Read the source material carefully before answering Question 1. Source material: Chilean cherries Producing just a few products can be risky for a country. Fig. 1.1 Population pyramids of Chile and Haiti 2018 Content removed due to copyright restrictions. Content removed due to copyright restrictions. There is, however, evidence of market failure and inequality in how resources are allocated. Answer all parts of Question 1. Refer to the source material in your answers. 1 (a) Calculate Chile’s agricultural output in 2017. [1] (b) Identify two disadvantages of a country specialising. [2] (c) Explain one reason why demand for cherries is price-elastic. [2] (d) Explain how Chile’s population structure differs from Haiti’s population structure. [4] (e) Analyse why China buys most of its cherries from Chile. [4] (f) Analyse why Chilean astronomers are paid more than Chilean farm workers. [5] (g) Discuss whether or not Chilean consumers would benefit from more government intervention in the economy. [6] (h) Discuss whether or not the Haitian economy would benefit from fewer of its people working in Chile. [6] Content removed due to copyright restrictions.

1(a) Calculate Chile’s agricultural output in 2017. $11.76bn / $11 760 000 000 / $11 760m (1). 1 Accept $11.8bn and $12bn. $ is not essential. 1(b) Identify two disadvantages of a country specialising. Two from: • demand may fall / new competitors may appear • supply/output may fall / diseases / natural disasters / bad weather may affect agricultural output / costs may rise • non-renewable resources may run out • structural unemployment may occur • reliance on imports no longer produced by home country / overdependency on other countries 2 One mark each for each of two disadvantages. Rely on a small number of industries is not sufficient. 1(c) Explain one reason why demand for cherries is price-elastic. A luxury product (1) they do not have to be purchased / not essential / not a necessity (1). Has close substitutes (1) example / rise in price will cause some people to switch to rival products (1). 2 In terms of close substitutes, also accept: fall in price will cause some people to switch towards this product and away from rival products. One mark for the reason identified and one mark for the explanation. A candidate who writes a luxury product and has close substitutes and no more has identified two reasons, so just one mark. If a candidate identifies one of the two reasons but does not explain it and then identifies the second reason and explains it, the second reason can be taken and with the explanation, 2 marks. 1(d) Explain how Chile’s population structure differs from Haiti’s population structure. Logical explanation which might include: Chile has a higher proportion of its population aged over 65 / Haiti a lower proportion aged over 65 (1). Chile has a lower proportion of the population aged under 15 / Haiti has a higher proportion aged under 15 (1). Chile is likely to have a lower birth rate / Haiti is likely to have a higher birth rate (1). Chile likely to have a lower death rate / Haiti is likely to have a higher death rate (1). Chile’s population pyramid indicates a relatively high level of development/high income country / Haiti’s population pyramid indicates a relatively low level of development/low income country (1). Chile’s population pyramid is less pyramid shaped / more stationary / constrictive / bulges out in the middle / more egg-shaped / Haiti’s is more pyramid shaped / more expansive (1). Lower dependency ratio in Chile / higher dependency ratio in Haiti (1). Higher proportion of population of working age in Chile / lower proportion of population of working age in Haiti (1). Higher population size in Chile / lower population size in Haiti (1). 4 Accept for the first and second points other relevant age ranges e.g. over 60, under 10. Accept longer life expectancy for lower death rate and shorter life expectancy for higher death rate. Note that each country overall has more females than males, so not a difference. 1(d) Chile has a higher average age / older population / Haiti has a lower average age population / younger population (1). 1(e) Analyse why China buys most of its cherries from Chile. Coherent analysis which might include: Chile has high production standards (1) cherries are likely to be of a high quality (1). China does not impose tariffs on Chilean cherries (1) may keep their price low (1). 4 Free trade agreement on its own is not sufficient. 1(f) Analyse why Chilean astronomers are paid more than Chilean farm workers. Coherent analysis which might include: Most astronomers have a university degree (1) high cost of training/ long period of training (1) well qualified / well educated / high level of knowledge (1) highly productive / highly skilled / efficient (1) in short supply (1) high demand (1) more inelastic demand (1) more inelastic supply (1). Most work in the public sector (1) government may be more willing / able to pay higher wages (1) public sector workers are more likely to belong to a trade union (1) have stronger bargaining power (1). 