Total marks: 60 · Duration: 1 hour 30 minutes
Instructions to candidates
• Answer all questions. • Use black ink or black ball-point pen. • The number of marks is given in brackets [ ] at the end of each question or part question. • You may use a calculator. • Refer to any data provided where a question asks you to. • The total number of marks for this paper is 60. • All the data and tables you need are printed within the questions.
Paper
Section A — Structured Questions (44 marks)
1. The economic problem and markets
(a) Explain what is meant by the term opportunity cost. [2]
(b) Explain two factors, other than price, that could cause an increase in the demand for electric cars. [4]
(c) Explain how the price mechanism acts to remove a shortage in a market. [4]
2. Production and costs
(a) State what is meant by productivity. [2]
(b) Explain two ways a firm could increase the productivity of its workers. [4]
(c) As a firm grows larger it can benefit from economies of scale. Explain two examples of economies of scale. [4]
3. The labour market
The table shows the average weekly pay in three occupations in a country.
| Occupation | Average weekly pay ($) |
|---|---|
| Surgeon | 2,400 |
| Electrician | 900 |
| Cleaner | 380 |
(a) Using the data, explain two reasons why a surgeon is paid much more than a cleaner. [4]
(b) Explain one effect that introducing a national minimum wage could have on low-paid workers, and one possible drawback for employers. [4]
(c) Explain one way a trade union can try to improve the pay and conditions of its members. [4]
4. Government and the economy
(a) State two reasons why a government collects taxes. [2]
(b) Explain the difference between a direct tax and an indirect tax, giving an example of each. [4]
(c) Explain two ways in which a government could use its spending to improve the economy. [6]
Section B — Extended Response (16 marks)
5. A country is experiencing rising unemployment.
Discuss the problems that high unemployment can cause, and evaluate the different ways a government could try to reduce unemployment. Reach a supported conclusion. [16]