the necessary investments amount to 200 million Euros. The funding for such projects is provided by member states, an example of which is given in Fig.2. Country GDP per capita. 2013. $ Contribution to ICPDR. 2013. Euros. Romania 6,067 98,000 Montenegro 4,690 28,488 Moldova 1,138 11,395 Contribution from other 8 countries N/A 1,001,651 Total 1,139,534 Fig.2 Financial contribution to ICPDR and GDP per head by selected country. As well as this investment the ICPDR suggests that each country should introduce and enforce an appropriate legal framework including regulation and environmental standards. It is expected that this would ensure adequate management, the closure of any unacceptable sites and the construction of new environmentally friendly landfills. 4 © OCR 2016 PRACTICE PAPER H460/01 Answer all the questions. 1 (a) Explain what is meant by a resource being rival. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ...................................................................................................................................... [2] (b) Explain, using a diagram and the information in Fig.1, the change in the level of market failure resulting from water use by producers in Romania between 2000 and 2012. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... .......................................................................................................................................[6] 5 © OCR 2016 PRACTICE PAPER H460/01 Turn over (c) Explain one possible reason why the contributions countries make to the ICPDR account for different percentages of the ICPDR's total fund. ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... ........................................................................................................................................... .......................................................................................................................................[2] (d) Evaluate the effectiveness of legislation and regulation, such as environmental standards, in reducing the market failure associated with the Danube river. 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paper H460/01 Turn over 9 SECTION B Answer EITHER Question 2 OR Question 3. EITHER OR .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... .......................................................................................................................................................... 2* In January 2016 junior doctors were planning to strike after pay negotiations with their employer, the National Health Service, had failed to produce a satisfactory outcome. Evaluate, using an appropriate diagram(s), the impact of a monopsonist employer, such as the National Health Service, on the market for highly skilled labour. [25] 3* One of the roles of the Competition and Markets authority is to prevent the abuse of monopoly power. Evaluate, using an appropriate diagram(s), the potential impact of monopoly power within an industry. 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Question 4 OR Question 5. EITHER 4* Many firms seek to maximise growth. Evaluate whether the main influence on the size of a firm over time is economies of scale. 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[25] 5* Despite decades of positive economic growth in the UK, a more equal distribution of income remains a major economic objective of the UK government. Evaluate the effectiveness of changes in the tax and benefit system in reducing the level of income inequality in the UK. 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END OF QUESTION PAPER © OCR 2016 Practice paper H460/01 17 ADDITIONAL ANSWER SPACE If additional space is required, you should use the following lined page(s). 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Practice Paper – Set 1 A Level Economics H460/01 Microeconomics MARK SCHEME Duration: 2 hours MAXIMUM MARK 80 This document consists of 23 pages 2 For answers marked by levels of response: • To determine the level – start at the highest level and work down until you reach the level that matches the answer • To determine the mark within the level, consider the following: Descriptor Award mark Consistently meets the criteria for this level At top of level Meets the criteria but with some slight inconsistency Above middle and either below top of level or at middle of level (depending on number of marks available) Meets most of the criteria with some inconsistencies Middle of level Just enough achievement on balance for this level Above bottom and either below middle or at midd