5 Also accept an approach based on an analysis of why Chilean farm workers are paid less than Chilean astronomers. This may include reference to immigrant farm workers who may be prepared to accept relatively low wages and Chilean farm workers being replaced by capital equipment / more replaceable than astronomers. 1(g) Discuss whether or not Chilean consumers would benefit from more government intervention in the economy. Award up to 4 marks for why they might: • evidence of market failure (1) • merit goods may be underproduced (1) as under- consumed (1) • demerit goods may be overproduced (1) as overconsumed (1) • external costs could be reduced (1) external benefits may be increased (1) external costs / external benefits are not taken into account by the private sector (1) • public goods may not be produced (1) no profit incentive to make them (1) as there can be free riders (1) • inequality (1) poor consumers may lose out / there may be poverty (1) resources may not be devoted to producing what the poor need (1) may not be able to afford prices charged (1) • government subsidies (1) can lower prices (1) • government could set maximum prices (1) lower prices of necessities (1) • government could control (private sector) monopoly power (1) prevent abuse of market power (1) • government investment in education (1) could lower prices / raise quality of output (1). Award up to 4 marks for why they might not: • government failure may occur (1) e.g. government may lack information (1). • market forces can provide wide choice of products (1) may be consumer sovereignty (1) 6 Apply this example to all questions with the command word DISCUSS (1(g), 1(h), 2(d), 3(d), 4(d) and 5(d)) Not taking lower taxes, lower subsidies or reduced immigration controls as a form of government intervention. Each point may be credited only once, on either side of an argument, but separate development as to how/why the outcome may differ is rewarded. Generic example Tax revenue may decrease … 1 ... because of reason e.g. incomes may be lower. 1 Tax revenue may increase because incomes may be higher i.e. reverse of a previous argument. 0 Tax revenue may increase because of a different reason i.e. not the reverse of a previous argument e.g. government spending on subsidies may stimulate the economy more than spending on education. 1 1(g) • profit incentive (1) industries may respond to changes in consumer demand (1) • efficient industries (1) prices may be low (1) quality may be high (1) • government intervention in the form of nationalisation (1) may reduce competition (1). • government taxes / tariffs / regulation / minimum wages (1) may increase costs (1) raise prices (1) • maximum prices could reduce availability of products (1) • government limits on immigration (1) may reduce availability of products / raise prices (1) 1(h) Discuss whether or not the Haitian economy would benefit from fewer of its people working in Chile. Award up to 4 marks for why it might: • wages may be low in Chile (1) work involves unskilled labour (1) • employment may be rising in Haiti (1) the country could keep more of its skilled workers (1) • larger labour force / more workers (1) higher total demand (1) increase GDP / increase economic growth / increase productive potential (1) increase living standards (1) increase exports (1) • rise in the numbers employed in Haiti could increase tax revenue (1) may enable more spending on e.g. education (1) • fewer parents may leave behind dependent relatives (1) reduce burden on the government (1) • jobs could be found in other countries (1) Award up to 4 marks for why it might not: • wages may be higher in Chile (1) fewer emigrant workers may send money home (1) living standards may be lower (1) lower spending (1) • less money coming into the country (1) may increase a current account deficit (1) • job opportunities may be higher in Chile (1) unemployment may rise in Haiti (1) • if unemployment rises in Haiti, cost of unemployment benefits may rise (1) opportunity cost / higher taxation (1) • opportunities to gain new skills may be reduced (1) these skills could be brought back into the country (1) 6 For an approach which discusses whether or not the Haitian economy benefits from its people working in Chile, award a maximum of 3 marks. 1(h) • may reduce pressure to invest / spend on capital equipment (1) reduce advances in technology / reduce increases in efficiency / productivity (1) • may increase overcrowding / overpopulation (1) increase external costs / pollution (1) pressure on resources (1).

