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Cambridge IGCSE®
ECONOMICS 0455/02Paper 2 Structured Questions For examination from 2020MARK SCHEME
Maximum Mark: 90
Specimen
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Page 2 of 16© UCLES 2017
Gen
eric
Mar
king
Prin
cipl
es
Thes
e ge
nera
l mar
king
prin
cipl
es m
ust b
e ap
plie
d by
all
exam
iner
s w
hen
mar
king
can
dida
te a
nsw
ers.
The
y sh
ould
be
appl
ied
alon
gsid
e th
e sp
ecifi
c co
nten
t of t
he m
ark
sche
me
or g
ener
ic le
vel d
escr
ipto
rs fo
r a q
uest
ion.
Eac
h qu
estio
n pa
per a
nd m
ark
sche
me
will
als
o co
mpl
y w
ith th
ese
mar
king
pr
inci
ples
.
GE
NE
RIC
MA
RK
ING
PR
INC
IPLE
1:
Mar
ks m
ust b
e aw
arde
d in
line
with
:
•th
e sp
ecifi
c co
nten
t of t
he m
ark
sche
me
or th
e ge
neric
leve
l des
crip
tors
for t
he q
uest
ion
•th
e sp
ecifi
c sk
ills
defin
ed in
the
mar
k sc
hem
e or
in th
e ge
neric
leve
l des
crip
tors
for t
he q
uest
ion
•th
e st
anda
rd o
f res
pons
e re
quire
d by
a c
andi
date
as
exem
plifi
ed b
y th
e st
anda
rdis
atio
n sc
ripts
.
GE
NE
RIC
MA
RK
ING
PR
INC
IPLE
2:
Mar
ks a
war
ded
are
alw
ays
who
le m
arks
(not
hal
f mar
ks, o
r oth
er fr
actio
ns).
GE
NE
RIC
MA
RK
ING
PR
INC
IPLE
3:
Mar
ks m
ust b
e aw
arde
d po
sitiv
ely:
•m
arks
are
aw
arde
d fo
r cor
rect
/val
id a
nsw
ers,
as
defin
ed in
the
mar
k sc
hem
e. H
owev
er, c
redi
t is
give
n fo
r val
id a
nsw
ers
whi
ch g
o be
yond
the
scop
e of
the
sylla
bus
and
mar
k sc
hem
e, re
ferr
ing
to y
our T
eam
Lea
der a
s ap
prop
riate
•m
arks
are
aw
arde
d w
hen
cand
idat
es c
lear
ly d
emon
stra
te w
hat t
hey
know
and
can
do
•m
arks
are
not
ded
ucte
d fo
r err
ors
•m
arks
are
not
ded
ucte
d fo
r om
issi
ons
•an
swer
s sh
ould
onl
y be
judg
ed o
n th
e qu
ality
of s
pelli
ng, p
unct
uatio
n an
d gr
amm
ar w
hen
thes
e fe
atur
es a
re s
peci
fical
ly a
sses
sed
by th
e qu
estio
n as
indi
cate
d by
the
mar
k sc
hem
e. T
he m
eani
ng, h
owev
er, s
houl
d be
una
mbi
guou
s.
GE
NE
RIC
MA
RK
ING
PR
INC
IPLE
4:
Rul
es m
ust b
e ap
plie
d co
nsis
tent
ly e
.g. i
n si
tuat
ions
whe
re c
andi
date
s ha
ve n
ot fo
llow
ed in
stru
ctio
ns o
r in
the
appl
icat
ion
of g
ener
ic le
vel
desc
ripto
rs.
GE
NE
RIC
MA
RK
ING
PR
INC
IPLE
5:
Mar
ks s
houl
d be
aw
arde
d us
ing
the
full
rang
e of
mar
ks d
efin
ed in
the
mar
k sc
hem
e fo
r the
que
stio
n (h
owev
er; t
he u
se o
f the
full
mar
k ra
nge
may
be
lim
ited
acco
rdin
g to
the
qual
ity o
f the
can
dida
te re
spon
ses
seen
).
PMT
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Page 3 of 16© UCLES 2017
GE
NE
RIC
MA
RK
ING
PR
INC
IPLE
6:
Mar
ks a
war
ded
are
base
d so
lely
on
the
requ
irem
ents
as
defin
ed in
the
mar
k sc
hem
e. M
arks
sho
uld
not b
e aw
arde
d w
ith g
rade
thre
shol
ds o
r gra
de
desc
ripto
rs in
min
d.
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 4 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
Sect
ion
A
1(a)
Cal
cula
te th
e nu
mbe
r of p
eopl
e un
empl
oyed
in K
enya
in 2
015.
1.8
mill
ion
(1).
1
1(b)
Iden
tify
two
reas
ons
why
the
tota
l am
ount
sav
ed in
Ken
ya is
like
ly to
hav
e in
crea
sed
in 2
015.
Hig
her i
ncom
e/re
al G
DP
per h
ead
(1) a
hig
her i
nter
est r
ate
(1).
2
1(c)
Expl
ain
the
effe
ct th
at a
rise
in th
e pr
ice
of fl
ower
s on
Wom
en’s
Day
in R
ussi
a w
ould
be
likel
y to
hav
e on
flow
er
prod
ucer
s’ re
venu
e.
