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INTERNATIONAL ADVANCED LEVELEDEXCEL INTERNATIONAL TMATERIALSEdexcel International GCSE in Economics (9-1) (4ET0)First examination JunePearson Edexcel International Advanced Subsidiary in Economics (XEC11)Pearson Edexcel International Advanced Level in Economics (YEC11)First teaching September 2018First examination from January 2019First certification from August 2019 (International Advanced Subsidiary)and August 2020 (International Advanced Level)Issue 2

Edexcel, BTEC and LCCI qualificationsEdexcel, BTEC and LCCI qualifications are awarded by Pearson, the UK’s largest awardingbody offering academic and vocational qualifications that are globally recognised andbenchmarked. For further information, please visit our qualification website atqualifications.pearson.com. Alternatively, you can get in touch with us using the detailson our contact us page at qualifications.pearson.com/contactusAbout PearsonPearson is the world's leading learning company, with 35,000 employees in more than70 countries working to help people of all ages to make measurable progress in theirlives through learning. We put the learner at the centre of everything we do, becausewherever learning flourishes, so do people. Find out more about how we can help youand your learners at qualifications.pearson.comReferences to third party material made in this sample assessment materials are made ingood faith. Pearson does not endorse, approve or accept responsibility for the content ofmaterials, which may be subject to change, or any opinions expressed therein. (Materialmay include textbooks, journals, magazines and other publications and websites.)All information in this document is correct at time of publication.ISBN 978 1 446 94955 9All the material in this publication is copyright Pearson Education Limited 2018

Summary of International AdvancedSubsidiary/Advanced Level Economics SAMs Issue 2changesSummary of changes made between previous issue and this currentissuePage numberThe marks for Level 3 in the ‘Evaluation’ part of Question 13 for Units 1 and 2have been corrected to ‘7-8’ in the mark scheme.41, 80The marks for Level 3 in the ‘Evaluation’ part of Questions 8, 9 and 10 for Unit 3have been corrected to ‘7-8’ in the mark scheme.114, 116, 118The marks for Questions 7(c) and 7(d) in Unit 4 have been corrected to 8 and 6respectively.124, 126,127The marks for Level 3 in the ‘Evaluation’ part of Questions 8, 9 and 10 for Unit 4have been corrected to ‘7-8’ in the mark scheme.152, 154, 156This document is Issue 2. We will inform centres of any changes to this issue. The latestissue can be found on the Pearson website: qualifications.pearson.com

ContentsIntroduction1General marking guidance3Unit 1 – Question paper and source booklet5Unit 1 – Mark scheme31Unit 2 – Question paper and source booklet45Unit 2 – Mark scheme71Unit 3 – Question paper and source booklet83Unit 3 – Mark scheme107Unit 4 – Question paper and source booklet119Unit 4 – Mark scheme145

IntroductionThe Pearson Edexcel International Advanced Subsidiary in Economics and the PearsonEdexcel International Advanced Level in Economics are part of a suite of InternationalAdvanced Level qualifications offered by Pearson.These sample assessment materials have been developed to support these qualificationsand will be used as the benchmark to develop the assessment students will take.Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 20181

2Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 2018

General marking guidance All candidates must receive the same treatment. Examiners must mark the lastcandidate in exactly the same way as they mark the first. Mark schemes should be applied positively. Candidates must be rewarded for whatthey have shown they can do rather than be penalised for omissions. Examiners should mark according to the mark scheme – not according to theirperception of where the grade boundaries may lie. All the marks on the mark scheme are designed to be awarded. Examiners shouldalways 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 isnot worthy of credit according to the mark scheme. Where some judgement is required, mark schemes will provide the principles bywhich marks will be awarded and exemplification/indicative content will not beexhaustive. However different examples of responses will be provided atstandardisation. When examiners are in doubt regarding the application of the mark scheme to acandidate’s response, a senior examiner must be consulted before a mark is given. Crossed-out work should be marked unless the candidate has replaced it with analternative response.Marking guidance for levels based mark schemesHow to award marksThe indicative content provides examples of how students will meet each skill assessed inthe question. The levels descriptors and indicative content reflect the relative weightingof each skill within each mark band.Finding the right levelThe first stage is to decide which level the answer should be placed in. To do this, use a‘best-fit’ approach, deciding which level most closely describes the quality of the answer.Answers can display characteristics from more than one level, and where this happensmarkers must use the guidance below and their professional judgement to decide whichlevel is most appropriate.Placing a mark within a levelAfter a level has been decided on, the next stage is to decide on the mark within thelevel. The instructions below tell you how to reward responses within a level. However,where a level has specific guidance about how to place an answer within a level, alwaysfollow that guidance. Statements relating to the treatment of students who do not fullymeet the requirements of the question are also shown in the indicative content section ofeach levels based mark scheme. These statements should be considered alongside thelevels descriptors.Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 20183