Section A Read the source material carefully before answering Question 1. Source material: India’s airline industry Air India fact file total revenue 2018 $2.2 bn total cost 2018 $2.9 bn number of passengers carried in 2018 16.4 m number of passengers carried in 2017 14.8 m share of India’s international and national air travel market in 2018 13% share of India’s international and national air travel market in 1994 100% Air India is owned by the Indian government. The entry of new firms into India’s air travel market has reduced Air India’s ability to set price. The state-owned firm faces competition not only from other airlines but also from other forms of transport including trains and ships. In 2017 the Indian government tried, unsuccessfully, to sell Air India to the private sector. A successful sale would have raised money for the Indian government and might have increased the airline’s efficiency. It is predicted that India will have the third largest airline industry by 2025. The growth in the industry may affect the current account position of India’s balance of payments. Table 1.1 shows the current account position in India and four other countries. Table 1.1 The current account position of the balance of payments of selected countries in 2017 Country Current account ($ bn) Current account % of GDP Brazil –9.8 –0.5 China 164.9 1.4 India –48.7 –1.9 Kenya –5.4 –6.8 Russia 35.4 2.2 A rise in both the number of routes flown and the quality of the passenger experience may increase the number of tourists visiting India. A larger Indian airline industry is likely to increase the ease of movement of people and goods into and out of India. This might attract more multinational companies (MNCs) and reduce firms’ costs of production. India’s air travel market faces a number of challenges. India has Asia’s highest airline fuel tax. Some economists suggest that this should be increased further to increase tax revenue and to reduce market failure. The airlines’ other costs are rising but it is difficult for them to raise prices. This is because India’s air passengers are among the most price-sensitive in the world. Some airlines stop their costs rising any further by improving their staff training, introducing new technology and improving their pilots’ working conditions. The airlines’ ability to hire pilots is influenced by, among other factors, the quality of education and other job opportunities. Answer all parts of Question 1. Refer to the source material in your answers. (a) Calculate, in $, Air India’s loss in 2018. [1] (b) Identify two substitutes for air travel. [2] (c) Explain one characteristic that suggests that Air India was a monopoly in 1994. [2] (d) Explain two reasons why a government may privatise an industry. [4] (e) Analyse how India’s position on the current account of its balance of payments in 2017 compares with the other four countries. [4] (f) Analyse how a successful airline industry can promote economic growth. [5] (g) Discuss whether the Indian government should increase the tax on airline fuel. [6] (h) Discuss whether more people will apply to be pilots for Indian airlines in the future. [6]

