Economics · May / June 2022 · Paper 21 · Question 5

0455

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Singapore is a high-income country with a shortage of land and labour. Singapore is often given as an example of a market economy. The Singaporean government does, however, intervene in the economy. For example, it encourages its population to eat two servings of fruit and two servings of vegetables per day.

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5(a)[2]
Identify the reward to labour and the reward to land. Wages (1)
rent (1).
5(b)[4]
Explain how an increase in a worker’s income can affect their mobility of labour. Logical explanation which might include: An increase in income will enable a worker to spend more on their education (1)
increasing occupational mobility (1). Higher income will make housing more affordable (1)
increasing geographical mobility (1). Higher income will make high-tech products more affordable (1)
enabling a worker to be better informed (1)
increasing both occupational and geographical mobility (1). Higher incomes may discourage a worker from changing jobs / may be content with current job (1)
may be satisfied with income level (1)
reducing geographical and occupational mobility (1). Higher incomes make it easier to afford car / use public transport (1)
increases geographical mobility (1). 4 No marks for causes of higher income.
5(c)[6]
Analyse, using a demand and supply diagram, how a greater awareness of the health benefits of eating fruit will affect the market for fruit. Coherent analysis which might include: Up to 4 marks for D & S diagram: Axes correctly labelled–price and quantity or p and q (1). Original demand and supply curves correctly labelled (1). New demand curve shifted to the right (1). Equilibriums–shown by lines P1 and Q1 and P2 and Q2 or equilibrium points E1 and E2 (1). Up to 2 marks for written analysis which might include: Greater awareness of health benefits will encourage more people to eat / demand fruit (1)
Raise price / raise quantity traded (1). 6 Note Note: Axes do not have to be labelled price of fruit and quantity of fruit to get mark. No marks for stating price changes from P1 to P2 or quantity changes from Q1 to Q2. To get first mark in written analysis they must refer to fruit.
5(d)[8]
Discuss whether or not a market economic system benefits an economy. In assessing each answer, use the table opposite. Why it might:
profit incentive and competition may increase efficiency
wage differentials may encourage effort
price may be low and quality high
country’s products may be internationally competitive
economic growth may be high
consumer choice may be high
consumer sovereignty may be high Why it might not:
risk of market failure
public goods will not be provided
demerit goods are overconsumed and merit goods and under-consumed
problem of pollution and other external costs
unemployment may be high as lack of co-ordination
some countries may lack the support structures e.g., legal system to enforce property rights to allow market forces to work efficiently.
monopolies can be created Level Description A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other, but overall, both sides of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and / or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes. 6−8 Guidance Level Description A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development may be one- sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question. 3−5 There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding. 1−2 A mark of zero should be awarded for no creditable content.

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