Workers — Paper 3 · IGCSE Economics 0455

1 (a) Why is Jamaican Blue Mountain coffee called ‘black gold’? … … … … … … [2] (b) Why might some people involved in coffee production not think of coffee as similar to gold? … … … … … … … … … … … … [3] (c) Discuss whether Jamaica should be pleased that such a large amount of coffee is sold to one country, Japan. … … … … … … … … … … … … … … … … … … … … [5] (d) Explain the difference between variable cost and fixed cost and identify what happened to Starbucks’ fixed and variable costs in 2007. … … … … … … … … … … … … … … … … … … … … … … … … [6] (e) The extract says that Starbucks had a bad year. As a researcher, you are asked to assess whether this is correct. Discuss whether the evidence in the extract supports this claim and suggest what other information you might require. … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [10] [Total: 26] The extract ‘Charging some cars extra to enter London may raise, not lower, pollution’ will be needed for this question.

26 marks

Mark scheme: 1 (a) 1 mark for it is the most expensive coffee in the world. 1 mark for it sells at US$125 a kilogram. 1 mark for it sells for four times the average price of a good coffee blend. 1 mark for it earns Jamaica US$38 million from trade / brings a large amount of money into the economy. Note: maximum of 2 marks. 1 mark in total for a less specific response. For example, it is expensive / sells for a high price / has a high value. [2] (b) 1 mark for workers have to work long hours. 1 mark for workers have poor working conditions. 1 mark for workers receive low pay. Note: nothing for just copying out the extract. [3] (c) Up to 3 marks why they may be pleased. For example; • provides a secure market • large sales provide high profits / GDP • large sales bring in export revenue • large sales provide employment. Note: 3 full marks may be gained for 1 reason which is well-explained. Up to 3 marks why they may not be pleased. For example; • There is a risk of being reliant on one country as Jamaica may lose a considerable amount of revenue should Japanese incomes fall / should tastes change. • Japan may use buying power to reduce the price of coffee. No marks for improved international relations. Note: 3 full marks may be gained for 1 reason which is well-explained. [5] (d) Up to 2 marks for defining variable cost: 1 mark for a cost that changes / varies. 1 mark for reference to the link to changing output. Up to 2 marks for defining fixed cost: 1 mark for a cost that does not change. 1 mark for reference to the link to changing output / short run. 1 mark for fixed cost rose as more stores were opened. 1 mark for variable cost rose as sales increased / cost of milk rose. [6] IGCSE – May/June 2010 0455 31 (e) Up to 2 marks for considering why Starbucks may have had a bad year: • opening fewer stores than planned • costs rose • increased competition • share price fell • number of US customers fell • customers coming from lower income groups. Up to 2 marks for considering why Starbucks may have had a good year: • still opening new stores • able to raise prices to cover higher costs • profits rose in the third quarter • sales increased worldwide / number of global customers rose • average amount spent increased. Up to 2 marks for a conclusion: • performance varied over the year • whilst the US had problems, the global performance was better. Up to 4 marks for suggesting what other information might be required: • profits in previous years • costs in previous years • revenue in previous years • share price trends • performance of competitors. Up to 2 marks for research methods / how information might be found. Note: maximum of 10 marks. [10] IGCSE – May/June 2010 0455 31

This question in 0455/31 May/June 2010

1 (a) Draw a demand and supply diagram to show the effect of an increase in demand for gas on the world market for gas. [3] (b) Using information from the extract, explain why Gazprom’s share price may have fallen in 2009. … … … … … … … … … … … … [3] (c) (i) Give two reasons why a firm may borrow. … … … … [2] (ii) What effect might Gazprom’s spending on building new pipelines have on the company’s profits in the short term and long term? … … … … … … … … … … … … … … … … [4] (d) Why might the best engineers want to work for Gazprom? … … … … … … … … … … … … [3] (e) (i) Comment on how close Gazprom was to being a monopoly in 2008. … … … … … … … … … … … … [3] (ii) Discuss the information you would need in order to assess whether a monopoly is benefiting consumers. … … … … … … … … … … … … … … … … … … … … … … … … [6] [Total: 24] The extract ‘Information on Gross Domestic Product (GDP), Human Development Index (HDI), foreign aid and health expenditure in selected countries’ will be needed for this question.