1(a) Calculate, in $, Air India’s loss in 2018. 0.7bn, 700m, 700 000 000. 1 7 × 10 to the power 8. 7 × 10ˆ8. 1(b) Identify two substitutes for air travel. Trains (1) ships (1). 2 For ‘ships’ accept water travel. 1(c) Explain one characteristic that suggests that Air India was a monopoly in 1994. Share of the market was 100% (1) only firm / share above 25% of the market / share above 40% / a complete/pure monopoly / no competition (1). Able to set price (1) a price-maker (1). 2 1(d) Explain two reasons why a government may privatise an industry. Logical explanation which might include: Raise (tax) revenue (1) which could be spent on e.g. education, healthcare / increase government spending (1). Increase efficiency / may perform better in the private sector / higher productivity (1) introduce a profit motive / increase output/GDP / reduce costs of production (1). Increase competition (1) lower price / increase quality / increase choice (1). Industry may be loss making / costly to run (1) reduce need to use tax revenue to finance industry / tax revenue can be used for other purposes e.g. education / increase government spending / reduce national debt / tax rates might be cut (1). 4 One mark each for each of two reasons identified and one mark each for each of two explanations. 1(e) Analyse how India’s position on the current account of its balance of payments in 2017 compares with the other four countries. Coherent analysis which might include: Brazil, India and Kenya had a current account deficit (1) while China and Russia had a current account surplus (1). India’s current account deficit is the largest in terms of $s (1) but the second largest in % terms (1). China’s current account had a larger impact on its economy in terms of $s (1) and Kenya’s in percentage terms (1). Russia’s current account surplus is larger than China’s in terms of % of GDP (1). China has the largest surplus in $s (1). 4 Up to 2 marks maximum for idea of size of current account balance without reference to deficit or surplus e.g. China has the largest current account balance and India the lowest. So maximum of 2 marks without reference to deficit/s or surplus/es. No marks for writing about a budget balance. 1(f) Analyse how a successful airline industry can promote economic growth. Coherent analysis which might include; May increase number of tourists (1) raise revenue from tourism / increase the size of the tourist industry (1) may increase exports / imports / increase the ease of movement of people and goods into and out of the country (1). May attract more MNCs (1) these will increase the country’s output/GDP (1) introduce new technology / new methods of production (1). May lower costs of production (1) raising firms’ profits (1) providing the incentive/finance to expand (1) increase the country’s output/GDP (1). May increase employment (1) raise incomes (1) increase total demand (1) increase tax revenue (1) more could be spent on e.g. education (1). May increase (geographical) mobility of labour (1) making it easier for expanding firms to recruit workers (1). 5 1(g) Discuss whether the Indian government should increase the tax on airline fuel. Award up to 4 marks for why it should: • Raise revenue (1) can be used to finance e.g. education / training of pilots / increase government spending (1) burden more likely to fall on the rich / may enable tax on basic necessities to be reduced (1). • May reduce market failure (1) air travel causes external costs / social cost exceeds social benefit (1) air/noise pollution (1) a tax may reduce air travel / lower demand for air travel (1) by raising price (1) encourage people to switch to other forms of transport (1). Award up to 4 marks for why it should not: • Will increase airlines’ costs / reduce airlines’ profits / cause a loss (1) airlines’ other costs are rising (1) difficult for them to cover higher costs / raise prices (1) due to elastic demand / price sensitive demand (1) may go out of business (1) may discourage investment (1) causing unemployment (1). • May reduce tourism in the country (1) harming the current account position (1). • Airline fuel is already highly taxed (1) may be difficult to tax further (1). • Ait travel is safer than car travel in many countries (1) so injuries may increase if there is a switch between the two (1). 6 Apply this example to all questions with the command word DISCUSS (1g, 1h, 2d, 3d, 4d and 5d) Each point may be credited only once, on either side of an argument, but separate development as to how/why the outcome may differ is rewarded. Generic example Tax revenue may decrease … 1 ... because of reason e.g. incomes may be lower. 1 Tax revenue may increase because incomes may be higher i.e. reverse of a previous argument. 0 Tax revenue may increase because of a different reason i.e. not the reverse of a previous argument e.g. government spending on subsidies may stimulate the economy more than spending on education. 1 1(h) Discuss whether more people will apply to be pilots for Indian airlines in the future. Award up to 4 marks for logical reasons why they might: • Introduction of new technology (1) will make the job easier (1) • Improved staff training (1) improve/increase skills (1) improve motivation / satisfaction (1) • improve working conditions (1) airlines want to retain staff (1) • More routes are being flown / size of industry is increasing (1) demand for pilots may increase / more job opportunities (1) may raise wages (1). • More fringe benefits may be provided (1) example (1). • Being a pilot is a highly regarded occupation in many countries (1). Award up to 4 marks for logical reasons why they might not: • There may not be more people qualified to become pilots (1) education standards may fall / qualifications may be high (1). • Period of training may increase / cost of training may increase (1). • Other jobs may offer higher wages / better working conditions / wages of pilots may fall (1) example of other jobs (1). • Advances in technology may reduce the need for pilots (1) may increase skills needed (1). • Increased tax on fuel may reduce the size of the airline industry (1) causing people to expect fewer job opportunities / unemployment of pilots (1). • Price of substitute forms of transport may reduce (1) lowering demand for pilots (1). 6 Note: some points may be given in reverse e.g. education standards may rise. 1(h) • Job may require workers to be away from their families (1) people may want to stay close to home (1). • Working hours may be unsociable (1) people may want to spend more time with their families (1). • May be considered in some cases to be a risky job (1).