Incr
ease
(1) a
s de
man
d is
pric
e-in
elas
tic (1
).
2
1(d)
Ana
lyse
the
evid
ence
that
sho
ws
the
mar
ket f
or fl
ower
s is
som
etim
es in
dis
equi
libriu
m.
Coh
eren
t ana
lysi
s w
hich
mig
ht in
clud
e:
Dem
and
exce
edin
g su
pply
/sho
rtage
s oc
curr
ing
(1) p
rice
bein
g to
o lo
w (1
) the
mar
ket n
ot c
lear
ing
(1).
Sup
ply
exce
edin
g de
man
d/su
rplu
s oc
curr
ing
(1) p
rice
bein
g to
o hi
gh (1
) the
mar
ket n
ot c
lear
ing
(1).
4
1(e)
Expl
ain
two
reas
ons
why
the
pric
e of
Ken
yan
flow
ers
may
hav
e fa
llen
in th
e U
S in
201
5.
Logi
cal e
xpla
natio
n w
hich
mig
ht in
clud
e:
Ris
e in
pro
duct
ivity
(1) t
his
coul
d ha
ve re
duce
d co
sts
of p
rodu
ctio
n (1
). D
epre
ciat
ion
of th
e ex
chan
ge ra
te (1
) wou
ld h
ave
low
ered
pric
e of
Ken
yan
expo
rts (1
).
4
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Page 5 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
1(f)
Ana
lyse
the
rela
tions
hip
betw
een
real
GD
P pe
r hea
d an
d th
e ad
ult l
itera
cy ra
te.
Coh
eren
t ana
lysi
s w
hich
mig
ht in
clud
e:
The
rela
tions
hip
show
n is
larg
ely
a po
sitiv
e on
e (1
) as
real
GD
P pe
r hea
d ris
es s
o do
es a
dult
liter
acy
(1) e
xam
ple
that
su
ppor
ts th
e re
latio
nshi
p (1
) Uga
nda
is a
n ex
cept
ion
(1).
Cou
ntrie
s w
ith a
hig
her a
dult
liter
acy
rate
are
like
ly to
hav
e m
ore
skill
ed w
orke
rs (1
) cap
able
of p
rodu
cing
a h
ighe
r out
put (
1).
Cou
ntrie
s w
ith a
hig
her r
eal G
DP
per h
ead
are
likel
y to
hav
e m
ore
fund
s to
spe
nd o
n ed
ucat
ion
(1) m
ore
and
high
er q
ualit
y ed
ucat
ion
is li
kely
to in
crea
se a
dult
liter
acy
(1).
5
1(g)
Dis
cuss
whe
ther
or n
ot a
n in
crea
se in
wag
es w
ill a
lway
s at
trac
t mor
e pe
ople
to w
ork
in K
enya
’s fl
ower
indu
stry
.
6 m
arks
max
imum
for t
he q
uest
ion.
Awar
d up
to 4
mar
ks fo
r log
ical
reas
ons
why
they
mig
ht, w
hich
mig
ht in
clud
e: •
Une
mpl
oym
ent m
ay re
mai
n hi
gh (1
) res
ultin
g in
peo
ple
sear
chin
g fo
r job
s (1
). •
Wag
es a
re a
key
influ
enci
ng fa
ctor
in th
e jo
bs th
at p
eopl
e se
lect
to d
o (1
) inc
reas
es in
wag
es c
an ra
ise
livin
g st
anda
rds
(1) e
nabl
ing
peop
le to
con
sum
e m
ore
good
s an
d se
rvic
es (1
). •
Hig
her w
ages
may
ena
ble
som
e pe
ople
to e
scap
e po
verty
(1) a
llow
ing
them
to a
fford
bas
ic e
ssen
tials
(1).
•P
opul
atio
n is
incr
easi
ng (1
) mor
e pe
ople
are
like
ly to
be
ente
ring
the
labo
ur fo
rce
(1).
Awar
d up
to 4
mar
ks fo
r log
ical
reas
ons
why
they
mig
ht n
ot, w
hich
mig
ht in
clud
e: •
Wag
es m
ay ri
se m
ore
in o
ther
indu
strie
s (1
) red
ucin
g th
e re
lativ
e pa
y in
the
cut f
low
er in
dust
ry (1
). •
Wag
es m
ay ri
se b
y le
ss th
an in
flatio
n (1
) red
ucin
g re
al w
ages
(1).
•W
orke
rs d
o no
t bas
e th
eir d
ecis
ions
just
on
wag
es/n
on-w
age
fact
ors
may
be
bette
r in
othe
r ind
ustri
es (1
) exa
mpl
es e
.g.
bette
r pro
mot
ion
oppo
rtuni
ties,
bet
ter w
orki
ng c
ondi
tions
, lon
ger h
olid
ays
(up
to 2
mar
ks ).
6
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Page 6 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
1(h)
Dis
cuss
whe
ther
or n
ot K
enya
sho
uld
cont
inue
to s
peci
alis
e in
pro
duci
ng fl
ower
s.
6 m
arks
max
imum
for t
he q
uest
ion.