24 marks

Mark scheme: 1 (a) D1 D S Price of gas P1 P D1 S D 0 Q Q1 Quantity of gas 1 mark for labels. 1 mark for a shift to the right of the demand curve. 1 mark for equilibriums. [3] (b) Recognition that demand for shares may have fallen (1). Explanation that lower demand may have been due to a cut in dividend paid (1). Recognition that demand for gas was expected to fall in the future (1), which may reduce profit and so Gazprom’s ability to pay high dividends in the future (1). Explanation that Gazprom may have issued more shares (1) to finance expansion (1). Recognition that share prices in general may have fallen (1) because of the global downturn (1). Recognition that lower demand may have been due to Gazprom’s debts (1), as greater debts would mean less to pay shareholders (1). Recognition that higher supply may reduce prices (1) and if demand is inelastic may lower revenue (1). Note: maximum mark is 3. [3] (c) (i) 1 mark for each of the two valid reasons, e.g. to finance investment expenditure, to finance the take-over of another firm, to cover shortfall in revenue, to finance running costs, to finance research and development. [2] (ii) Up to 2 marks for examining the effect in the short term. It is likely to reduce profits (1) as costs will rise (1). Up to 2 marks for examining the effect in long term. Explanation of why it might fall/explanation of why it might rise (1). Position more uncertain/may go either way (1). [4] (d) Reasons may include high pay, good working conditions, opportunity to use the latest technology, status of working for the largest gas company, opportunity to work with other top engineers, Gazprom is intending to expand so promotion chances may be increasing. Up to 3 marks for one reason well explained. 2 marks for one reason reasonably well explained. 1 mark for each of the three reasons identified. [3] IGCSE – October/November 2010 0455 33 (e) (i) Defining monopoly (1). Clear judgement on position in Russia (1). Clear judgement on position in Europe (1). No information given on share of sales in other parts of the world so judgement cannot be made on world market share (1). Recognition that a monopoly can be defined in more than one way (1). [3] (ii) Consumers may be disadvantaged as a result of high prices, poor quality, lack of choice and lack of innovation. On the other hand, they may benefit from low prices due to low costs arising from economies of scale, reliability of supply, large profits may lead to more spending on research and development, which can lead to more innovation and better quality. Candidates should consider what needs to be assessed, e.g. how prices, costs, range of products, profit and innovation might compare with a more competitive situation. Up to 4 marks for one-sided view. Up to 6 marks for two-sided view. [6]

This question in 0455/33 Oct/Nov 2010

2 (a) Calculate the estimated percentage fall in the Japanese population from 2008 to 2050. … … [1] (b) Identify: (i) one cause of a decline in population size not mentioned in the extract … … [1] (ii) two possible causes of the change in Japan’s death rate. … … … … … … … … [2] (c) What is meant by the labour force? … … … … … … … … [2] (d) Explain, using a demand and supply diagram, the likely effect of an ageing population on the price of residential care. … … … … … … … … [4] (e) Explain why raising the retirement age would be expected to raise tax revenue. … … … … … … … … … … … … … … … … [4] Question 2 (f) is on the next page

14 marks

Mark scheme: 2 (a) 25% [1] (b) (i) 1 mark for either (net) emigration or a rise in the death rate (such as earthquake). Do not accept people marrying later or decline in number of marriages. [1] (ii) 1 mark each for any two valid causes of a falling death rate, e.g. • a healthier lifestyle, e.g. better diet, more exercise • advances in medical care • better housing • improved working conditions • less pollution. [2] (c) 2 marks for those in work and those seeking work, or employed and unemployed, or those who are economically active. 1 mark for those working/workers. [2] (d) 1 mark for correct labels (D, S, P and Q). 1 mark for shift of the demand curve to the right. 1 mark for correct equilibriums (indicated by lines only is sufficient). 1 mark for mentioning that the quantity bought and sold will be likely to rise. 1 mark for mentioning that price will be likely to rise. Note: maximum mark of 4. [4] (e) It would increase those who are working (1). Those affected are likely to receive higher incomes (1) and so pay more income/direct tax (1) and would spend more (1) and so pay more indirect taxes (1). Also reward a business paying more direct tax in the form of corporation tax (1) as a result of increased output/expenditure/profit (1). Note: maximum mark of 4. [4] IGCSE – May/June 2011 0455 32 (f) 1 mark for identification of each piece of information, up to a maximum of three, e.g. • size of population relative to the optimum size (candidates do not need to refer to this term) • current birth rate • current death rate • average age of population • net migration figure • employment level • resources available • short and long term effects. Up to 3 marks for discussing how the information would aid the assessment, e.g. a rise in a country’s birth rate would benefit its economy if: • the population is currently below the optimum level • the country has a labour shortage • the country is well endowed with resources other than labour • the population is ageing and declining • a short term reduction in the size of the labour force is offset by a long term increase in it. Note: up to 3 marks for strong discussion of one piece of information. Note: a maximum of 3 marks for just discussing a rise in the birth rate and ignoring the information needed. [6]