Read the source material carefully before answering Question 1. Source material: Changing eating habits Obesity fact file 2016 Country Population (million) Obesity % (percentage of population overweight) Senegal 15 9 UK 65 28 US 330 36 Concerns about health, obesity and animal welfare have risen in high income countries. This led to an increase in vegetarianism (not eating meat) and veganism (not eating meat, eggs or dairy) in high income countries. In 2017, veganism increased in the UK by 20%. As incomes rise in the UK, people are more likely to eat vegan food. Advertising vegan food has encouraged its consumption. It is claimed that eating vegan food can improve people’s health. Healthier workers can produce more, and better quality, products. Eating less meat and dairy products can also improve the environment. Farm animals emit greenhouse gases and their waste products add to water pollution. While meat consumption per person is falling in high income countries, it is rising in low income countries. Fig. 1.1 shows average daily calorie intake consumed in Senegal, a west African country, and in the US, by food groups in 2015. The recommended daily calorie intake is 2800. Senegal calorie intake = 2320 US calorie intake = 3800 Cereals/grains Meat Sugar & sweeteners Fruit & vegetables Added fats & oils Fig. 1.1 Average daily calorie intake in Senegal and the US by food groups in 2015 To respond to changes in the type of food that people are eating, it is useful if workers are mobile. Generally, the greater labour mobility, the more efficient the labour market becomes in adjusting to changes in demand, and the supply of workers. This helps a country’s international performance in trade of goods. As some people in Africa are malnourished, eating more food of any type, including meat, may make them healthier. A rise in meat consumption will increase demand for vets (for animal welfare) and transport firms. It can also increase the number of meat processing firms. Senegal has a high unemployment rate and a low income per head. It has recently experienced a fall in consumer expenditure. New industries and new jobs would help to stop Senegal experiencing a recession. A rise in government spending may also be needed. The high birth rate and rising population also puts pressure on the government to spend more. Emigration is, however, reducing tax revenue while providing some Senegalese with useful employment experience. Answer all parts of Question 1. Refer to the source material in your answers. 1 (a) Calculate the number of obese people in the UK in 2016. [1] (b) Identify two reasons why the demand for vegan food has increased in the UK. [2] (c) Explain one external benefit that may arise from eating less meat. [2] (d) Explain how food consumption in Senegal differed from the US in 2015. [4] (e) Analyse how an increase in labour mobility could improve the performance of a country’s trade in goods. [4] (f) Analyse how an increase in meat consumption could benefit African economies. [5] (g) Discuss whether or not an increase in Senegalese government spending will stop the country experiencing a recession. [6] (h) Discuss whether or not emigration would reduce poverty in Senegal. [6]