Awar
d up
to 4
mar
ks fo
r log
ical
reas
ons
why
it s
houl
d, w
hich
mig
ht in
clud
e:
•K
enya
has
sui
tabl
e fa
ctor
s of
pro
duct
ion
(1) e
.g. a
read
y su
pply
of l
abou
r (1)
. •
Pro
duct
ivity
has
bee
n in
crea
sing
(1) i
f thi
s co
ntin
ues
Ken
ya m
ay h
ave
a co
st a
dvan
tage
(1).
•Th
e co
untry
has
a g
ood
repu
tatio
n in
pro
duci
ng g
ood
qual
ity c
ut fl
ower
s (1
) thi
s m
ay in
crea
se d
eman
d fo
r its
cut
flow
ers
(1).
•C
ut fl
ower
s te
nd to
be
a lu
xury
goo
d (1
) as
inco
me
rises
, dem
and
may
incr
ease
(1).
Awar
d up
to 4
mar
ks fo
r log
ical
reas
ons
why
it s
houl
d no
t, w
hich
mig
ht in
clud
e: •
Sup
ply
is a
ffect
ed b
y w
eath
er c
ondi
tions
(1) t
his
can
lead
to in
stab
ility
of i
ncom
e (1
). •
The
exch
ange
rate
cou
ld ri
se (1
) mak
ing
expo
rts m
ore
expe
nsiv
e (1
) whi
ch c
ould
redu
ce e
arni
ngs
from
sel
ling
flow
ers
(1).
•C
ompe
titio
n fro
m o
ther
cou
ntrie
s m
ay in
crea
se (1
) red
ucin
g K
enya
’s s
hare
of t
he m
arke
t (1)
.
6
Que
stio
nA
nsw
erM
arks
Sect
ion
B
2(a)
Def
ine
budg
et d
efic
it.
Gov
ernm
ent s
pend
ing
exce
edin
g (1
) gov
ernm
ent (
tax)
reve
nue
(1).
2
2(b)
Expl
ain
two
reas
ons
why
a c
ount
ry m
ay e
xper
ienc
e a
decl
ine
in li
ving
sta
ndar
ds a
t the
sam
e tim
e as
an
incr
ease
in
real
GD
P pe
r hea
d.
Exp
lana
tions
whi
ch m
ight
incl
ude:
•In
com
e m
ay b
ecom
e m
ore
unev
enly
dis
tribu
ted
(1) r
esul
ting
in m
ost p
eopl
e’s
livin
g st
anda
rds
falli
ng (1
). •
Hig
her o
utpu
t may
incr
ease
pol
lutio
n (1
) thi
s m
ay c
ause
hea
lth c
are
prob
lem
s (1
). •
The
shad
ow e
cono
my
may
hav
e sh
runk
(1) r
educ
ing
outp
ut p
er h
ead
(1).
•W
orki
ng h
ours
may
hav
e in
crea
sed
(1) r
educ
ing
leis
ure
time
(1).
•W
orki
ng c
ondi
tions
may
hav
e de
clin
ed (1
) red
ucin
g th
e he
alth
of w
orke
rs (1
). •
Mor
e re
sour
ces
may
hav
e be
en d
evot
ed to
pro
duci
ng c
apita
l goo
ds (1
) whi
ch m
ay re
duce
the
avai
labi
lity
of c
onsu
mer
go
ods
in th
e sh
ort r
un (1
).
4
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Que
stio
nA
nsw
erM
arks
2(c)
Ana
lyse
how
a fa
ll in
une
mpl
oym
ent m
ay in
crea
se a
cou
ntry
’s in
flatio
n ra
te.
Coh
eren
t ana
lysi
s w
hich
mig
ht in
clud
e:
•A
fall
in u
nem
ploy
men
t may
incr
ease
inco
mes
(1) t
his
may
incr
ease
con
sum
er s
pend
ing
(1) i
ncre
asin
g to
tal (
aggr
egat
e)
dem
and
(1) c
ausi
ng d
eman
d-pu
ll in
flatio
n (1
). •
A fa
ll in
une
mpl
oym
ent m
ay re
sult
in a
sho
rtage
of w
orke
rs (1
) thi
s m
ay ra
ise
wag
es (1
) inc
reas
ing
firm
s’ c
osts
of
prod
uctio
n (1
) cau
sing
cos
t-pus
h in
flatio
n (1
).
6
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Que
stio
nA
nsw
erM
arks
2(d)
Dis
cuss
whe
ther
or n
ot a
cou
ntry
will
gai
n fr
om th
e em
igra
tion
of s
ome
of it
s pe
ople
.
In a
sses
sing
eac
h an
swer
, use
the
tabl
e be
low
.
Leve
lD
escr
iptio
nM
arks
3A
reas
oned
dis
cuss
ion
whi
ch a
ccur
atel
y ex
amin
es b
oth
side
s of
the
econ
omic
arg
umen
t, m
akin
g us
e of
eco
nom
ic in
form
atio
n an
d cl
ear a
nd lo
gica
l ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns.
One
sid
e of
the
argu
men
t may
hav
e m
ore
dept
h th
an th
e ot
her,
but o
vera
ll bo
th s
ides
of t
he a
rgum
ent
are
cons
ider
ed a
nd d
evel
oped
. The
re is
thou
ghtfu
l eva
luat
ion
of e
cono
mic
con
cept
s, te
rmin
olog
y,
info
rmat
ion
and/
or d
ata
appr
opria
te to
the
ques
tion.