This question in 0455/32 May/June 2011

2 (a) Calculate the estimated percentage fall in the Japanese population from 2008 to 2050. … … [1] (b) Identify: (i) one cause of a decline in population size not mentioned in the extract … … [1] (ii) two possible causes of the change in Japan’s death rate. … … … … … … … … [2] (c) What is meant by the labour force? … … … … … … … … [2] (d) Explain, using a demand and supply diagram, the likely effect of an ageing population on the price of residential care. … … … … … … … … [4] (e) Explain why raising the retirement age would be expected to raise tax revenue. … … … … … … … … … … … … … … … … [4] Question 2 (f) is on the next page

14 marks

Mark scheme: 2 (a) 25% [1] (b) (i) 1 mark for either (net) emigration or a rise in the death rate (such as earthquake). Do not accept people marrying later or decline in number of marriages. [1] (ii) 1 mark each for any two valid causes of a falling death rate, e.g. • a healthier lifestyle, e.g. better diet, more exercise • advances in medical care • better housing • improved working conditions • less pollution. [2] (c) 2 marks for those in work and those seeking work, or employed and unemployed, or those who are economically active. 1 mark for those working/workers. [2] (d) 1 mark for correct labels (D, S, P and Q). 1 mark for shift of the demand curve to the right. 1 mark for correct equilibriums (indicated by lines only is sufficient). 1 mark for mentioning that the quantity bought and sold will be likely to rise. 1 mark for mentioning that price will be likely to rise. Note: maximum mark of 4. [4] (e) It would increase those who are working (1). Those affected are likely to receive higher incomes (1) and so pay more income/direct tax (1) and would spend more (1) and so pay more indirect taxes (1). Also reward a business paying more direct tax in the form of corporation tax (1) as a result of increased output/expenditure/profit (1). Note: maximum mark of 4. [4] IGCSE – May/June 2011 0455 33 (f) 1 mark for identification of each piece of information, up to a maximum of three, e.g. • size of population relative to the optimum size (candidates do not need to refer to this term) • current birth rate • current death rate • average age of population • net migration figure • employment level • resources available • short and long term effects. Up to 3 marks for discussing how the information would aid the assessment, e.g. a rise in a country’s birth rate would benefit its economy if: • the population is currently below the optimum level • the country has a labour shortage • the country is well endowed with resources other than labour • the population is ageing and declining • a short term reduction in the size of the labour force is offset by a long term increase in it. Note: up to 3 marks for strong discussion of one piece of information. Note: a maximum of 3 marks for just discussing a rise in the birth rate and ignoring the information needed. [6]

This question in 0455/33 May/June 2011

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. … … … … … … … … … … … … … … … … [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. … … … … … … … … … … … … … … … … [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. … … … … … … … … … … … … … … … … … … … … … … … … [6] [Total: 20] The extract ‘Microfinance’ will be needed for this question.

20 marks

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

This question in 0455/31 Oct/Nov 2011

1 (a) Which two government aims are referred to in the extract? … … … … … … … … [2] (b) Using a demand and supply diagram, analyse how the change in the demand for air travel mentioned in the extract would be expected to affect the market for air travel. … … … … … … [4] (c) Explain the effect that the growth in tourism to India would be expected to have on India’s: (i) employment … … … … … … … … … … … … … … [4] (ii) wages. … … … … … … … … [2] (d) Using Table 1, which country was the largest net earner from tourism in 2008? … … [1] (e) Discuss what information you would need to decide whether the building of a new airport would benefit the inhabitants of a city. … … … … … … … … … … … … … … … … … … … … … … … … … … … … [7] [Total: 20] The extract ‘Bangladesh’s garment (clothing) industry’ will be needed for this question.