1(a) Calculate the number of obese people in the UK in 2016. 18.2 million/18 200 000/18.2 × 106 1 Accept 18 million. 1(b) Identify two reasons why the demand for vegan food has increased in the UK. Two from: • (concerns about) health • (concerns about) obesity • (compassion for) animal welfare • rise in income/getting richer/higher standard of living • advertising of vegan products • less consumption of meat 2 One mark each for each of two reasons. 1(c) Explain one external benefit that may arise from eating less meat. Healthy/less obese people (1) are more productive/higher output/live longer/government can spend more on education and raise skills (1). Improved environment/air/water quality (1) less greenhouse gases/pollution/people sick (1). 2 One mark for the external benefit identified and one mark for the explanation. 1(d) Explain how food consumption in Senegal differed from the US in 2015. Senegalese citizens consumed fewer calories (1) consumed less than the recommended amount/US consumed more than the recommended amount (1). Senegalese may have suffered malnourishment (1) US may have suffered from obesity (1). Senegalese had a healthier diet (1) e.g. more fruit and vegetables (1). A higher proportion of the Senegalese diet consisted of cereals/grains (1) because it was cheap (1). Senegalese citizens consumed less meat (1) because it was expensive/low incomes (1). Senegalese citizens consumed less sugar and/or sweeteners (1). Senegalese consumed a higher proportion of fruit and/or vegetables (1). Senegalese consumed less added fats and/or oils (1). 4 Accept a response from the viewpoint of the US e.g. US citizens ate more meat. 1(e) Analyse how an increase in labour mobility could improve the performance of a country’s trade in goods. Coherent analysis which might include: Labour markets will become more efficient (1) workers become more skilled (1) workers will move more easily between industries/become more occupationally mobile/respond quickly to changes in demand (1). Workers can move more easily from one place to another/become more geographically mobile (1). If demand for a product rises (1) it will be easier to recruit new workers/fill vacancies (1) more can be produced/supplied (1) less need for imports (1) import expenditure could fall (1) more can be exported (1) export revenue could rise (1). 4 1(f) Analyse how an increase in meat consumption could benefit African economies. Coherent analysis which might include: May reduce malnutrition/make people healthier (1) make workers more productive/efficient (1) improve quantity/quality of output (1) lower costs of production (1) more competitive internationally (1) exports increase/imports reduce (1) economic growth (1). Increase demand for vets and transport firms (1) increase number of meat processing firms (1) greater investment by firms (1) will increase output (1) raise employment (1) raise incomes/standard of living (1). Reduces government spending on health care (1) can spend more on education/unemployment benefits/infrastructure increasing skill levels/productivity (1). 5 1(g) Discuss whether or not an increase in Senegalese government spending will stop the country experiencing a recession. Award 1 mark for explanation of recession. Award up to 4 marks for logical reasons for why it might, which might include: • Government spending part of total (aggregate) demand (1) may increase total (aggregate) demand (1) may offset fall in consumer expenditure (1) this may encourage firms to produce more/attract new firms to set up (1) employ more staff/lower (cyclical) unemployment (1) earn more income (1) purchase more goods and services (1). • Government spending on education/training/healthcare infrastructure (1) improves productivity (1) make products more internationally competitive (1) increasing total (aggregate) demand (1) raising output (1). • Government subsidies (1) will lower costs of production (1) encouraging firms to produce more (1). Award up to 4 marks for logical reasons for why it might not, which might include: • May not be great enough to offset fall in investment (1) business confidence may be low (1). firms may not increase output after being given government subsidies (1) 6 Apply this example to all questions with the command word DISCUSS (1g, 1h, 2d, 3d, 4d and 5d) Each point may be credited only once, on either side of an argument, but separate development as to how/why the outcome may differ is rewarded. Generic example Mar k Tax revenue may decrease 1 because of reason e.g. incomes may be lower. 1 Tax revenue may increase because incomes may be higher i.e. reverse of a previous argument. 0 Tax revenue may increase because of a different reason i.e. not the reverse of a previous argument e.g. government spending on subsidies may stimulate the economy more than spending on education. 1 1(g) • Consumer expenditure may fall (1) investment may not rise (1) exports may fall (1) • if consumer confidence is low (1). • May be global recession (1) exports may fall (1). • If taxes are raised to pay for the increase in government spending (1) government borrows (1) effect on total (aggregate) demand may be small (1). Higher spending on education/health/infrastructure may not result in increased workforce/greater productivity (1). 1(h) Discuss whether or not emigration would reduce poverty in Senegal. Award up to 4 marks for logical reasons for why it might, which might include: • Workers’ remittances may increase/emigrants may send money home to Senegal (1) working abroad may enable them to provide more financial support for their families (1) than working at home (1) if wages are higher abroad (1) • Unemployment may fall (1) if potential emigrants could not gain work at home (1) • Increase ability of people to gain skills/work experience (1) increasing their ability to earn more (1) can share those skills with workers when they return to Senegal (1) • Emigration may move the country towards the optimum population (1) if the country lacks resources (1) this could increase income per head (1) increasing ability to purchase basic necessities (1) Award up to 4 marks for logical reasons for why it might not, which might include: • Skilled workers may leave the country (1) reducing output (1) discouraging MNCs (1) reducing jobs (1) reducing income (1) • There will be fewer people to pay taxes (1) lower tax revenue available to spend to reduce poverty (1) e.g. on education (1) • May be more dependents on the government (1) if parents leave children and elderly relatives behind (1) • Fewer workers in the population (1) will make it harder to finance state pensions (1) may reduce income of pensioners (1) 6

2 Nearly one million people in Cairo, the capital city of Egypt, live in crowded, unhealthy housing. One reason why people lack basic necessities, including adequate housing, is unemployment. In 2019, nearly 10% of Cairo’s workers did not have a job. Other citizens of Cairo live in luxury, in houses costing more than $1 million. Many of Cairo’s rich adults grew up in rich families. (a) Identify two basic necessities, other than housing. [2] (b) Explain how frictional unemployment differs from cyclical unemployment. [4] (c) Analyse why the children of the rich tend to become rich adults. [6] (d) Discuss whether a government should provide subsidies to families to spend on housing. [8]