The
dis
cuss
ion
may
als
o po
int o
ut th
e po
ssib
le
unce
rtain
ties
of a
ltern
ativ
e de
cisi
ons
and
outc
omes
.
6–8
2A
reas
oned
dis
cuss
ion
whi
ch m
akes
use
of e
cono
mic
info
rmat
ion
and
clea
r ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns. T
he a
nsw
er m
ay la
ck s
ome
dept
h an
d de
velo
pmen
t or m
ay b
e on
e-si
ded.
The
re is
rele
vant
use
of e
cono
mic
con
cept
s, te
rmin
olog
y, in
form
atio
n an
d da
ta a
ppro
pria
te to
the
ques
tion.
3–5
1Th
ere
is a
sim
ple
atte
mpt
at u
sing
eco
nom
ic d
efin
ition
s an
d te
rmin
olog
y. S
ome
refe
renc
e m
ay b
e m
ade
to e
cono
mic
theo
ry, w
ith o
ccas
iona
l und
erst
andi
ng.
1–2
0A
mar
k of
zer
o sh
ould
be
awar
ded
for n
o cr
edita
ble
cont
ent.
0
Why
it m
ight
gai
n: •
Em
igra
tion
of d
epen
dent
s, w
ould
redu
ce th
e bu
rden
on
the
wor
king
pop
ulat
ion,
wou
ld re
duce
gov
ernm
ent s
pend
ing
on
bene
fits/
pens
ions
, whi
ch m
eans
gov
ernm
ent s
pend
ing
on o
ther
item
s ca
n in
crea
se.
•If
ther
e is
ove
rpop
ulat
ion/
popu
latio
n ab
ove
the
optim
um le
vel,
outp
ut p
er h
ead
shou
ld ri
se/m
ore
effic
ient
use
can
be
mad
e of
reso
urce
s. •
Wor
kers
who
em
igra
te m
ay s
end
mon
ey b
ack
to re
lativ
es; t
his
may
incr
ease
livi
ng s
tand
ards
. •
Em
igra
nts
may
late
r ret
urn
to th
e co
untry
brin
ging
new
ski
lls w
ith th
em; t
his
may
rais
e th
e pr
oduc
tivity
of t
he la
bour
forc
e in
thei
r cou
ntry
of o
rigin
.
Why
it m
ight
not
gai
n: •
Ski
lled
wor
kers
may
em
igra
te. T
his
will
redu
ce th
e qu
ality
of t
he la
bour
forc
e, lo
wer
pro
duct
ivity
, and
dis
cour
age
MN
Cs
from
set
ting
up.
•If
peop
le o
f wor
king
age
em
igra
te, t
he d
epen
denc
y ra
tio w
ill in
crea
se.
•If
ther
e is
und
er-p
opul
atio
n/po
pula
tion
belo
w th
e op
timum
leve
l, ou
tput
per
hea
d w
ould
fall/
less
effi
cien
t use
can
be
mad
e of
reso
urce
s. •
With
low
er o
utpu
t les
s ad
vant
age
can
be ta
ken
of e
cono
mie
s of
sca
le.
8
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 9 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
3(a)
Def
ine
max
imum
pric
e.
A pr
ice
that
pro
duce
rs c
anno
t cha
rge
abov
e a
pric
e ce
iling
(1) s
et b
y th
e go
vern
men
t (1)
.
2
3(b)
Ex
plai
n tw
o re
ason
s w
hy th
e su
pply
of b
anan
as m
ay d
ecre
ase.
Logi
cal e
xpla
natio
ns w
hich
mig
ht in
clud
e:
•a
perio
d of
bad
wea
ther
/nat
ural
dis
aste
r (1)
this
wou
ld d
ecre
ase
the
crop
(1)
•a
rise
in c
osts
of p
rodu
ctio
n (1
) e.g
. hig
her w
ages
pai
d to
farm
wor
kers
wou
ld m
ake
it m
ore
expe
nsiv
e to
pro
duce
the
prod
uct (
1)
•a
gove
rnm
ent t
ax (1
) thi
s ac
ts a
s a
disi
ncen
tive/
is a
n ex
tra c
ost (
1) •
the
rem
oval
of a
sub
sidy
(1) w
ould
redu
ce th
e in
cent
ive
to p
rodu
ce th
e pr
oduc
t (1)
•a
chan
ge in
the
pric
e of
oth
er c
rops
(1) m
ay e
ncou
rage
a s
hift
of re
sour
ces
(1)
•ch
ange
in th
e av
aila
bilit
y of
land
(1) e
.g. f
lood
ing
may
redu
ce th
e su
pply
of l
and
(1).
4
3(c)
Ana
lyse
the
fact
ors
whi
ch le
ad a
n M
NC
to p
rodu
ce in
par
ticul
ar c
ount
ries.
