AQA A-level ECONOMICS 7136/1 Paper 1 Markets and Market Failure Question Paper + Mark scheme [MERGED] June 2022 IB/M/Jun22/E7 7136/1 Time allowed: 2 hours Materials For this paper you must have: • an AQA 12-page Answer Book • a calculator. Instructions

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AQA A-level ECONOMICS 7136/1 Paper 1 Markets and Market Failure Question Paper + Mark scheme [MERGED] June 2022 IB/M/Jun22/E7 7136/1 Time allowed: 2 hours Materials For this paper you must h... ave: • 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. A-level ECONOMICS Paper 1 Markets and Market Failure 2 IB/M/Jun22/7136/1 Section A Answer EITHER Context 1 OR Context 2. EITHER Context 1 Total for this context: 40 marks Flexible labour markets and trade unions Study Extracts A, B and C and then answer all parts of Context 1 which follow. Extract A Figure 1: Participation in platform work*, % of UK workers, 2016 and 2019 Figure 2: Median after-tax real earnings of working-age employees and the self-employed, 2009/10 to 2018/19 Year Employed, £ Self-employed, £ 2009/10 21 900 15 800 2010/11 21 300 15 100 2011/12 20 300 15 800 2012/13 20 800 14 200 2013/14 20 500 14 000 2014/15 20 900 15 800 2015/16 21 300 16 100 2016/17 21 400 16 300 2017/18 21 400 17 600 2018/19 21 600 16 500 Source: TUC, 2020 Note: *Platform work is defined as paid tasks that are found via a website or ‘app’. Source: Department for Work & Pensions, 2020 Note: Base year is 2018/19 Extract B: The gig economy The gig economy can be defined as that part of the labour market characterised by short-term contracts or occasional work, as opposed to permanent jobs. The rise of gig economy work has been driven by new technology, enabling people to work from anywhere, any time. Many self-employed people work in the gig economy through online platforms such as Uber, Deliveroo and Airbnb. These roles often replace employee roles in sectors including cleaning, taxi driving, pizza delivery, project managers and personal training. Gig economy workers face higher risks and more uncertainty about the stability of their incomes than standard workers. They tend to earn less than employees doing similar work and they also tend to work longer hours. However, they do have greater flexibility and control over their worklife balance. People who have other responsibilities beyond work (for example childcare) may choose to work in the gig economy because it allows them to allocate their time as they choose. The government has pledged to combat unfair working practices associated with zero-hours contracts and the gig economy. They are seeking to bring gig employers into line with the standards and regulations by which other employers must abide. However, providers of meal delivery, ride-sharing and other gig economy services warn that tighter regulations will damage economic efficiency and employees will lose out. Gig economy defenders claim that today’s flexible labour markets offer modern workers the opportunity to move freely between jobs and this gives them more choice over their working hours. 5 10 15 Source: News reports, 2020 3 IB/M/Jun22/7136/1 Turn over ► Extract C: New unions representing gig economy workers The cleaners at St Mary’s Hospital in London are members of United Voices of the World (UVW), a new trade union of mostly migrant workers whose employment is not secure. Their October 2019 strike and demonstration were typical of UVW action: joyful, noisy, confrontational and uncompromising. It was also very successful. The hospital trust increased their £8.21 minimum wage to the London Living Wage of £10.75, and decided to employ them directly, rather than via an agency for temporary workers. As insecure and gig economy work becomes more common, especially among migrant and young workers, new trade unions are developing to meet demand from workers in workplaces with few protections. Since it was founded in 2014, UVW has organised at more than 20 workplaces and won improved contracts, wage rises or sick pay from employers including the Daily Mail Group, the Royal Borough of Kensington and Chelsea and the London School of Economics. It now has more than 3000 members and says it is attracting 200 more every month. Some gig economy firms are starting to recognise workers as employees. Just Eat, which delivers takeaway food, has announced plans to offer workers benefits, including hourly wages above the minimum living wage, sick pay and pension contributions. This sets a precedent in the UK gig economy. The new drivers will be on a mix of full-time, part-time and zero-hours contracts, the company said, allowing some to retain more flexible working hours. The firm said that operating costs would rise as a result of the new scheme but Just Eat felt it was the ‘right thing to do’. 5 10 15 20 Source: News reports, 2020 0 1 Using the data in Extract A (Figure 1), calculate the number of workers doing weekly platform work in 2019 for each worker doing monthly platform work in 2019. Give your answer to two decimal places. [2 marks] 0 2 Explain how the data in Extract A (Figure 2) show that the incentive for workers to become self-employed increased between 2009/10 and 2018/19. [4 marks] 0 3 Extract C (lines 4–5) states that, as a result of trade union action, ‘The hospital trust increased their £8.21 minimum wage to the London Living Wage of £10.75.’ With the help of a diagram, analyse how a trade union might achieve higher pay for its members. [9 marks] 0 4 Extract B (lines 16–18) states that, ‘Gig economy defenders claim that today’s flexible labour markets offer modern workers the opportunity to move freely between jobs and this gives them more choice over their working hours.’ Assess the view that government intervention in the UK labour market is necessary to protect the interests of people who are working in the gig economy. [25 marks] 4 IB/M/Jun22/7136/1 Do NOT answer Context 2 if you have answered Context 1. OR Context 2 Total for this context: 40 marks The UK supermarket sector Study Extracts D, E and F and then answer all parts of Context 2 which follow. Extract D Figure 3: Cost of a basket of 100 popular groceries, April 2020 Figure 4: Market shares in the UK supermarket sector, 2012–2020 Source: Which?, 2020 Source: Statista, 2020 Extract E: Have Aldi and Lidl reached their peak? Aldi and Lidl, the German discount grocers which primarily sell through physical stores, have missed out as more sales have moved online. They are now trying some small scale 'click and collect' and other online options, and are hoping to win back business as the economic downturn prompted shoppers to seek out lower prices. However, industry experts say their recent rapid growth and competition from traditional supermarkets would make it harder for the discounters to take more business from rivals. The ‘big four’ UK supermarkets – Tesco, Sainsbury's, Asda and Morrison's – have well-established home delivery infrastructure and were able to expand online delivery dramatically during the pandemic. This led to a doubling of the online share of the overall grocery market to 13% in just a few months. Aldi and Lidl grew rapidly after 2008 as traditional supermarkets defended profit margins rather than sales. The discounters’ combined market share in the UK grew from 4% to 14% in a decade. However, this time the traditional supermarkets are expected to put up a tougher fight. Andrew Porteous, analyst at HSBC, said the big four were “all very conscious of the mess they made of the last recession. They have done well through lockdown.” “They will want to make sure they don’t give people any reason to go back to split shops” he added, referring to the practice of shopping for basics at a discounter and topping up elsewhere. Supermarkets set prices interdependently, and price wars look very likely. Analysts estimate the price gap between discounters and conventional supermarkets is now about 10–12%, against more than 20% a few years ago. Tesco has pledged to match Aldi prices on key items, while Morrisons recently cut prices on 400 basics, and Asda has indicated it will not be holding back from price reductions. Competition and investment in more stores have reduced the discounters’ profitability. Aldi’s profit margin fell from above 5% in 2013 to just 1.75% in 2018. 5 10 15 20 Source: News reports, 2020 5 IB/M/Jun22/7136/1 Turn over ► Extract F: Regulatory intervention in supermarkets For decades now, economists have worried about a lack of competition between supermarkets. The sector has been dominated by a small number of large firms, led by Tesco. Sainsbury’s and Asda, the second and third largest supermarket firms, attempted a merger in 2019, which would have led to a combined market share of 33%. They argued that the resulting cost savings of £1 billion per year would be passed on to consumers. However, the Competition and Markets Authority (CMA) was not persuaded, arguing that the promised price cuts would be hard to monitor, and that customers would have reduced choice for their shopping. Not only was the CMA concerned about market concentration at the national level, but also the establishment of local monopolies where some towns might have only one large supermarket to purchase groceries. They predicted lengthening queues and rising prices. In April 2019, they banned the merger. In 2020, the CMA ruled that Tesco had been preventing landlords from letting property to other supermarkets. This is illegal as it may reduce competition, limit choice and make consumers worse off. Nigel Howorth, a lawyer, said: “Major supermarkets have for many years sought to maintain competitive advantage over rivals through the land planning system and restrictive property arrangements.” 5 10 15 Source: News reports, 2020 0 5 Using the data in Extract D (Figure 3), calculate, in percentage terms, how much more expensive a basket of groceries at Waitrose was than at Lidl in April 2020. Give your answer as a percentage to two decimal places. [2 marks] 0 6 Explain how the data in Extract D (Figure 4) show that the supermarket sector is competitive. [4 marks] 0 7 Extract E (lines 16–17) states that, ‘Supermarkets set prices interdependently, and price wars look very likely.’ With the help of a diagram, analyse the impact on grocery consumers of interdependence between supermarkets. [9 marks] 0 8 Extract E (lines 17–19) states that, ‘the price gap between discounters and conventional supermarkets is now about 10–12%, against more than 20% a few years ago.’ Evaluate the view that the supermarket sector is serving customers' interests well. [25 marks] 6 IB/M/Jun22/7136/1 Section B Answer one essay from this section. Each essay carries 40 marks. EITHER Essay 1 The government has promised that everyone will be able to access superfast broadband by 2025. As more people have switched to studying and working remotely, good Internet connections have become more important. Low-income households have difficult choices to make between high-speed Internet and essential items such as food, heating and clothing. 0 9 Explain how the price mechanism allocates resources in a market economy. [15 marks] 1 0 Assess the view that high-speed Internet connection is a necessity for modern life and should be provided by the government, free of charge, to all households. [25 marks] OR Essay 2 Markets fail for a variety of reasons and governments can play an important role in reducing the inefficiencies associated with such failures. However, Milton Friedman once suggested that “When government, in pursuit of good intentions, tries to rearrange the economy...the costs come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” 1 1 Explain the difference between complete and partial market failure. [15 marks] 1 2 Evaluate the view that government failure means that government intervention in markets will rarely lead to an improvement in economic welfare. [25 marks] 7 IB/M/Jun22/7136/1 OR Essay 3 Data from the Organisation for Economic Co-operation and Development (OECD) suggest that countries with very different levels of pre-tax income inequality often have similar levels of post-tax income inequality. 1 3 Explain the main causes of inequality in the distribution of pre-tax incomes. [15 marks] 1 4 Evaluate whether the best way to reduce inequality in disposable income is to reduce differences in pre-tax incomes rather than through taxes and welfare benefits. [25 marks] END OF QUESTIONS 8 IB/M/Jun22/7136/1 There are no questions printed on this page Copyright information For confidentiality purposes, all acknowledgements of third-party copyright material are published in a separate booklet. This booklet is published after each live examination series and is available for free download from www.aqa.org.uk. Permission to reproduce all copyright material has been applied for. In some cases, efforts to contact copyright-holders may have been unsuccessful and AQA will be happy to rectify any omissions of acknowledgements. If you have any queries please contact the Copyright Team. Copyright © 2022 AQA and its licensors. All rights reserved. *226A7136/1* A-level ECONOMICS 7136/1 Paper 1 Markets and Market Failure Mark scheme June 2022 Version: 1.0 Final *226A7136/1/MS* MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 2 Mark schemes are prepared by the Lead Assessment Writer and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all associates participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the students’ responses to questions and that every associate understands and applies it in the same correct way. As preparation for standardisation each associate analyses a number of students’ scripts. Alternative answers not already covered by the mark scheme are discussed and legislated for. If, after the standardisation process, associates encounter unusual answers which have not been raised they are required to refer these to the Lead Examiner. It must be stressed that a mark scheme is a working document, in many cases further developed and expanded on the basis of students’ reactions to a particular paper. Assumptions about future mark schemes on the basis of one year’s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. Further copies of this mark scheme are available from aqa.org.uk Copyright information AQA retains the copyright on all its publications. However, registered schools/colleges for AQA are permitted to copy material from this booklet for their own internal use, with the following important exception: AQA cannot give permission to schools/colleges to photocopy any material that is acknowledged to a third party even for internal use within the centre. Copyright © 2022 AQA and its licensors. All rights reserved. MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 3 Level of response marking instructions Level of response mark schemes are broken down into levels, each of which has a descriptor. The descriptor for the level shows the average performance for the level. There are marks in each level. Before you apply the mark scheme to a student’s answer read through the answer and annotate it (as instructed) to show the qualities that are being looked for. You can then apply the mark scheme. Step 1 Determine a level Start at the lowest level of the mark scheme and use it as a ladder to see whether the answer meets the descriptor for that level. The descriptor for the level indicates the different qualities that might be seen in the student’s answer for that level. If it meets the lowest level then go to the next one and decide if it meets this level, and so on, until you have a match between the level descriptor and the answer. With practice and familiarity you will find that for better answers you will be able to quickly skip through the lower levels of the mark scheme. When assigning a level you should look at the overall quality of the answer and not look to pick holes in small and specific parts of the answer where the student has not performed quite as well as the rest. If the answer covers different aspects of different levels of the mark scheme you