Download Mark scheme – section d - revision questions

IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Practice Questions
2(a)1.a.
b.i.
ii. Inelastic
c.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
2. a.i.
ii.
b.
3. a.i.
ii.
b.i.
ii.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
4.a.
b.
c.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
5.
6.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
7. Read the note below.
8.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
9.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
10.
a.
b.
c.
Diagram:
Correct axes and demand and supply curves, original price and qty
Shift of supply to left
New higher price
Explanation
i. correct definition 2 marks
ii. One point(1 mark) , development (1 mark)
each point (1 mark each)
1 mark
1 mark
1 mark
1 mark
11.
(a) Definition: the responsiveness of quantity supplied to a change in price (up to 2 marks)
Diagrams (up to 2 marks)
Examples eg less than one = inelastic (up to 2 marks) (6)
(b) (i) Must have demand and supply factors for full marks.Responses giving only demand or only
supply, maximum 3 marks.Demand factors 1 mark for identification, 1 mark for development
eg high population in city centres competitive demand demand high for commercial properties
Supply factors 1 mark for identification, 1 mark for development eg inelastic supply (5)
(ii) Definition of exchange rates (1 mark)Must have demand and supply factors for full marks.
Responses giving only demand or supply, maximum 3 marks. Demand factors 1 mark for
identification, 1 mark for development eg demand for exports Supply factors 1 mark for
identification, 1 mark for development eg demand for imports (5)
(iii) Must have demand and supply factors for full marks. Responses giving only demand or supply
maximum 3 marks. Demand factors 1 mark for identification, 1 mark for development eg if wages
are too high people may do the job themselves Supply factors 1 mark for identification, 1 mark for
development eg no skills required therefore supply high (4)
12.
(a) 1 mark for correct formula or in words, 2 marks for correct answer = + 5
(do not need + sign for 3 marks).
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
Accept 5% = 2 marks.
1 mark if equation is correct but final answer incorrect.
If income is related to demand 1 mark only (3)
(b) Normal good = demand increases as income increases (1 mark), therefore
positive (1 mark), Inferior good = demand falls as income rises (1mark),
therefore negative (1 mark) 1 mark for 2 correct examples (5)
13.
a) For the correct definition (1 mark), correct answer, 2(1 mark)
b) (15*150)- (20*100)= 250 (2 marks)
c) Foe one point, 1 mark each e.g. climate, tournament, local authorities having promotional events to
popularize football
14.
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IGCSE Questions
Q1.
1(a)(i)
1(a)(ii)
As price rises quantity
(2)
demand falls (1 mark)
Reference to data 1 mark
Price rises 1.5 Euros to 2
Euros demand falls 28 kg to
26 kg. = 2 marks
Explanation which refers to
(4)
total amount spent (total
revenue) (2 marks). Inelastic:
As price rises total revenue
rises (2 marks). Also accept
as price rises there is a less
than proportionate (also
accept responsive) change in
quantity demanded. (2
marks).
Reference to data – 2 marks
Total amount spent in 2007
= 1.5 Euros x 28 = 42 Euros
Total amount spent in 2008
= 2 Euros x 26 = 52 Euros
b.i
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
ii. A
iii.
Accept reference to no change in supply with price change (1 mark). Reason (1 mark).
The supply of wheat can’t change in 1 year/2007 as it takes a long time to grow(1 mark) so as price changes
there will be no change in supply (1 mark)
c.i. A
ii.
Explanation 1 mark. Reference to high income earners 1 mark, low income earners 1 mark
As income of high income earners rises their demand for pasta falls (1 mark) from 25kg to 20kg (1 mark) so it
is an inferior good. Whilst low income earners demand more as their income rises (1 mark) so it is normal/not
inferior (1 mark).
d.i.
On diagram: Minimum wage level/ new price level = 1 mark
New quantity demanded/New quantity supplied = 1 mark.
Or level of unemployment 1 mark.
ii.
Level
Level 3
Level 2
Mark
5
Descriptor
Add justified conclusion 1
mark, e.g. evidence has
shown that the number of
workers losing their jobs is
not many so overall living
standards are improved. (1
mark)
Development of arguments
up to 2 marks. Must have
both arguments for and
against.
The introduction of a MWR
will increase the wages of
3-4
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Level 1
Ms.Dharshani Perera
lower paid workers (1
mark) so they will have
more to spend which
increases their standard of
living (1 mark). The
increase in wages will lead
to increased costs for
firms (1 mark) so some
may lose their jobs and
their standard of living
will fall (1 mark).
1 mark for each argument
for/against MWR improving
living standards up to 2
marks.
1-2
2.
