Cambridge IGCSE Economics 0455 — 2013 May/June Paper 3 · Variant 3

1 (a) Identify two disadvantages of small scale production referred to in the extract. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Using information from the extract, explain two reasons why the price of rubber increased in 2011. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] (c) Explain two functions of money referred to in the extract. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] (d) Using information from the extract, explain two reasons why demand for rubber from Thailand may decrease in the future. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] (e) Discuss what factors will influence whether people will want to work for a large rubber producing firm. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [6] [Total: 20] The extract ‘Cuba moves towards a market economy’ will be needed for this question.

Mark scheme: 1 (a) 1 mark for lack of capital. 1 mark for inability to take advantage of economies of scale/high average costs. [2] (b) 1 mark each for each of 2 reasons identified i.e. decrease in supply and increase in demand. 1 mark each for each of 2 explanations i.e. supply decreased due to bad weather, demand increased due to increasing global demand for tyres. [4] (c) 1 mark for identifying a standard for deferred payment with: 1 mark for explaining that is money is being used to borrow and to repay. 1 mark for identifying a store of value with: 1 mark for explaining that people are saving money. 1 mark for identifying unit of account (measure of value)/medium of exchange with: 1 mark for referring to prices/buying or selling. [4] (d) 1 mark for identifying increased competition from larger Chinese plantations. 1 mark for explaining these Chinese plantations may produce rubber more cheaply. 1 mark for identifying the quantity of synthetic rubber may rise. 1 mark for explaining synthetic and natural rubber are substitutes/people may switch from buying natural rubber to buying synthetic rubber. 1 mark for identifying bad weather may continue. 1 mark for explaining lower supply will raise price which will reduce demand. [4] (e) Up to 3 marks for identifying factors e.g. • wage rate • holidays • promotion chances • job security • job satisfaction • location. Up to 4 marks for discussing factors e.g. more people will want to work for a large rubber firm if: • the wage rate is high • there are long holidays • promotion chances are good • there is a high level of job security • a high level of job satisfaction • the firm is close to where people live. Note: up to three marks for any one point identified and discussed. Up to three marks for a list-like approach. Note: a maximum mark of 6. [6] IGCSE – May/June 2013 0455 33

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2 (a) Define the term ‘trade embargo’. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (b) Using information from the extract, explain why the Cuban Government is raising the retirement age. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (c) Explain whether Cuba’s income tax system is progressive or regressive. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [2] (d) The Cuban Government removed the subsidy on sugar. Using a demand and supply diagram, explain the effect this would have had on the market for sugar. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... ..................................................................................................................................... [4] (e) (i) Calculate the size of Cuba’s labour force in 2010. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [2] (ii) Using Table 1, comment on whether the data supports the view that a slowdown in economic growth results in higher unemployment. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. .................................................................................................................................. ............................................................................................................................. [2] (f) Discuss whether consumers in Cuba will be likely to benefit from their economy moving towards a market economy. .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Additional writing space is on the next page.

Mark scheme: 2 (a) 2 marks for a ban on imports/exports. 1 mark for a ban. [2] (b) 1 mark for coping with an ageing population. 1 mark for reducing the cost of state pensions/raising tax revenue. [2] (c) 2 marks for progressive as it takes a higher percentage of the income of the rich. 1 mark for progressive. [2] (d) S1 Price of D Sugar S Q1 Q D S1 S Q1 Q Quantity of Sugar 1 mark for correct labels – P, Q, D and S. 1 mark for shift of the supply curve to the left. 1 mark for original and new equilibriums. 1 mark for explaining price would rise. [4] (e) (i) 2 marks for 5 million. 1 mark for correct working i.e. 0.1 m/2%. [2] (ii) 1 mark for concluding generally no. 1 mark for recognising the economic growth rate falls from 2006 to 2008 but so does unemployment/economic growth rate rises from 2009 to 2010 and so does unemployment. 1 mark for noting that 2008 to 2009 supports the view/over the whole period the economic growth rate fell and the unemployment rate rose. 1 mark for unemployment is so low, it is less likely to be cyclical (demand-deficient) unemployment (more likely to be frictional unemployment). [2] IGCSE – May/June 2013 0455 33 (f) Up to 4 marks for why consumers may benefit e.g. • consumer sovereignty • low prices • choice • high quality • efficient allocation of resources. Up to 4 marks for discussing why consumers may not benefit e.g. • higher prices due to abuse of market power • higher prices due to removal of state subsidies • public goods not being provided • advertising distorting choices • some consumers lacking purchasing power. [6]

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