Coh
eren
t ana
lysi
s w
hich
mig
ht in
clud
e:
•S
ize
of m
arke
t (1)
if d
eman
d fo
r the
pro
duct
/s p
rodu
ced
is h
igh
in th
e co
untry
(1) h
ighe
r rev
enue
may
be
earn
ed (1
). •
Cos
ts o
f pro
duct
ion
(1) e
.g. l
ow w
ages
/low
raw
mat
eria
l cos
ts m
ay a
ttrac
t mul
tinat
iona
l com
pani
es (M
NC
s) (1
). •
Avai
labi
lity
of ra
w m
ater
ials
(1) c
erta
in ra
w m
ater
ials
e.g
. cop
per m
ay b
e fo
und
in a
sm
all n
umbe
r of c
ount
ries
(1).
•Tr
ade
prot
ectio
n (1
) MN
Cs
may
set
up
in a
cou
ntry
to g
et ro
und
tarif
fs (1
). •
Gov
ernm
ent s
ubsi
dies
(1) f
inan
cial
hel
p m
ay b
e gi
ven
to c
ompa
nies
set
ting
up in
som
e co
untri
es (1
). •
Few
er g
over
nmen
t reg
ulat
ions
(1) M
NC
s m
ay s
et u
p in
cou
ntrie
s w
ith fe
wer
rule
s an
d la
ws
(1).
•S
kills
of w
orke
rs (1
) hig
hly
skill
ed w
orke
rs w
ill p
rodu
ce p
rodu
cts
of a
goo
d qu
ality
(1).
6
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 10 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
3(d)
D
iscu
ss w
heth
er o
r not
a g
over
nmen
t sub
sidy
giv
en to
frui
t pro
duce
rs w
ill b
enef
it co
nsum
ers.
In a
sses
sing
eac
h an
swer
, use
the
tabl
e be
low
.
Leve
lD
escr
iptio
nM
arks
3A
reas
oned
dis
cuss
ion
whi
ch a
ccur
atel
y ex
amin
es b
oth
side
s of
the
econ
omic
arg
umen
t, m
akin
g us
e of
eco
nom
ic in
form
atio
n an
d cl
ear a
nd lo
gica
l ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns.
One
sid
e of
the
argu
men
t may
hav
e m
ore
dept
h th
an th
e ot
her,
but o
vera
ll bo
th s
ides
of t
he a
rgum
ent
are
cons
ider
ed a
nd d
evel
oped
. The
re is
thou
ghtfu
l eva
luat
ion
of e
cono
mic
con
cept
s, te
rmin
olog
y,
info
rmat
ion
and/
or d
ata
appr
opria
te to
the
ques
tion.
The
dis
cuss
ion
may
als
o po
int o
ut th
e po
ssib
le
unce
rtain
ties
of a
ltern
ativ
e de
cisi
ons
and
outc
omes
.
6–8
2A
reas
oned
dis
cuss
ion
whi
ch m
akes
use
of e
cono
mic
info
rmat
ion
and
clea
r ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns. T
he a
nsw
er m
ay la
ck s
ome
dept
h an
d de
velo
pmen
t or m
ay b
e on
e-si
ded.
The
re is
rele
vant
use
of e
cono
mic
con
cept
s, te
rmin
olog
y, in
form
atio
n an
d da
ta a
ppro
pria
te to
the
ques
tion.
3–5
1Th
ere
is a
sim
ple
atte
mpt
at u
sing
eco
nom
ic d
efin
ition
s an
d te
rmin
olog
y. S
ome
refe
renc
e m
ay b
e m
ade
to e
cono
mic
theo
ry, w
ith o
ccas
iona
l und
erst
andi
ng.
1–2
0A
mar
k of
zer
o sh
ould
be
awar
ded
for n
o cr
edita
ble
cont
ent.
0
Why
it m
ight
ben
efit:
•It
may
pro
vide
a fi
nanc
ial i
ncen
tive
to p
rodu
cers
; effe
ctiv
ely
low
ers
cost
s of
pro
duct
ion;
like
ly to
incr
ease
sup
ply;
low
er
pric
es; e
nabl
ing
cons
umer
s to
buy
mor
e/ra
isin
g pu
rcha
sing
pow
er.
•It
may
impr
ove
the
qual
ity o
f fru
it; fa
rmer
s w
ill h
ave
mor
e m
oney
to in
vest
. •
Frui
t is
a m
erit
good
; con
sum
ers
unde
rest
imat
ing
the
priv
ate
bene
fit to
them
selv
es o
f con
sum
ing
fruit;
they
may
gai
n he
alth
ben
efits
from
eat
ing
mor
e fru
it.
Why
it m
ight
not
ben
efit:
•Th
e su
bsid
y m
ay n
ot b
e pa
ssed
on
to c
onsu
mer
s in
the
form
of l
ower
pric
es.
•P
rice
will
fall
by a
sm
alle
r am
ount
if d
eman
d is
ela
stic
; poo
rer c
onsu
mer
s m
ay s
till n
ot b
e ab
le to
affo
rd to
buy
frui
t. •
The
subs
idy
may
mak
e pr
oduc
ers
com
plac
ent;
may
low
er q
ualit
y in
the
long
run.
•P
rovi
ding
a s
ubsi
dy in
volv
es a
n op
portu
nity
cos
t; co
nsum
ers
mig
ht b
enef
it m
ore
from
oth
er p
rodu
cts
bein
g su
bsid
ised
.
8
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 11 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
4(a)
Iden
tify
two
char
acte
ristic
s of
mon
ey.