20 marks

Mark scheme: 1 (a) 1 mark for full employment/lower unemployment. 1 mark for increasing GDP/economic growth. [2] (b) Price of air travel Quantity of air travel 1 mark for labels. 1 mark for shift of the demand curve to the right. 1 mark for correct equilibriums. 1 mark for mentioning that the quantity of air travel bought and sold would increase. 1 mark for mentioning that the increase in demand would tend to increase the price of air travel. Note: maximum mark of 4. [4] IGCSE – October/November 2011 0455 33 (c) (i) Employment: It would be expected to increase employment (1). More jobs will be created in the tourism industry (1) and more employment created in infrastructure (1). Higher employment will lead to more spending, which will generate more jobs (1). Impact on employment will depend on the extent of the rise (1). Some jobs may be filled by people outside the country (1), some jobs may be seasonal (1). Tax revenue may rise (1), which will enable the government to spend more on increasing the skills of the labour force (1). Maximum of 4 marks. [4] (ii) Wages: It would be likely to raise wages (1) as demand for labour would increase/raise ability of firms to pay higher wages (1). Note: accept a diagram which shows demand for labour shifting to the right and wages increasing for 2 marks. [2] (d) Spain. [1] (e) Up to 4 marks for identification of relevant information, for example: • level of capacity at any existing airports • direct and indirect effect on employment • effect on ease of travel to and from the city • where the airport is built • effect on air • noise and visual pollution • private costs • private benefits • external costs • external benefits. Up to 4 marks for commenting on the relevant information, for example: will be more beneficial if any existing airport is working at full capacity, the building of an airport will employ building workers, may increase tourism and may attract new firms into the city but the airport may be built on land of outstanding natural beauty and the pollution resulting from the airport may reduce the quality of people’s lives. A cost-benefit analysis could be conducted to assess whether the building of the airport would be beneficial. Note: a maximum of 3 marks if the answer just discusses whether the building of a new airport would benefit the inhabitants of a city without reference to the information needed. 2 marks if this approach is one-sided. [7] $ $

This question in 0455/33 Oct/Nov 2011

2 (a) What was the value of Bangladesh’s exports of garments in 2009? … … [1] (b) (i) What is meant by a fixed cost? … … … … … … … … [2] (ii) Identify one example of a fixed cost from the extract. … … [1] (c) Explain two reasons why Bangladesh’s garment workers are low-paid. … … … … … … … … … … … … … … … … [4] (d) (i) What is meant by an industry being labour-intensive? … … … … … … … … [2] (ii) Explain two types of internal economies of scale from which a garment firm could benefit. … … … … … … … … … … … … … … … … [4] Question 2(e) is on the next page

14 marks

Mark scheme: 2 (a) $11.2bn (1) (80% of $14bn). [1] (b) (i) A cost that does not vary (1) with output/in the short run (1). [2] (ii) 1 mark for rent. (Also accept wages.) [1] IGCSE – October/November 2011 0455 33 (c) 1 mark for each of two reasons identified: • supply exceeds demand/unemployed garment workers • not unionised • low skilled • workers are mainly female • minimum wage is set low. 1 mark for each of two explanations, for example: • excess supply gives employers strong bargaining power • non-unionised workers have limited bargaining power • female workers tend to receive lower pay • the wage floor set by the government is lower in the garment industry than in most industries. [4] (d) (i) 2 marks for an industry which uses a high proportion of labour/workers relative to capital/ advanced technology. 1 mark for an industry which uses a high amount of labour/number of workers. [2] (ii) 1 mark for each of two internal economies of scale identified, for example: • buying economies • financial economies • managerial economies. 1 mark for each of two explanations linked to the garment industry, for example: • a large garment firm will be able to buy buttons in bulk and so receive a discount • a large garment firm may be well known and so may be able to borrow more easily and at a lower rate • a large garment firm may be able to employ specialist buyers of fabric. [4] (e) Up to 4 marks for identifying the factors that could influence whether Bangladesh’s garment industry will sell more garments in the future, for example: • costs of production • changes in incomes abroad • import restrictions • the exchange rate • performance and number of competitors. Up to 4 marks for commenting on the factors, for example: a rise in costs of production in Bangladesh due to higher wages, a fall in incomes abroad would be likely to reduce sales, the imposition of trade restrictions on Bangladesh garments would raise their price which would be likely to reduce sales, a rise in the exchange rate would make exports from the country more expensive and other countries might start producing garments or might gain a price advantage or raise the quality of what they produce. [6]

This question in 0455/33 Oct/Nov 2011

2 (a) Identify, from the extract, two influences on the demand for tea. … … … … … … … … [2] (b) (i) Explain what is likely to have happened to the price of Kenyan tea in 2009. … … … … … … … … [2] (ii) Explain what is likely to have happened to the price of Kenyan tea in 2010. … … … … … … … … [2] (c) Using information from the extract, explain two reasons why Kenyan tea pickers may want to switch to other jobs. … … … … … … … … … … … … … … … … [4] (d) Why is there a high average cost of producing tea in Kenya? … … … … … … … … … … … … … … … … [4] (e) Discuss whether giving a subsidy to Kenyan tea farmers would be likely to increase sales of Kenyan tea to Pakistan. … … … … … … … … …

