Cambridge IGCSE Economics 0455 — 2012 Oct/Nov Paper 3 · Variant 3

1 (a) Identify, from the extract, two benefits tourism provides for the economy of Ecuador. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) (i) What evidence is there in the extract that Peru has been more concerned with environmental conservation than Ecuador? .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [2] (ii) Why might conservation restrict economic development? .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [4] (c) (i) Explain whether Petroecuador is a public corporation or a public limited company. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [2] (ii) Explain two external costs, referred to in the extract, that might arise from allowing firms to drill for oil in the ITT area. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [4] (d) Discuss whether other countries would benefit from Ecuador preventing oil extraction in the ITT area. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] [Total: 20] The extract ‘Falling fertility’ will be needed for this question.

Mark scheme: 1 (a) 1 mark for brings in foreign currency/export revenue/high demand for Ecuadorean currency. 1 mark for creates employment. [2] (b) (i) 1 mark for Peru spends a higher proportion of its GDP on conservation than Ecuador. 1 mark for the rainforest is disappearing more slowly in Peru than in Ecuador. [2] (ii) 1 mark for defining economic development. 1 mark for conserving resources means not using them now. 1 mark for lower output. 1 mark for output may be below full capacity/potential. 1 mark for lower output means lower incomes/revenue. 1 mark for lower incomes may reduce living standards. 1 mark for lower aggregate demand. 1 mark for lower employment. 1 mark for lower exports. 1 mark for higher costs of production (in the short run). 1 mark for cost of government expenditure involved in conserving resources. 1 mark for opportunity cost involved in government spending on conservation. 1 mark for example of opportunity cost. 1 mark for income is one influence on economic development 1 mark for has the potential to reduce tourism. [4] (c) (i) 1 mark for public corporation. 1 mark for the extract refers to state owned firm/state owned firm is another term for public corporation. Note: the second mark cannot be gained if the answer given is a public limited company. [2] (ii) Up to 2 marks for an understanding of external costs: 2 marks for social costs minus private costs 2 marks for harmful effects on third parties 1 mark for effect on third parties/those not directly involved in the consumption and production of the product. 1 mark for each of two examples from the extract: • pollution/carbon emissions • loss of homes for tribes people • loss of homes for wildlife. [4] IGCSE – October/November 2012 0455 33 (d) Up to 4 marks for commenting on why other countries may benefit, e.g.: • may experience less pollution, reduce external costs, raise living standards • other oil producing countries will have less competition, raise demand for their oil, increase revenue • the oil firms may move to other countries, contribute to their output/GDP, create employment, increase tax revenue • may help tourist industry in neighbouring countries, increase number of tourists, raise GDP, increase employment, improve current account position. (Note: all 4 marks can be gained for commenting on one reason.) Up to 4 marks for commenting on why other countries may not benefit, e.g.: • restrict supply of oil, raise the price of oil, worsen current account position of countries importing oil • Ecuador’s GDP may rise more slowly, the country’s demand for imports may grow more slowly, the growth in other countries’ exports may slow • pollution may increase in other countries, destroy wildlife habitats, reduce their tourism • prevent specialisation, reduce world output, lower living standard • prevent MNCs from other countries from extracting oil, lowering their profits, employment. (Note: all 4 marks can be gained for commenting on one reason.) Up to 3 marks for a list-like response. [6]

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2 (a) (i) Using information from the extract, explain two reasons why developing countries tend to have higher fertility rates than developed countries. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [4] (ii) Using Table 1, comment on whether the data supports the view that fertility rates fall as countries develop. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [4] (iii) Why may the global average replacement rate fall in the future? .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [2] (b) (i) Explain two reasons why a country’s fertility rate may fall but its population size increases. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [4] (ii) Discuss what information you would need to assess whether a country would benefit from a decrease in its population size. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ..................................................................................................................................

Mark scheme: 2 (a) (i) 1 mark for each of two reasons identified: • low cost of raising children • lack of state benefits/pensions/needing children to support parents in old age • fewer women working • expectation of high infant mortality • less education. 1 mark for each of two explanations e.g.: • low cost of raising children as the number of years of schooling may be low • lack of state benefits/pensions may mean parents become financially dependent on their children • when women are not in work, they may be less likely to restrict their family size due to e.g. more time available • high infant mortality rate may result in parents having more children, expecting only a few to survive, due to poor medical care • less education may mean people are less aware of ways to limit family size. [4] (ii) 1 mark for generally it shows poorer countries do have higher fertility rates. 1 mark for supporting evidence from the data for this. 1 mark for exceptions identified in ranking – Nigeria and/or Norway. 1 mark for only a few countries are shown. 1 mark for only one year is shown. 1 mark for GDP per head is only one influence on fertility/there may be another influence. 1 mark for giving another relevant influence. [4] (iii) 1 mark for infant mortality rate may fall in future/more babies surviving 1 mark for countries may develop/health care may develop [2] IGCSE – October/November 2012 0455 33 (b) (i) 1 mark for each of two reasons identified: • more women in the population • fall in the death rate • fall in the infant mortality rate • net immigration • fertility rate may still be above the replacement rate. 1 mark each for each of two explanations e.g.: • more women in the population may mean that whilst each woman, on average, may have fewer children, the number of children born may rise/reason why birth rate may rise • a fall in the death rate may offset a fall in the birth rate/reason why death rate may rise • a fall in infant mortality rate will mean more children survive/infant mortality rate may fall due to better health care • a net inflow of people into the country may offset a natural decrease in population size/reason why immigration may increase • a fall in the fertility rate may just mean that the population size grows more slowly. Up to 3 marks for a list-like response. [4] (ii) Up to 4 marks for identifying relevant information e.g.: • size of decrease • size of population • resources • current level of income/GDP • current level of employment • duration of the decrease • cause of the decrease. Other relevant information should be credited if link to population change and benefit/cost to country established. Up to 4 marks for commenting on why the information is relevant e.g.: • a small decrease may not have much of an impact • if the country is overpopulated/above optimum population, it would benefit from a decrease, less overcrowding, more resources per head of the population, higher income per head • a decrease in population size, with the same level of income, will increase GDP per head • if there is high unemployment, a decrease in population size may reduce the problem in the short term – but in the longer term will also reduce aggregate demand and so the number of jobs available • a short term decrease may not have much of an impact • a fall in the birth rate may increase the size of the labour force in the short run but reduce it in the long run, affect the dependency ratio • net emigration may deprive the country of skilled workers, reduce output, reduce productivity, lower living standards. (Up to 4 marks can be given for commenting well on one factor.) Up to 3 marks for a list-like approach. Maximum of 4 marks if there is no discussion of why the information identified is relevant. Note: a maximum of 2 marks for a response which just concentrates on the effects of a decrease in a country’s population size. [6]

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