One
mar
k ea
ch fo
r any
two
from
:
•ge
nera
l acc
epta
bilit
y/lim
ited
in s
uppl
y •
porta
ble
•di
visi
ble
•re
cogn
isab
le •
hom
ogen
eous
2
4(b)
Expl
ain
why
gov
ernm
ents
pro
vide
pub
lic g
oods
.
Exp
lana
tions
whi
ch m
ight
incl
ude:
The
priv
ate
sect
or/m
arke
t for
ces
wou
ld n
ot p
rovi
de p
ublic
goo
ds (1
).P
ublic
goo
ds a
re n
on-e
xclu
dabl
e (1
) it i
s no
t pos
sibl
e to
exc
lude
non
-pay
ers
(1) s
o pe
ople
can
act
as
free
rider
s (1
). Th
is
mea
ns th
at p
rivat
e se
ctor
firm
s w
ould
hav
e no
fina
ncia
l inc
entiv
e to
pro
vide
pub
lic g
oods
(1) s
uch
as d
efen
ce (1
).
4
4(c)
Ana
lyse
how
a c
entr
al b
ank
mig
ht re
duce
hou
seho
ld b
orro
win
g.
Coh
eren
t ana
lysi
s w
hich
mig
ht in
clud
e:
It m
ight
incr
ease
the
rate
of i
nter
est (
1) th
is w
ould
incr
ease
the
cost
of b
orro
win
g (1
) thi
s m
ay d
isco
urag
e ho
useh
olds
from
bu
ying
item
s/en
cour
age
savi
ng (1
) tha
t wou
ld re
quire
them
to ta
ke o
ut a
loan
(1).
It m
ight
impo
se re
stric
tions
on
the
amou
nt th
at b
anks
can
lend
(1) t
hese
may
lim
it th
e si
ze o
f a lo
an a
hou
seho
ld c
an g
et (1
) or
incr
ease
the
cond
ition
s th
at h
ave
to b
e m
et b
efor
e a
loan
is g
iven
(1).
It m
ight
redu
ce th
e m
oney
sup
ply
(1) w
hich
may
redu
ce s
pend
ing
(1) a
nd s
o m
ay re
duce
dem
and
for l
oans
(1).
6
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 12 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
4(d)
Dis
cuss
whe
ther
or n
ot a
gov
ernm
ent s
houl
d im
pose
tarif
fs o
n its
cou
ntry
’s im
port
s.
In a
sses
sing
eac
h an
swer
, use
the
tabl
e be
low
.
Leve
lD
escr
iptio
nM
arks
3A
reas
oned
dis
cuss
ion
whi
ch a
ccur
atel
y ex
amin
es b
oth
side
s of
the
econ
omic
arg
umen
t, m
akin
g us
e of
eco
nom
ic in
form
atio
n an
d cl
ear a
nd lo
gica
l ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns.
One
sid
e of
the
argu
men
t may
hav
e m
ore
dept
h th
an th
e ot
her,
but o
vera
ll bo
th s
ides
of t
he a
rgum
ent
are
cons
ider
ed a
nd d
evel
oped
. The
re is
thou
ghtfu
l eva
luat
ion
of e
cono
mic
con
cept
s, te
rmin
olog
y,
info
rmat
ion
and/
or d
ata
appr
opria
te to
the
ques
tion.
The
dis
cuss
ion
may
als
o po
int o
ut th
e po
ssib
le
unce
rtain
ties
of a
ltern
ativ
e de
cisi
ons
and
outc
omes
.
6–8
2A
reas
oned
dis
cuss
ion
whi
ch m
akes
use
of e
cono
mic
info
rmat
ion
and
clea
r ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns. T
he a
nsw
er m
ay la
ck s
ome
dept
h an
d de
velo
pmen
t or m
ay b
e on
e-si
ded.
The
re is
rele
vant
use
of e
cono
mic
con
cept
s, te
rmin
olog
y, in
form
atio
n an
d da
ta a
ppro
pria
te to
the
ques
tion.
3–5
1Th
ere
is a
sim
ple
atte
mpt
at u
sing
eco
nom
ic d
efin
ition
s an
d te
rmin
olog
y. S
ome
refe
renc
e m
ay b
e m
ade
to e
cono
mic
theo
ry, w
ith o
ccas
iona
l und
erst
andi
ng.
1–2
0A
mar
k of
zer
o sh
ould
be
awar
ded
for n
o cr
edita
ble
cont
ent.
0
Why
they
mig
ht im
pose
tarif
fs:
•Th
is w
ill ra
ise
reve
nue
for t
he g
over
nmen
t; th
is c
ould
be
spen
t on
e.g.
hea
lthca
re/e
duca
tion.
•Th
is m
ay re
duce
dem
and
for i
mpo
rts; i
mpr
ove
the
trade
in g
oods
pos
ition
; and
so
impr
ove
the
curr
ent a
ccou
nt p
ositi
on.
•Th
is m
ay p
rote
ct in
fant
indu
strie
s; th
ese
may
gro
w a
nd ta
ke a
dvan
tage
of e
cono
mie
s of
sca
le; b
ecom
e in
tern
atio
nally
co
mpe
titiv
e; s
o cr
eate
out
put a
nd e
mpl
oym
ent.