14 marks

Mark scheme: 2 (a) 1 mark for each of two influences from price, quality and tastes. [2] (b) (i) 1 mark for price is likely to have increased. 1 mark for because supply decreased/tea became more scarce/idea of lower supply. (Accept a diagrammatic approach.) [2] (ii) 1 mark for price is likely to have fallen. 1 mark for because supply increased/oversupply/idea of higher supply. (Accept a diagrammatic approach.) [2] (c) 1 mark for each of two reasons identified e.g. • risk of unemployment • disruption to income/earnings • low wages/fluctuations in wages • hard physical job/poor working conditions • fear of change due to possible movement towards more capital intensive methods • fear of change due to increasing competition from other tea-producing countries. 1 mark for each of two explanations e.g. • Tea pickers may want greater stability/security of employment or income/suffer from greater fluctuations in employment or income/experience seasonal unemployment. • Tea pickers may be attracted by higher wages in other jobs/explanation of why wages are low in tea picking explanation that low wages result in low living standards. • Tea picking may have to be undertaken in bad weather conditions or with little capital equipment to help/working conditions may be more favourable in other jobs. • Workers may lack the skills to adapt to new methods of production/skills required in other jobs are not changing, or new methods of production may result in unemployment. Note that the explanation marks may be gained either by explaining why the reason identified occurs (e.g. fluctuations in output, increasing competition from tea producers in other countries, falling demand for Kenyan tea) or why other jobs would be more attractive. [4] IGCSE – May/June 2012 0455 31 (d) 1 mark for small scale of production. 1 mark for little use of capital equipment/labour-intensive method of production. 1 mark for inability to spread fixed cost over a high output/high average fixed cost. 1 mark for increasing output may increase efficiency or productivity/low-scale output is inefficient/labour intensive production may be inefficient/capital intensive production may be efficient. 1 mark for inability to take advantage of economies of scale. Up to 2 marks for describing the types of economies of scale that larger tea producers could experience. [4] (e) Why it might increase sales, e.g. it may • increase supply • lower price • or award up to 2 marks for the above points if shown in a relevant diagram • reduce costs of production • make Kenyan tea more price competitive • make Kenyan tea farmers more efficient • allow Kenyan tea farmers to benefit from economies of scale • provide funds for reinvestment • improve quality. Why it might not increase sales, e.g. • price may not fall below rivals • a recession may occur in Pakistan • import restrictions may be imposed by Pakistan • taste/quality may still favour other countries • there is a risk that Kenyan tea farmers will become reliant on the subsidy and so become inefficient • other factors may influence supply e.g. weather conditions may prevent supply increasing • other tea-producing countries may also subsidise tea production. Maximum of 4 marks for a one sided approach. Maximum of 3 for a list or list-like approach. [6]

This question in 0455/31 May/June 2012

1 (a) (i) State two reasons why some workers are paid more than others. … … … … … … … … [2] (ii) What do the gender gap figures for Japan and Costa Rica indicate? … … … … … … … … [2] (b) Explain two costs of poverty indicated in the extract. … … … … … … … … … … … … … … … … [4] (c) (i) Using Table 1, analyse the relationship between the MPI measure and the income measure. … … … … … … … … [2] (ii) Identify two possible reasons why Uzbekistan has low poverty on the MPI measure. … … … … … … … … [2] (d) Discuss whether increasing government spending will always reduce poverty. … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … … [8] [Total: 20] The extract ‘Market changes’ will be needed for this question.