2(a) Identify two basic necessities, other than housing. Two from e.g.: Food, water, clothing, healthcare and education. 2 Accept any relevant basic necessity e.g. heating or electricty. If more than two examples given, only consider the first three. 2(b) Explain how frictional unemployment differs from cyclical unemployment. Logical explanation which might include: Frictional unemployment arises from people being in between jobs (1) may be waiting for a better paid job / may be seasonally unemployed / may have worked on a short-term contract / may lack information about vacancies (1) may exist even when there is full employment / may be self-correcting (1). Cyclical unemployment is caused by a lack of total (aggregate) demand (1) more people unemployed than there are job vacancies (1) may arise from a recession / economic downturn (1) may need government action to reduce it (1). Frictional unemployment would be reduced by a rise in labour mobility (1) cyclical unemployment would not be (1). Frictional unemployment may be short term (1) cyclical unemployment may be long term (1). 4 Up to 2 marks for each type of unemployment. 2(c) Analyse why the children of the rich tend to become rich adults. Coherent analysis which might include: The children of the rich tend to receive a good education (1) may not have to take part-time jobs / not have to help in family business when studying / not have to leave school early (1) become well qualified / well educated / gain high level of knowledge (1) become highly skilled / productive / efficient (1) find it is relatively easy to find employment / get a good job (1) well-paid (1). The children of the rich tend to receive good health care (1) good nutrition (1) have good housing (1) unlikely to miss time at school (1) unlikely to miss time at work (1) income will be high (1). The children of the rich tend to have high expectations (1) apply for better jobs (1). The children of the rich may inherit e.g. property (1) may gain income from e.g. inherited property / business / savings (1). Rich parents may have connections with e.g. bosses of major employers (1) more likely to gain high paid work (1). 6 Note the focus here is on the children of the rich so no marks for e.g. the children of the poor may lack education. Reference to highly skilled / productive or efficient may be linked to education, healthcare or nutrition but can only be credited once. 2(d) Discuss whether a government should provide subsidies to families to spend on housing. In assessing each answer, use the table opposite. Why it might: • will increase the spending power of families who receive it • may increase quantity supplied • may give low-income families access to a basic necessity, reducing poverty • may enable families to spend more on e.g. education • may increase employment / reduce unemployment, creating jobs building housing / increase labour mobility • may increase quality of housing and so improve health Why it might not: • rich can already afford housing • some families may not spend it on housing • may be inflationary, demand increasing for housing and e.g. furniture, carpets • opportunity cost • taxes may be raised to finance subsidy • building more houses may result in environmental damage 8 Level Description 3 A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other, but overall both sided of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and/or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes. 6–8 2 A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development may be one-sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question. 3–5 1 There is a simple attempt at u sing economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding. 1–2 0 A mark of zero should be awarded for no creditable content. 0

Cambridge O Level Economics · 2281

O-Level Economics (2281) Microeconomic decision makers past paper questions

Questions on money and banking, households, workers, trade unions, firms, and market structure — the microeconomic decision makers.

266 free questions from 2016–2021, each with its marking scheme. Open the full topical bank to filter by subtopic, paper, and year.

Microeconomic decision makers in O-Level Economics 2281 exams, 2020–2025

Across 2020–2025, Microeconomic decision makers accounted for 240 questions worth 1,994 marks in Cambridge O Level Economics (2281) papers.

By year
Year	Questions	Marks
2020	39	306
2021	39	335
2022	38	382
2023	37	352
2024	44	349
2025	43	270

Most-tested subtopics

3.3 Workers790 marks
3.5 Firms590 marks
3.8 Market structure550 marks

Appears in

Paper 1 · 155 qs
Paper 2 · 85 qs

All most-tested Economics topics

2021 May/Jun · Paper 2 · Q1 · 30 marks
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2021 Oct/Nov · Paper 2 · Q1 · 30 marks
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2021 Oct/Nov · Paper 2 · Q1 · 30 marks
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2021 May/Jun · Paper 2 · Q2 · 20 marks
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2021 May/Jun · Paper 1 · Q9 · 1 mark
Marking scheme
Mark scheme — 2021 Paper 1 Q9
Answer: B
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