1(a)(i)
1 mark for perfectly inelastic supply
1(a)(ii)
Example 1 mark e.g. rice,
oil(accept agricultural
goods/minerals)
1(a)(iii)
Product B
1(a)(iv)
Must use the data for full
marks. E.g. Elastic because
as price rises TR falls (1
mark) and vice versa
Price 8 TR = 160 Price 10
TR=100 (2 marks)
Or calculation of elasticity:
+100/-20=-5 (2 marks)
1(a)(v)
Level
Level 1
Mark
1-2
Level 2
3-4
(1)
(1)
(1)
(3)
Descriptor
Each factor affecting
elasticity of demand of
rice and/or chocolate e.g.
rice = necessity chocolate
= luxury
Factors identified and
developed. Must have a
factor for rice and a factor
for chocolate for 4 marks.
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Level 3
5
1(b)(i)
1(b)(ii)
1(b)(iii)
Level
Each characteristic
identified, 1 mark
development 1 mark.
e.g. some parts owned by
state (1 mark) providing
essential services like public
transport (1mark), some
parts owned by private
sector (1 mark) and they
aim to make a profit
(1mark).
Ms.Dharshani Perera
Must have evaluative
statement as well as
factors identified and
developed including a
factor for rice and a factor
for chocolate. E.g. Rice
can be considered a
necessity, when price rises
people’s demand falls only
by a small amount.
Whereas chocolate is a
luxury that people can live
without so as price rises
the demand will fall a
great deal. Some might
argue that both have
substitutes (potatoes for
rice) (biscuits for
chocolate)and both might
be elastic but I think that
rice will be more inelastic
because it is more
essential than chocolate.
(4)
Each reason identified, 1 mark, development, 1
mark
e.g. introduction of MWR (1
(4)
mark), government passes a
law which makes firms pay a
MWR ( 1mark), shortage of
skilled labour, rise in demand
for labour.
2+2 marks
Mark
Descriptor
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Level 1
1-2
Level 2
3-4
Level 3
5-6
Ms.Dharshani Perera
Each statement relating to
relationship between
wages and employment, 1
mark. E.g. wages are the
price of labour so if price
goes up
demand/employment falls.
Each statement relating to
relationship between
wages and employment, 1
mark and developed, 1
mark. E.g. wages are the
price of labour so if price
goes up
demand/employment falls.
The rise in wages may be
due to introduction of
MWR (1 mark).
Accept other factors which
might lead to increase in
wages and/or increased
employment.
Must have evaluative
statement which refers to
the importance of other
factors for 6 marks. E.g.
wages are the price of
labour so if price goes up
demand/employment falls
(1 mark). The rise in wages
may be due to
introduction of MWR (1
mark). The extent of the
fall in employment may
depend on the elasticity of
demand for labour (1
mark). If there are no
substitutes for labour then
the firm will continue to
demand labour at a higher
wage rate (1 mark). There
are other factors which
might limit the fall in
employment. If workers
are members of a powerful
trade union (1 mark) and
the firm may not make
workers unemployed for
fear of industrial unrest
(1mark)
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
Q3.
1(a)(i) Vertical supply curve shift to left, 1 mark, correctly
labelled, 1 mark. Must have shift to left or 0 marks.(2)
1(a)(ii) Due to horizontal axis being labelled “quality” candidates can get 2 marks for correctly
indicating price as follows:
1 mark for P
1 mark for 1.5
They can also get 2 marks for indicating price, P or 1.5 and quantity!
Quantity should be indicated by Q or 2007 on horizontal axis = 1 mark.(2)
1(a)(iii) Incomes will fall, 1 mark. (1)
1(a)(iv) Explanation 2 marks. Reference to total revenue/income (not profits) falling as price rises
(1mark) due to elastic demand curve (1 mark).
For example as price rises incomes fall because the demand curve is elastic = 2 marks.
Only 1 mark for definition of elastic demand curve for example it is elastic so a rise in price brings
about a more than proportionate change in quantity demanded.(2)
1(a)(v) Each reason identified, 1 mark, development, 1 mark, for example orange juice is made
from an agricultural good/natural good (1 mark) which cannot be increased in supply quickly /
takes time to respond to changes in price/demand (1 mark). Soft drinks like cola are
manufactured/artificial (1 mark) and the raw materials can easily be obtained to
increase supply (1 mark).(4)
1(b)(i) 1 mark for minimum wage rate drawn above equilibrium.
1 mark for new quantity of labour demanded.
1 mark for quantity of labour supplied.
1 mark for an indication that supply is now greater than demand.
Accept unemployment from old equilibrium to new equilibrium or Qd to Qs. (4)
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Q4.
1(a)(i)
Ms.Dharshani Perera
1 mark for P1. 1 mark for Q1.
1(a)(ii)
S2. Also accept new supply curve to the right of S1.
Do not accept shift in both demand and supply.