•Th
is m
ay p
rote
ct d
eclin
ing
indu
strie
s; p
reve
ntin
g un
empl
oym
ent.
•Th
is m
ay p
reve
nt d
umpi
ng; f
orei
gn fi
rms
selli
ng a
t bel
ow c
ost p
rice;
dom
estic
firm
s be
ing
driv
en o
ut o
f bus
ines
s. •
This
may
pro
tect
con
sum
ers
from
har
mfu
l pro
duct
s.
Why
they
mig
ht n
ot im
pose
tarif
fs:
•Th
is m
ay ra
ise
pric
es to
con
sum
ers;
con
sum
ers
may
not
hav
e do
mes
tic p
rodu
cts
to s
witc
h to
; any
dom
estic
sub
stitu
tes
may
be
of a
low
er q
ualit
y; s
o re
duce
s va
riety
for c
onsu
mer
s.
•Th
is m
ay ra
ise
cost
s of
impo
rted
raw
mat
eria
ls; r
aise
cos
ts o
f pro
duct
ion;
cau
se c
ost-p
ush
infla
tion.
•Th
is m
ay le
ad to
redu
ctio
n in
com
petit
ive
pres
sure
on
dom
estic
firm
s; s
o to
inef
ficie
ncy.
•Th
ere
may
be
reta
liatio
n; w
ith o
ther
cou
ntrie
s im
posi
ng ta
riffs
on
the
coun
try’s
exp
orts
. •
Ther
e m
ay n
ot b
e do
mes
tic s
ubst
itute
s fo
r im
ports
; con
sum
ers
may
not
sto
p bu
ying
impo
rts; b
ecau
se o
f ine
last
ic d
eman
d.
8
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 13 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
5(a)
Def
ine
econ
omic
goo
d.
Ther
e is
an
oppo
rtuni
ty c
ost i
nvol
ved
in p
rodu
cing
the
good
(1) a
s it
take
s no
reso
urce
s to
pro
duce
it (1
).
2
5(b)
Expl
ain
two
influ
ence
s on
wha
t fac
tors
of p
rodu
ctio
n a
firm
use
s.
Exp
lana
tions
whi
ch m
ight
incl
ude:
•th
e ty
pe o
f pro
duct
pro
duce
d/si
ze o
f the
firm
(1) f
or in
stan
ce, p
rodu
cing
nuc
lear
pow
er is
cap
ital-i
nten
sive
(1)
•th
e pr
oduc
tivity
of f
acto
rs o
f pro
duct
ion
(1) i
f, fo
r ins
tanc
e, la
bour
bec
omes
mor
e sk
illed
, a fi
rm m
ight
bec
ome
mor
e la
bour
-inte
nsiv
e (1
) •
the
avai
labi
lity
of fa
ctor
s of
pro
duct
ion
(1) i
n so
me
coun
tries
ther
e m
ay b
e sh
orta
ge o
f oil
or p
eopl
e of
wor
king
age
(1)
•th
e re
lativ
e co
st o
f fac
tors
of p
rodu
ctio
n (1
) if c
apita
l is
rela
tivel
y ex
pens
ive,
labo
ur-in
tens
ive
met
hods
of p
rodu
ctio
n m
ay
be u
sed
(1)
4
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 14 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
5(c)
Ana
lyse
, usi
ng a
pro
duct
ion
poss
ibili
ty c
urve
dia
gram
(PPC
), th
e ef
fect
of t
he d
estr
uctio
n of
som
e of
its
reso
urce
s on
an
econ
omy.
Up
to 4
mar
ks fo
r the
dia
gram
.
AB
A B
GO
OD
X
GO
OD
YO
•ax
es c
orre
ctly
labe
lled
(1)
•or
igin
al c
urve
/dow
nwar
d sl
opin
g lin
e to
axe
s (1
) •
new
cur
ve p
rese
nt (1
) •
shift
to th
e le
ft cl
early
indi
cate
d ei
ther
by
an a
rrow
or b
y la
belli
ng (1
)
Up
to 2
mar
ks fo
r coh
eren
t ana
lysi
s w
hich
mig
ht in
clud
e:
•th
e de
stru
ctio
n of
reso
urce
s w
ill re
duce
the
max
imum
out
put a
cou
ntry
can
pro
duce
(1)
•th
is w
ill m
ove
the
prod
uctio
n po
ssib
ility
cur
ve to
the
left/
clos
er to
the
orig
in (1
)
6
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 15 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
5(d)
Dis
cuss
whe
ther
or n
ot th
e av
erag
e co
st o
f pro
duct
ion
alw
ays
falls
whe
n a
firm
incr
ease
s its
sca
le o
f pro
duct
ion.
In a
sses
sing
eac
h an
swer
, use
the
tabl
e be
low
.
Leve
lD
escr
iptio
nM
arks
3A
reas
oned
dis
cuss
ion
whi
ch a
ccur
atel
y ex
amin
es b
oth
side
s of
the
econ
omic
arg
umen
t, m
akin
g us
e of
eco
nom
ic in
form
atio
n an
d cl
ear a
nd lo
gica
l ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns.