should use a best fit approach for defining the level and then use the variability of the response to help decide the mark within the level, ie if the response is predominantly level 3 with a small amount of level 4 material it would be placed in level 3 but be awarded a mark near the top of the level because of the level 4 content. Step 2 Determine a mark Once you have assigned a level you need to decide on the mark. The descriptors on how to allocate marks can help with this. The exemplar materials used during standardisation will help. There will be an answer in the standardising materials which will correspond with each level of the mark scheme. This answer will have been awarded a mark by the Lead Examiner. You can compare the student’s answer with the example to determine if it is the same standard, better or worse than the example. You can then use this to allocate a mark for the answer based on the Lead Examiner’s mark on the example. You may well need to read back through the answer as you apply the mark scheme to clarify points and assure yourself that the level and the mark are appropriate. Indicative content in the mark scheme is provided as a guide for examiners. It is not intended to be exhaustive and you must credit other valid points. Students do not have to cover all of the points mentioned in the Indicative content to reach the highest level of the mark scheme. An answer which contains nothing of relevance to the question must be awarded no marks. MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 4 Below is the levels of response marking grid to be used when marking any 25-mark question. Level of response Response: Max 25 marks 5 Sound, focused analysis and well-supported evaluation that: • is well organised, showing sound knowledge and understanding of economic terminology, concepts and principles with few, if any, errors • includes good application of relevant economic principles to the given context and, where appropriate, good use of data to support the response • includes well-focused analysis with clear, logical chains of reasoning • includes supported evaluation throughout the response and in a final conclusion. 21–25 marks 4 Sound, focused analysis and some supported evaluation that: • is well organised, showing sound knowledge and understanding of economic terminology, concepts and principles with few, if any, errors • includes some good application of relevant economic principles to the given context and, where appropriate, some good use of data to support the response • includes some well-focused analysis with clear, logical chains of reasoning • includes some reasonable, supported evaluation. 16–20 marks 3 Some reasonable analysis but generally unsupported evaluation that: • focuses on issues that are relevant to the question, showing satisfactory knowledge and understanding of economic terminology, concepts and principles but some weaknesses may be present • includes reasonable application of relevant economic principles to the given context and, where appropriate, some use of data to support the response • includes some reasonable analysis but which might not be adequately developed or becomes confused in places • includes fairly superficial evaluation; there is likely to be some attempt to make relevant judgements but these aren’t well-supported by arguments and/or data. 11–15 marks 2 A fairly weak response with some understanding that: • includes some limited knowledge and understanding of economic terminology, concepts and principles is shown but some errors are likely • includes some limited application of relevant economic principles to the given context and/or data to the question • includes some limited analysis but it may lack focus and/or become confused • includes some evaluation which is weak and unsupported. 6–10 marks 1 A very weak response that: • includes little relevant knowledge and understanding of economic terminology, concepts and principles • includes application to the given context which is, at best, very weak • includes attempted analysis which is weak and unsupported. 1–5 marks MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 5 Context 1 Total for this context: 40 marks 0 1 Using the data in Extract A (Figure 1), calculate the number of workers doing weekly platform work in 2019 for each worker doing monthly platform work in 2019. Give your answer to two decimal places. [2 marks] Calculation: 9.6 / 11.8 = 0.813559 Correct answer: 0.81 or expressed as a ratio 0.81:1 Response Max 2 marks For the correct answer, to two decimal places 2 marks For the correct answer but not to two decimal places OR For the correct method but the wrong answer, to two decimal places OR 81.36% 1 mark MAXIMUM FOR QUESTION 01: 2 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 6 0 2 Explain how the data in Extract A (Figure 2) show that the incentive for workers to become self-employed increased between 2009/10 and 2018/19. [4 marks] Response: Max 4 marks • includes evidence that shows that the incentive for workers to become selfemployed increased • clearly explains how this data is evidence that the incentive for workers to become self-employed increased. 4 marks • includes evidence that shows that the incentive for workers to become selfemployed increased • explanation of how this data is evidence that the incentive for workers to become self-employed increased. 