20 marks

Mark scheme: 1 (a) (i) 1 mark each for each of two reasons stated e.g. more skilled, having greater bargaining power, more qualified, higher productivity, in higher demand, in lower supply, working in expanding industries, in promoted position, gender. [2] (ii) 1 mark for men earned more than women in Japan. 1 mark for women earned more than men in Costa Rica. 1 mark for a wider pay differential in Japan than in Costa Rica. [2] (b) 1 mark each for two costs identified: • low life expectancy • low labour productivity • social division • lack of basic necessities • malnourishment • children not finishing primary school • lack of clean water • lack of electricity. 1 mark for each explanation, e.g.: • people who live in poverty may not enjoy good health • people living in poverty are likely to receive less education and training and be less skilled/low labour productivity means low output per worker/worker hour • the poor will not be able to enjoy the lifestyle of the rich/there may be social unrest • the poor may not have access to adequate housing, food and clothing • malnourishment may shorten life expectancy/reduce earning capacity • children not finishing school will hinder their employment/earning opportunities • lack of clean water will lead to diseases/reduce life expectancy • lack of electricity reduces living standards. [4] (c) (i) 1 mark for generally a direct relationship/countries with a high proportion of people living in poverty on MPI measure also have a high proportion living on less than $1.25. 1 mark for recognising that countries’ figures on the MPI measure are not always higher than their figures on the income measure. 1 mark for exception(s) – Sierra Leone, Uzbekistan and/or Pakistan. 1 mark for recognising that only seven countries are shown so it difficult to draw a firm conclusion. [2] (ii) 1 mark each for each of two reasons from: • a lack of malnourishment/good nutrition • children finishing primary school/better education • access to clean water • access to electricity. Also allow low child mortality, good sanitation, non-dirt floors, good cooking fuel, ownership of consumer assets. [2] IGCSE – October/November 2012 0455 32 (d) Up to 5 marks why it might, e.g.: • an increase in government spending on health care, result in workers being healthier, lose fewer days’ work through illness, increase productivity, increase earnings • an increase in government spending on education can increase skills/productivity, increase employment chances, raise wages • an increase in government spending on benefits for the poor, raise their income, enable them to gain access to basic necessities • an increase in government spending can raise total (aggregate) demand, increase employment opportunities, enable some of the poor to earn an income • government spending on infrastructure/subsidies to firms, which can reduce firms’ costs, encourage firms to expand, raise employment opportunities. (Note: all 5 marks can be gained by commenting on one factor.) Up to 5 marks for why it might not, e.g.: • an increase in government spending may be on areas that do not benefit the poor e.g. repaying debt • spending on education may not raise the skills of workers, the education may be of a poor quality, may be in areas that will not be in demand in the future, those educated may emigrate • the increase in government spending may be too small to have much effect, may be offset by e.g. a fall in consumer expenditure • an increase in government spending may raise total (aggregate) demand, cause inflation, higher prices may make it more difficult for the poor to buy basic necessities • the increase in government spending may be matched by an increase in taxation, total demand may not change, impact on poverty will be influenced by whether progressive or regressive taxes are raised. (Note: all 5 marks can be gained by commenting on one factor.) Up to 4 marks for a list-like response. [8] (2) (a) 1 mark each for each of two from: • wages • washing bed clothes • buying food. Note: if more than two costs are identified, mark the first two. [2] (b) 1 mark for definition or formula of price elasticity of demand. 1 mark for it indicates elastic demand. 1 mark for this is because the figure is greater than 1 (ignoring the sign). 1 mark for indicates demand changes by a greater percentage than price/very responsive to change in price. 1 mark for it means e.g. a 10% change in price will lead to a 15% change in quantity demanded. 1 mark for price and total revenue move in opposite directions. 1 mark for negative sign shows price and demand move in opposite directions/price and demand move in opposite directions. [4] IGCSE – October/November 2012 0455 32 (c) 1 mark for each of two reasons identified: • spending on advertising • rival airlines increasing their prices • lower hotel prices in Dubai • more flights available. 1 mark for each of two explanations: • a successful advertising campaign will attract new consumers and/or may encourage existing consumers to buy more • consumers may switch to a substitute, in the form of another airline • lower hotel prices will make holidays cheaper/hotel accommodation and flights are complementary goods • flights may increase the flexibility of air travel/increase destinations/raise supply and so lower price. [4] (d) 1 mark for recognising there are barriers to entry/not easy to enter the market. 1 mark for providing evidence of barriers to entry – shortage of landing slots. 1 mark for recognising there is a degree of brand loyalty. 1 mark for providing evidence of brand loyalty – reluctance to switch to new airlines. 1 mark for recognising there is a lack of information about market conditions. 1 mark for providing evidence of lack of information – not aware of price differences. 1 mark for some firms have a larger share of the market than others. 1 mark for providing evidence of some airlines having market power/gaining market power – e.g. Delta Airlines carried 105m passengers/merger taking place. 1 mark for recognising airlines are price makers and not price takers. 1 mark for providing evidence – Emirates/other airlines in the region changed prices. [4] (e) Up to 4 marks for commenting on the possible benefits of the merger for passengers, e.g.: • larger firm and so more able to take advantage of economies of scale, example/s of economies of scale [credit best example], and so may lower prices and raise quality • may make larger profits, reinvest, improve quality • may reduce wasteful duplication, e.g. flying two planes instead of three planes with empty seats, reduce costs, lower prices • enable passengers to fly to more destinations, through ticketing. (Note all 4 marks can be gained by commenting on one benefit.) Up to 4 marks for commenting on possible disadvantages e.g.: • risk of higher prices because of greater market power • may experience diseconomies of scale, example/s of diseconomies of scale [credit best example], raise costs, increase prices • lower competition may reduce quality, lack of incentive to innovate • may concentrate on more profitable routes, reduce number of flights, reduce number of destinations. (Note all 4 marks can be gained by commenting on one disadvantage.) Up to 4 marks for a response that is not clearly linked to how air passengers would be affected. Up to 3 marks for a list-like approach. [6]

