Cambridge IGCSE Economics 0455 — 2011 Oct/Nov Paper 3 · Variant 1

1 (a) What is meant by a ‘brain gain’? .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[2] (b) Explain two possible reasons why, in the future, Ghanaian doctors may choose to work in Ghana. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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.......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[4] (c) (i) Using the extract identify: • a private benefit of education .................................................................................................................................. ..............................................................................................................................[1] • an external benefit of education. .................................................................................................................................. ..............................................................................................................................[1] (ii) Explain two policies a government could use to encourage more people to enter higher education. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. 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.................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ..............................................................................................................................[4] (d) Using Table 1, identify, relative to its GDP: (i) the country most dependent on remittances ..............................................................................................................................[1] (ii) the country least dependent on remittances. ..............................................................................................................................[1] (e) Discuss what factors should be taken into account when assessing whether an economy would benefit from the emigration of its workers. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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‘Microfinance’ will be needed for this question.

Mark scheme: 1 (a) ‘Brain gain’ is the net immigration of skilled workers (2)/gain of skilled workers (1) from other countries (1). [2] (b) 1 mark for each of two valid reasons identified, such as: • incomes at home may rise • working hours and conditions may improve • restrictions may be placed on migration to other countries • family ties. 1 mark for each of two explanations identified, such as: • a doctor may earn nearly as much in Ghana as in the USA • working hours may be cut in Ghana and doctors may want to work in, for example, the UK but may not be able to get work visas • Ghanaian doctors may want to stay with family and relatives. [4] (c) (i) Private benefit: high pay (1). External benefit: higher output or higher tax revenue (1). [2] (ii) 1 mark for each of two valid reasons identified, such as: • subsidising/providing higher education free • providing information about the benefits of education • lowering the qualifications needed to enter higher education • expanding existing universities • increasing the number of places by building more. 1 mark for each of two explanations identified, such as: • Subsidising/providing education free would enable the poor to access it. • People may underestimate the benefits of education. • Reducing qualifications needed would make it easier for more people to gain entry to universities. [4] (d) (i) Country most dependent on remittances: the Philippines (1) (remittances = 11.1% of GDP). (Also accept: difficult to determine as net figure not shown.) [1] (ii) Country least dependent on remittances: France (1) (0.54% of GDP). (Also accept: difficult to determine as net figure is not shown.) [1] (e) Up to 3 marks for identifying influencing factors, such as: • level of vacancies in the country • whether the workers are skilled or unskilled • size of the remittances • effect on foreign direct investment • whether it encourages children to go to university • size of population • effect on dependency ratio. Up to 3 marks for commenting on the factors, such as: • may benefit the economy if unemployed • unskilled workers emigrate who send home a significant proportion of their incomes • if country initially had a population in excess of the optimum level. [6] IGCSE – October/November 2011 0455 31

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2 (a) Identify, from the extract, three motives for borrowing. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ......................................................................................................................................[3] (b) (i) Explain what is meant by poverty. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ..............................................................................................................................[2] (ii) Apart from the difficulty of borrowing, explain one other disadvantage the extract suggests the poor experience. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ..............................................................................................................................[2] (c) (i) State two reasons why a conventional commercial bank may be reluctant to lend to the poor. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ..............................................................................................................................[2] (ii) Using a demand and supply diagram, show the effect of increasing loans to poor entrepreneurs on the market for basic, inexpensive capital goods such as sewing machines. [3] (d) (i) What is meant by entrepreneurial skills? .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ..............................................................................................................................[2] Question 2(d)(ii) is on the next page

Mark scheme: 2 (a) 1 mark for each of three motives from: • to start a business • to buy mobile phones/TVs • to pay household bills. [3] (b) (i) Explanation may include: • 1 mark for lack of income. • 1 mark for lack of basic necessities. • 1 mark for having a lower income than others in the country. Note: a maximum mark of 2. [2] (ii) 1 mark for identifying a disadvantage, such as: • lack of education/poor health care or entrepreneurial skills • having to pay high interest rates • problem paying household bills • problem buying basic capital goods • difficulty saving and problem repaying loans. 1 mark for explaining a disadvantage, such as, the poor may be unable to afford: • to send their children to school/attend higher education • to seek treatment for medical conditions • to develop new businesses. [2] (c) (i) Reasons may include: • 1 mark for fear will not be repaid. • 1 mark for collateral is unlikely to be offered as a guarantee. • 1 mark for will not earn much interest/administrative costs may be high. Note: a maximum mark of 2. [2] IGCSE – October/November 2011 0455 31 (ii) Price of basic capital goods D1 S D P1 P D1 S D 0 Q Q1 Quantity of basic capital goods 1 mark for correct labels. 1 mark for shift of the demand curve to the right. 1 mark for correct equilibriums. [3] (d) (i) Entrepreneurial skill is: the skill of taking risks/bearing uncertain risks/setting up a new business (1) and organising/managing other factors of production (1). [2] (ii) Up to 3 marks for identifying factors, such as: • level of wages relative to potential profit • job security • business risks • skills possessed • availability of assistance to start a business. Up to 3 marks for commenting on factors, such as: • an individual may be more likely to want to work for someone else if the pay is good • working conditions are good • businesses are failing • the person thinks s/he lacks the necessary skills • there is little government support in setting up a business. [6]

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