3 marks • includes some evidence that shows that the incentive for workers to become self-employed increased • limited explanation of how this data is evidence that the incentive for workers to become self-employed increased. 2 marks • includes evidence that does not clearly show that the incentive for workers to become self-employed increased • no explanation of how this data is evidence that the incentive for workers to become self-employed increased. 1 mark Relevant issues include: • increases in relative wages will improve the incentive for workers to become self-employed • between 2009/10 and 2018/19, median wages fell for employed workers from £21 900 to £21 600, a decrease of £300 or 1.4% • between 2009/10 and 2018/19, median wages rose for self-employed workers from £15 800 to £16 500, an increase of £700 or 4.4% • median wages of employees peaked in the first year shown, 2009/10 at £21 900, whereas median wages of self-employed workers peaked later, in 2017/18 at £17 600. • the relative wage premium received by employed workers compared with self-employed workers was 38.6% in 2009/10, but only 30.9% in 2018/19. MAXIMUM FOR QUESTION 02: 4 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 7 0 3 Extract C (lines 4–5) states that, as a result of trade union action, ‘The hospital trust increased their £8.21 minimum wage to the London Living Wage of £10.75.’ With the help of a diagram, analyse how a trade union might achieve higher pay for its members. [9 marks] Level of response Response: Max 9 marks 3 • is well organised and develops one or more of the key issues that are relevant to the question • shows sound knowledge and understanding of relevant economic terminology, concepts and principles • includes good application of relevant economic principles and/or good use of data to support the response • includes well-focused analysis with a clear, logical chain of reasoning • includes a relevant diagram that will, at the top of this level, be accurate and used appropriately. 7–9 marks 2 • includes one or more issues that are relevant to the question • shows reasonable knowledge and understanding of economic terminology, concepts and principles but some weaknesses may be present • includes reasonable application of relevant economic principles and/or data to the question • includes some reasonable analysis but it might not be adequately developed and may be confused in places • may include a relevant diagram. 4–6 marks 1 • is very brief and/or lacks coherence • shows some limited knowledge and understanding of economic terminology, concepts and principles but some errors are likely • demonstrates very limited ability to apply relevant economic principles and/or data to the question • may include some very limited analysis but the analysis lacks focus and/or becomes confused • may include a relevant diagram but the diagram is not used and/or is inaccurate in some respects. 1–3 marks MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 8 Suggested diagram A labour market diagram is expected, showing how trade unions can negotiate for a higher wage than that prevailing in an otherwise competitive labour market. However, other appropriate diagrams should be given credit, for example a diagram showing the impact of a trade union negotiated wage in a monopsonistic labour market (such as the market for hospital workers in the UK), or a diagram showing a labour supply curve shifted to the left. Relevant issues include: • definitions of trade union and pay • explanation of the diagram, showing impact of higher wage and comparison with non-unionised wages. Analysis of impact on employment is not expected • how a union may engage in collective bargaining for the benefit of its members • explanation of types of actions taken by unions, such as strikes, work-to-rule, litigation, media campaigning, and how they can lead to higher negotiated pay settlements • how a union may act as a monopoly supplier, or at least have some degree of monopoly power in the labour market • use of extracts (particularly Extract C) in explaining how unions have acted to protect the interests of workers and secured higher pay. MAXIMUM FOR QUESTION 03: 9 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 9 0 4 Extract B (lines 16–18) states that ‘Gig economy defenders claim that today’s flexible labour markets offer modern workers the opportunity to move freely between jobs and this gives them more choice over their working hours.’ Assess the view that government intervention in the UK labour market is necessary to protect the interests of people who are working in the gig economy. [25 marks] Areas for discussion include: • explanation of the gig economy and the difference between terms of employment in the gig economy and standard employment • discussion of the emerging trends that have contributed to the rise of the gig economy, such as technological progress and online commerce • what is meant by the ‘interests of people who are working in the gig economy’ • discussion of the reasons why some roles/industries are more likely to arise in the gig economy than others • the benefits of gig economy work to the individual, such as: flexibility over hours, ease of switching between jobs, autonomy from having no supervising manager • the costs of gig economy work to the individual, such as lower