Markers should be prepared to use the full range of marks available in a level and notrestrict marks to the middle. Markers should start at the middle of the level (or theupper-middle mark if there is an even number of marks) and then move the mark up ordown to find the best mark. To do this, they should take into account how far the answermeets the requirements of the level:4 If it meets the requirements fully, markers should be prepared to award fullmarks within the level. The top mark in the level is used for answers that are asgood as can realistically be expected within that level If it only barely meets the requirements of the level, markers should considerawarding marks at the bottom of the level. The bottom mark in the level is usedfor answers that are the weakest that can be expected within that level The middle marks of the level are used for answers that havea reasonable match to the descriptor. This might represent a balance betweensome characteristics of the level that are fully met and others that are onlybarely met.Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 2018

Write your name hereSurnameOther namesPearson EdexcelCentre NumberCandidate NumberInternationalAdvanced LevelEconomicsInternational Advanced Subsidiary/Advanced LevelUnit 1: Markets in actionSample assessment material for first teachingSeptember 2018Time: 1 hour 45 minutesPaper ReferenceWEC11/01You must have:Source booklet (enclosed), calculator.Total MarksInstructionsblack ink or ball-point pen. UseFillinboxes at the top of this page with your name, centrethenumber and candidate number.ALL questions in Sections A, B and C. AnswerONE question in Section D. AnswerAnswerthe questions in the spaces provided – there maybe more space than you need.Informationtotal mark for this paper is 80. Thefor each question are shown in brackets –Theusemarksthis as a guide as to how much time to spend on each question. Candidates may use any calculator permitted by Pearson regulations.Adviceeach question carefully before you start to answer it. ReadCheck your answers if you have time at the end.Turn overS57251A 2018 Pearson Education Ltd.1/1/1/1*S57251A0121*Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 20185

SECTION AAnswer ALL questions in this section.Questions must be answered with a cross in a box . If you change your mind aboutan answer, put a line through the box and then mark your new answer with a cross .1 Statement 1: Countries should impose indirect taxes of 20% on sugary drinks.Statement 2: 39% of adults worldwide were overweight in 2014. 11% of men and15% of women were classified as obese.Which one of the following best describes the two statements above?A Both statements are normative.B Statement 1 is normative and statement 2 is positive.C Both statements are positive.D Statement 1 is positive and statement 2 is normative.(Total for Question 1 1 mark)2 Which one of the following is an example of market failure?A The price of a commodity falling in response to falling demandB A tradeable pollution permit scheme aimed at reducing external costsC A market bubble caused by speculators, which leads to house prices risingD Excessive administrative costs resulting from the introduction of regulation(Total for Question 2 1 mark)3 In the UK, gas and electricity customers could save over 300 by moving to adifferent supplier. However, 70% of customers have never switched gas and electricitysuppliers.Which one of the following explains this behaviour?A Customers being good at computationB Customers maximising utilityC Customers not feeling valued by current suppliersD Customers exhibiting habitual behaviour(Total for Question 3 1 mark)26*S57251A0221*Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 2018

4 The diagram shows an economy’s production possibility frontier.Capital goods100U80500VWXYZ8090100Consumer goodsWhich one of the following movements has an opportunity costs of 30 capital goods?A U to VB V to YC W to ZD Y to Z(Total for Question 4 1 mark)5 The price of a litre of rapeseed oil increased by 7% in August 2016. Over the sameperiod the quantity demanded of rapeseed oil decreased by 5% and the quantitydemanded of sunflower oil increased by 3%.Ceteris paribus, the cross-elasticity of demand for sunflower oil following a pricechange in rapeseed oil is equal to:A 0.43B 0.71C 1.40D 2.33(Total for Question 5 1 mark)*S57251A0321*Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 201873Turn over

6 The table below shows the estimated price elasticity of demand for various fooditems in the USA.Estimates of priceelasticity of demandFood itemCheese-0.70Ice cream-0.23Milk-0.10Other dairy products-1.04(Source: http://www.ers.usda.gov/media/875267/err139.pdf )Which one of the following can be deduced from the table?A Cheese is an inferior good.B Ice cream has perfectly price inelastic demand.C An increase in the price of milk will cause a less than proportionate decreasein quantity demanded.D A decrease in the price of other dairy products will cause a more thanproportional decrease in quantity demanded.(Total for Question 6 1 mark)TOTAL FOR SECTION A 6 MARKS48*S57251A0421*Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 2018

SECTION BAnswer ALL questions in this section in the space provided.7 To support the income of rice farmers, the Indian government introduced aguaranteed minimum price in 2016.Draw a diagram to illustrate the impact of the introduction of the minimum price onthe market for rice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Total for Question 7 4 marks)*S57251A0521*Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 201895Turn over

8 In the European Union, if a bank fails and has to be closed down, an individual’sdeposits are guaranteed up to 100 000 by the individual’s government.With reference to the market for banking, explain what is meant by the term ‘moralhazard’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Total for Question 8 4 marks)610*S57251A0621*Pearson Edexcel International Advanced Subsidiary/Advanced Level in EconomicsSample Assessment Materials – Issue 2 – June 2018 Pearson Education Limited 2018

9 In 2016 the Regional Public Goods Initiative provided grants of 9.45 million to fundpublic goods across Latin America and the Caribbean.Explain why governments have to fund the provision of public goods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Edexcel International Advanced Level in Economics are part of a suite of International Advanced Level qualifications offered by Pearson. These sample assessment materials have been developed to support these qualifications and will be used as the benchmark to develop the assessment students will take .

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