This question in 0455/32 Oct/Nov 2012

1 (a) (i) Identify two ways in which a sole proprietor differs from a multinational company. … … … … … … … … [2] (ii) Why may a sole proprietor have low total costs and high average costs? … … … … … … … … [2] (b) Calculate the percentage increase in the average pay of workers in fast food outlets in Hong Kong in 2011. … … … … … … … … [2] (c) Using information from the extract, explain two reasons why the introduction of the national minimum wage may not take everyone out of poverty in Hong Kong. … … … … … … … … … … … … … … … … [4] (d) Using information from the extract, explain two reasons why the introduction of a national minimum wage may raise labour productivity. … … … … … … … … … … … … … … … … [4] (e) Discuss what information you would need to assess whether people will seek to work as street cleaners in Hong Kong in the future. … … … … … … … … … … … … … … … … … … … … … … … … [6] [Total: 20] The extract ‘Does Iran’s future lie with oil?’ will be needed for this question.

20 marks

Mark scheme: 1 (a) (i) One mark each for each of two differences e.g. • number of owners (a sole proprietor has only one owner whereas a multinational company has many owners) • liability (a sole proprietor has unlimited liability whereas a multinational company has limited liability) • location of production (a sole proprietor produces in one country whereas a multinational company produces in a number of countries) • differences in amount of capital employed (a sole proprietor is likely to have limited capital whereas a multinational is likely to have more capital) • differences in number of workers employed (a sole proprietor is likely to employ fewer workers) • differences in the size of output (a sole proprietor is likely to produce less than a multinational) • size of average and total costs (a sole proprietor may have high average and low total costs whereas a multinational company is likely to have low average and high total costs)/it is probable that multinational companies will be able to take greater advantage of economies of scale. Note: a comparison has to be made to gain a mark so e.g. it is not sufficient to state that a sole proprietor is likely to have high average and low total costs. Note: no marks for the statement that a sole proprietor will be smaller than a multinational company. [2] (ii) One mark for low total costs due to low output. One mark for high average costs because it is not able to take advantage of economies of scale/take advantage of a particular type e.g. buying in bulk/able to spread costs only over a low output. [2] (b) Two marks for 40%. One mark for correct working i.e. HK$8/HK$20 x 100. [2] (c) One mark each for each of two relevant reasons identified e.g. • some of the poor are not in work e.g. unemployed/retired • some self-employed are poor • some of those who will benefit are not poor/come from rich households • some employers are not passing on the benefits of the minimum wage/trying to get round the legislation • fringe benefits are being reduced • not every employee is covered by the national minimum wage/legislation • workers losing their jobs/unemployment. One mark each for each of two relevant reasons explained e.g. • the unemployed and retired do not benefit from the minimum wage/their income is NOT from a wage • if those who benefit come from rich households by definition they are not poor/relative poverty may not be reduced • some low paid workers are the children/partners in rich households • some employers are cutting back on holidays and payment for meal breaks • domestic helpers are provided with accommodation instead of a higher wage/not covered by the minimum wage as it is considered they receive a fringe benefit IGCSE – May/June 2013 0455 31 • students not covered by the minimum wage/legislation in Hong Kong may not be taken out of poverty in the short term • higher labour costs may lead to job losses and those who lose their jobs will not be able to benefit from a national minimum wage. NOTE: there are only two marks available for identifying relevant reasons. [4] (d) One mark each for each of two relevant reasons identified i.e. • increased motivation/appreciation • increased spending on training. One mark each for each of two relevant explanations i.e. • higher motivation/appreciation will encourage workers to work harder • increased spending on training will increase workers’ skills/enable workers to work more efficiently. [4] (e) Up to three marks for identifying relevant information e.g. • wage rates • holidays • working conditions • job security • job satisfaction • fringe benefits (free meals, accommodation) • job vacancies • qualifications required • distance to work • status of jobs • immigration controls. Up to four marks for discussion of points e.g. • more people will seek work as cleaners if wage rates increase relative to other jobs • good holidays/holidays increase • good working conditions/working conditions improve • good job security/job security strengthens • immigration into Hong Kong becomes easier. 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 31