(1)
1(a)(iii)
D2. Also accept new demand curve to the right of
D1.
Do not accept shift in both demand and supply.
(1)
1(b)(i)
Accurate definition = 2 marks.
Responsiveness of demand to
a change in income. Accept
formula for 2 marks. 1 mark
for incomplete or partial
definition.
(2)
b.ii B
1(b)(iii)
1(b)(iv)
As income increases,
demand falls (1). Use of
data (1).
Normal. Also accept luxury goods.
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(2)
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
1(c)(i)
Accurate definition = 2 marks.
Responsiveness of demand to a change in
price. Accept formula for 2 marks. 1
mark for incomplete or partial definition
C (1). Price increase (decrease) brings a
rise (fall) in Total Revenue. $50 to $54.
Also accept correct calculation (2).
Reference to change in price resulting in
small change in demand (1).
1(c)(ii)
Q5.
1(a)(i)
1 mark for original price
P1.
1 mark for original quantity
Q1.
(2)
1(a)(ii)
1 mark for shift to left of
demand curve.
(1)
1(a)(iii)
1(b)(i)
Ms.Dharshani Perera
1 mark for new
equilibrium price, P2 and
1 mark for new quantity,
Q2, corresponding to a
shift to the left of the
demand curve.
Elastic
(2)
(1)
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
1(b)(ii)
Elastic demand curve 1 mark
(the p and q change will
show this)
Price fall and quantity rise 1
mark
1 mark for explaining that as
price falls TR rises.
1 mark for “change in price
brings more than responsive
change in quantity
demanded” or similar.
If answer to 1(b)(i)
‘inelastic’ then accept
‘inelastic demand curve’ in
1(b)(ii)
(4)
1(c)(i)
Each factor identified, 1
mark. E.g. time, stocks,
spare capacity.
(2)
1(d)(i)
Transport provided by the
state/government, 1 mark,
1 mark for example. Accept
any feasible example.
(2)
1(d)(ii)
Mixed economy.
(1)
1(d)(iii)
Diagram – up to 3 marks: 1
mark for movement of S to
right.
1 mark for new lower
equilibrium price
1 mark for increase in
quantity.
Explanation: 1 mark for
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(5)
Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
subsidies reduce costs.
1 mark for firm passes on
reduced costs to consumers.
1 mark for reference to
limitation to the working of
subsidies:
incidence/elasticity.
Maximum 2 marks for
explanation
Q6.
1(a)(i)
Complements
(1)
1(a)(ii)
Label D and S, 1 mark,
original equilibrium price and
quantity, 1 mark.
(2)
1(a)(iii)
1 mark for shift of D to left,
new equilibrium price and
quantity, 1 mark.
(2)
1(b)(i)
1(b)(ii) 1 & 2
Accurate definition = 2 marks. Responsiveness of demand to a change in p
Accept formula for 2 marks.
1 mark for incomplete or partial definition.
Reason identified, 1 mark,
(4)
development, 1 mark. E.g.
Digital cameras are luxuries
not necessities so as the price
falls lots more will be bought.
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
1(c)(i)
Definition 1 mark, example 1 mark. E.g. each worker does a
specific task, 1 mark, in a camera some workers put in lenses
others pack the cameras etc. (1 mark). The example doesn’t
have to apply to camera factory. Accept specialisation for 1
mark.
1(c)(ii)
Advantage 1 mark,
disadvantage, 1 mark. E.g.
Task becomes easier,
monotony.
Q7.
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(2)
(2)
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Q8.
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
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Ms.Dharshani Perera
IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
CROSS ELASTICITY OF DEMAND
The quantity of demand of a particular good varies according to the price of other goods. A rise in price of a
good such as beef would increase the quantity demanded of a substitute such as pork. On the other hand, a rise in
price of a good such as cheese would lead to a fall in the quantity demanded of a complement such as macaroni.
CROSS ELASTICITY or CROSS PRICE ELASTICITY OF DEMAND measures the proportionate change in the price of
another. For instance, it is a measure of the extent to which demand for pork increases when the price of beef goes
up, or the extent to which the demand for macaroni falls when the price of cheese increases.
The formula for measuring cross elasticity of demand for good is :
Percentage change in quantity demanded of good X
Percentage change in price of another good Y
Positive Cross Elasticity
Two goods which are substitutes will have a positive cross elasticity. An increase (positive) in the price of
one good, such as gas, leads to an increase (positive) in the quantity demanded of a substitute such as electricity.
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IGCSE ECONOMICS : SECTION A - REVISION QUESTIONS- MARK SCHEME
Ms.Dharshani Perera
Negative Cross Elasticity
Two goods which are complements will have a negative cross elasticity. An increase (positive) in the price of
one good such as sand leads to a fall (negative) in demand of a complement such as cement.
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