One
sid
e of
the
argu
men
t may
hav
e m
ore
dept
h th
an th
e ot
her,
but o
vera
ll bo
th s
ides
of t
he a
rgum
ent
are
cons
ider
ed a
nd d
evel
oped
. The
re is
thou
ghtfu
l eva
luat
ion
of e
cono
mic
con
cept
s, te
rmin
olog
y,
info
rmat
ion
and/
or d
ata
appr
opria
te to
the
ques
tion.
The
dis
cuss
ion
may
als
o po
int o
ut th
e po
ssib
le
unce
rtain
ties
of a
ltern
ativ
e de
cisi
ons
and
outc
omes
.
6–8
2A
reas
oned
dis
cuss
ion
whi
ch m
akes
use
of e
cono
mic
info
rmat
ion
and
clea
r ana
lysi
s to
eva
luat
e ec
onom
ic is
sues
and
situ
atio
ns. T
he a
nsw
er m
ay la
ck s
ome
dept
h an
d de
velo
pmen
t or m
ay b
e on
e-si
ded.
The
re is
rele
vant
use
of e
cono
mic
con
cept
s, te
rmin
olog
y, in
form
atio
n an
d da
ta a
ppro
pria
te to
the
ques
tion.
3–5
1Th
ere
is a
sim
ple
atte
mpt
at u
sing
eco
nom
ic d
efin
ition
s an
d te
rmin
olog
y. S
ome
refe
renc
e m
ay b
e m
ade
to e
cono
mic
theo
ry, w
ith o
ccas
iona
l und
erst
andi
ng.
1–2
0A
mar
k of
zer
o sh
ould
be
awar
ded
for n
o cr
edita
ble
cont
ent.
0
Why
it m
ight
fall:
•Th
e fir
m m
ay e
xper
ienc
e ec
onom
ies
of s
cale
; tot
al c
ost w
ill ri
se b
y le
ss th
an to
tal o
utpu
t (lo
ng ru
n av
erag
e co
st m
ay fa
ll as
out
put i
ncre
ases
). •
The
firm
may
exp
erie
nce
buyi
ng/p
urch
asin
g ec
onom
ies
of s
cale
; may
be
offe
red
a di
scou
nt p
rice
whe
n bu
ying
raw
m
ater
ials
in b
ulk.
•Th
e fir
m m
ay e
xper
ienc
e te
chni
cal e
cono
mie
s of
sca
le; l
arge
r, m
ore
cost
effi
cien
t tec
hnol
ogic
al e
quip
men
t may
be
purc
hase
d to
pro
duce
a h
ighe
r out
put.
•Th
e fir
m m
ay e
xper
ienc
e m
anag
eria
l eco
nom
ies
of s
cale
; spe
cial
ist s
taff
may
be
empl
oyed
whe
n ou
tput
is h
igh.
•Th
e fir
m m
ay e
xper
ienc
e fin
anci
al e
cono
mie
s of
sca
le; a
s ou
tput
incr
ease
s, it
may
be
able
to b
orro
w m
ore
chea
ply/
or s
ell
its s
hare
s at
a lo
wer
pric
e. •
The
firm
may
exp
erie
nce
R &
D e
cono
mie
s of
sca
le; t
he R
& D
exp
endi
ture
can
be
spre
ad o
ver a
hig
her o
utpu
t. •
The
indu
stry
may
als
o be
gro
win
g in
siz
e; e
nabl
ing
adva
ntag
e to
be
take
n of
ext
erna
l eco
nom
ies
of s
cale
.
8
PMT
0455/02 Cambridge IGCSE – Mark Scheme For examination SPECIMEN from 2020
Page 16 of 16© UCLES 2017
Que
stio
nA
nsw
erM
arks
5(d)
Why
it m
ight
not
fall:
•Th
e fir
m m
ay e
xper
ienc
e di
seco
nom
ies
of s
cale
; tot
al c
ost m
ay ri
se b
y m
ore
than
tota
l out
put (
long
run
aver
age
cost
may
in
crea
se a
s ou
tput
incr
ease
s).
•Th
e fir
m m
ay e
xper
ienc
e di
seco
nom
ies
of s
cale
; thi
s m
ay m
ake
the
firm
slo
wer
to re
spon
d to
cha
ngin
g m
arke
t co
nditi
ons/
mor
e di
fficu
lt to
kee
p co
sts
dow
n. •
The
firm
may
exp
erie
nce
com
mun
icat
ion
prob
lem
s; id
eas
may
not
be
com
mun
icat
ed o
r may
be
mis
unde
rsto
od.
•Th
e fir
m m
ay e
xper
ienc
e po
or in
dust
rial r
elat
ions
; e.g
. pus
hing
up
the
cost
s of
pro
duct
ion.
•E
xter
nal d
isec
onom
ies
of s
cale
may
occ
ur; e
.g. p
ushi
ng u
p th
e co
sts
of p
rodu
ctio
n.
Allo
w u
p to
2 m
arks
for a
cor
rect
ly la
belle
d av
erag
e co
st d
iagr
am w
hich
sho
ws
econ
omie
s an
d di
seco
nom
ies
of s
cale
as
an
alte
rnat
ive
to d
escr
ibin
g av
erag
e co
sts
risin
g/fa
lling
as
outp
ut in
crea
ses.
PMT