pay and fewer non-wage benefits (for example pension, health insurance, maternity benefits) • analysis of why wages may be lower and working conditions worse in the gig economy than in the formal sector • benefits and costs of the gig economy to firms and the wider economy, such as greater labour mobility, lower costs of production, economic efficiency • discussion of the impact of the pandemic on the gig economy • discussion of possible policies, such as legislation, raising minimum wages, guaranteeing minimum hours for all roles, redefining gig economy workers as ‘employed’ rather than ‘self-employed’ • the argument that the need for government intervention is reduced by the existence and growth of trade unions representing gig economy workers • the argument that the need for government intervention is reduced by the fact that some firms in the gig economy are improving conditions for their workers anyway • use of examples • market failure arguments • government failure arguments. The use of relevant diagrams to support the analysis should be taken into account when assessing the quality of the student’s response to the question. Use the level mark scheme on page 4 to award students marks for this question. MAXIMUM FOR QUESTION 04: 25 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 10 Context 2 Total for this context: 40 marks 0 5 Using the data in Extract D (Figure 3), calculate, in percentage terms, how much more expensive a basket of groceries at Waitrose was than at Lidl in April 2020. Give your answer as a percentage to two decimal places. [2 marks] Calculation: (£68.69-£42.27)/£42.27 X 100 = 62.5029% Correct answer 62.50% Response Max 2 marks For the correct answer, to two decimal places, with % sign 2 marks For the correct answer but not rounded to two decimal places, and/or without % sign eg: 62.5% OR For the correct method but the wrong answer, to two decimal places, with % sign 1 mark MAXIMUM FOR QUESTION 05: 2 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 11 0 6 Explain how the data in Extract D (Figure 4) show that the supermarket sector is competitive. [4 marks] Response: Max 4 marks • includes evidence that the supermarkets sector is competitive • clearly explains how this data is evidence that the supermarkets sector is competitive. 4 marks • includes evidence that the supermarkets sector is competitive • explanation of how this data is evidence that the supermarkets sector is competitive. 3 marks • includes some evidence that the supermarkets sector is competitive • limited explanation of how this data is evidence that the supermarkets sector is competitive. 2 marks • includes evidence that does not clearly show that the supermarkets sector is competitive • no explanation of how this data is evidence that the supermarkets sector is competitive. 1 mark Relevant issues include: • explanation of why smaller firms taking market share from larger incumbents indicates competitiveness • since 2012, the market shares of the largest four firms have each declined. For example, Tesco's has fallen from 31% to 27% (this is the largest decline) • since 2012, the market shares of the smallest two firms have both risen. For example, Aldi's has risen from 3% to 8% (more than doubling in size) • since 2012, the market share of other supermarkets has risen significantly from 16% to 20% • CR4 has fallen from 0.78 to 0.68 • in each year shown in Figure 4, there are 6 major supermarkets competing for customers and ‘others’, who account for a significant share of the market, for example, around 20% in 2020. Note: please allow a margin of +/- 2% points MAXIMUM FOR QUESTION 06: 4 MARKS MARK SCHEME – A-LEVEL ECONOMICS – 7136/1 – JUNE 2022 12 0 7 Extract E (lines 16–17) states that: 'Supermarkets set prices interdependently, and price wars look very likely.' With the help of a diagram, analyse the impact on grocery consumers of interdependence between supermarkets. [9 marks] Level of response Response: Max 9 marks 3 • is well organised and develops one or more of the key issues that are relevant to the question • shows sound knowledge and understanding of relevant economic terminology, concepts and principles • includes good application of relevant economic principles and/or good use of data to support the response • includes well-focused analysis with a clear, logical chain of reasoning • includes a relevant diagram that will, at the top of this level, be accurate and used appropriately. 7–9 marks 2 • includes one or more issues that are relevant to the question • shows reasonable knowledge and understanding of economic terminology, concepts and principles but some weaknesses may be present • includes reasonable application of relevant economic principles and/or data to the question • includes some reasonable analysis but it might not be adequately developed and may be confused in places • may include a relevant diagram. 4–6 marks 1 • is very brief and/or lacks coherence • shows some limited knowledge and understanding of economic terminology, concepts and principles but some errors are likely • demonstrates very limited ability to apply relevant economic principles and/or data to the question • may include some very limited analysis but the analysis lacks focus and/or becomes confused • may include a relevant diagram [Show More]

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