This question in 0455/31 May/June 2013

2 (a) What is meant by economic growth? … … … … … … … … [2] (b) Using information from the extract, explain one reason, in each case, why India’s labour force is expected to grow in (i) quantity, … … … … … … … … [2] (ii) quality. … … … … … … … … [2] (c) Comment on whether the data in Table 1 supports the expected relationship between investment growth and unemployment. … … … … … … … … … … … … … … … … [4] (d) (i) Using information from the extract, identify two functions of commercial banks. … … … … … … … … [2] (ii) Explain one other function of a commercial bank. … … … … … … … … [2] (e) Discuss what factors will influence the amount saved in India in the future. … … … … …

14 marks

Mark scheme: 2 (a) Two marks for any of the following: • increase in GDP over time • increase in output over time • increase in GDP per head over time • increase in real GDP • increase in productive capacity. One mark maximum for any of the following: • increase in GDP • increase in GDP per head • increase in output • measured by GDP/reference to GDP. Note: Aggregate supply is not on the syllabus but credit an increase in AS for 2 marks (rise in productive capacity). [2] (b) (i) One mark for the population is young. One mark for there will be more people of working age in the future/more people available and or willing to work in the future. Or: One mark for identifying more women/‘more women will seek work’. One mark for it may be more acceptable for women in the future/more women may be willing to work in the future. Or: One mark for identifying more education. One mark for more educated people are likely to be able/willing to work in the future. [2] (ii) One mark for identifying higher government spending on education/more university graduates/government ensuring more children attend school. One mark for improved education should raise labour skills/productivity. Or: One mark for more young workers. One mark for young workers may be more energetic/mobile/more adaptable to change. [2] (c) One mark for identifying the expected relationship as an inverse relationship (as investment grows, unemployment falls and when investment falls, unemployment rises). One mark for most of the data does support the expected relationship. One mark for supporting evidence of an inverse relationship One mark for noting that 2010 is an exception to this expected relationship (allow 2009 – 2010). One mark for investment growth would indicate firms are expanding and so are likely to take on more workers/higher government investment on e.g. infrastructure, education, health care would increase demand for labour. One mark for noting that the relationship will depend on whether the capital goods being produced are being used alongside labour or as a replacement for labour/number unemployed may move in a different direction to the unemployment rate/unemployment may be influenced by other factors/there may be a time lag/higher investment may reduce unemployment in other countries if undertaken by MNCs. Note: a maximum mark of 4. [4] IGCSE – May/June 2013 0455 32 (d) (i) One mark for allowing people to open deposits/keep money safe/save. One mark for lending. [2] (ii) One mark for recognising a function e.g. • enabling customers to receive and make payments • providing foreign currency • providing advice • selling insurance • lending to individuals • keeping valuables safe. One mark for explanation of the function identified e.g. a commercial bank may • provide credit cards and direct debit facilities • allow customers to buy and sell foreign currency • provide guidance on where customers can financially invest their money • provide loans to buy houses • sell insurance to people taking out mortgages • provide facilities to keep e.g. gold and jewellery. Note: if a candidate does not select a relevant function in (d)(i) but explains the function here, it should be credited. [2] (e) Up to three marks for identifying relevant factors e.g. • income • tax • confidence • interest rate • range of banking services/availability of banking services • inflation • deflation • population size • age of population • unemployment rate • people’s desire to educate themselves or their children in the future • economic growth. Up to four marks for discussing the factors e.g. • higher income is likely to result in more saving (1) as it enables people to save more (1) • a low interest rate may reduce saving (1) as it will reduce the return from saving (1) • greater confidence may increase saving (1) as people are more likely to spend at the expense of saving (1) • greater provision of banking services will be likely to increase saving (1) e.g. introduction of saving schemes for the poor (microfinance) (1) • inflation may reduce saving as people seek to spend before prices rise (1) or increase saving to maintain the real value of money (1) • more people in India may increase the amount saved (1) even if the average amount saved remains the same (1) • deflation would increase savings (1) as people would delay spending until prices fall (1). Up to three marks for a list-like approach. Up to three marks for any one point identified and discussed. Note: a maximum of 6 marks. [6]

This question in 0455/32 May/June 2013

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.

20 marks

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

This question in 0455/33 May/June 2013