Optional20 marks
Case study · The market for higher education in the UK
Evaluate the possible advantages of a free market approach to providing services such as education.
Specification point 1.2.7 · Theme 1
Price mechanism
How markets work · Introduction to markets and market failure
Questions tagged to this specification point
10 questions
Essay questions
Long-form evaluation and discussion
Data-response questions
Questions built around exam extracts
10 marks
Case study · The market for higher education in the UK
Assess the likely impact of these drop-out rates on the allocation of resources within an economy.
15 marks
Case study · The market for higher education in the UK
With reference to Figure 1 and Extract A, discuss the benefits of allowing universities to charge higher tuition fees for some degree courses.
15 marks
Case study · The market for housing
With reference to Figures 1 and 2 and your own knowledge, discuss the functions of the price mechanism in allocating housing.
Short-answer questions
Focused calculations, explanations and diagrams
3 marks
Explain how the operation of market forces will eliminate an excess supply of coffee.
3 marks
ContextDuring 2021 the UK experienced severe shortages of crisps, petrol and many other items.
Explain one reason why it is rational for a firm to raise prices when there is excess demand.
2 marks
ContextFree market economics is being challenged. The arguments for and against are being increasingly discussed within many countries.
Explain how resources are allocated in a free market economy.
Learn this question
Open a video explanation without leaving the question.
3 marks
ContextThe excess supply of carbon steel has recently caused its global price to fall below $530 per tonne.
Explain how the price mechanism responds to excess supply in a free market.
Multiple-choice questions
Quick checks of economic understanding
AS Paper 1, November 2020, Q1(b)Multiple choice
1 mark
Which one of the following is the best example of the rationing function of the price mechanism?
AAn increase in demand, leading to a rise in price, will encourage new firms to enter the market
BChanges in price provide information to both producers and consumers
CIf a product is scarce, a rise in price is likely to make the shortage worse
DWhen there is a shortage of a product, the price will rise and discourage
AS Paper 1, June 2018, Q3(a)Multiple choice
1 mark
ContextIn the UK charges for dental treatment vary. For example, the following charges can be made for a tooth filling: • National Health Service (NHS) dental treatment £50.50 • Private dental treatment £95–£700 A dentist can choose to offer NHS treatment, private treatment or both.
Using the data above, which one of the following is a function of the price mechanism in the market for private dental care?
AActing as a signal to dentists when deciding whether to provide private dental treatment
BEliminating a shortage of private dentists by allowing the price of private treatment to fall
CEncouraging government intervention to set dental care targets
DIncentivising private dentists to offer only NHS treatment
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