Economics · Oct / Nov 2022 · Paper 22 · Question 4
0455
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The question as text
Advances in technology have changed how trees (wood) are cut down, transported and used in the manufacture of furniture, such as tables. Wood is in inelastic supply. Wood can be supplied in all economic systems. However, public goods are not supplied in a market economic system.
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4(a)[2]
Define inelastic supply. Quantity supplied / supply changes by a smaller percentage change than price (2). Supply changing by less than price / PES less than 1 / PES < 1 / supply unresponsive to change in price (1). 2 Allow one mark for PES = 0.
4(b)[4]
Explain why public goods would not be supplied in a market economic system. Logical explanation which might include: Public goods are non-excludable (1)
it is not possible to stop people who are not prepared to pay for them, from consuming them (1)
free rider problem (1). Public goods are non-rival (1)
if supplied for one, supplied for everyone and so cannot charge additional consumers (1). Private sector firms are profit motivated (1)
they will not produce products if they cannot get revenue from them (1)
would make a loss (1). 4 No marks for examples.
4(c)[6]
Analyse, using a demand and supply diagram, the effect on the market for furniture of an increase in the price of wood. Coherent analysis which might include: Up to 4 marks for the diagram: D&S diagram: Axes correctly labelled – price and quantity or p and q (1). Original demand and supply curves correctly labelled (1). New supply curve shifted to the left (1). Equilibriums – shown by lines P1 and Q1 and P2 and Q2 or equilibrium points E1 and E2 (1). Up to 2 marks for coherent analysis which might include: Would increase costs of production (1)
raise price / reduce quantity (traded) (1). Accept increase in price or fall in quantity on their own but not an increase in price of wood or fall in quantity of wood.
4(d)[8]
Discuss whether or not advances in technology will benefit a country’s population. In assessing each answer, use the table opposite. Why it might:
may reduce costs of productionmay increase significance of technical economies of scalemay lower pricesmay make the country’s firms more internationally competitivemay promote globalisationmay encourage firms to expand and take on more workerseconomic growth may increase incomesmay increase quality – less subject to human errormay create new productsmay improve working conditionsmay extend education through online learning. Why it might not:may increase unemploymentmay make products more standardised / not produced to individual needsmay increase stressmay be over dependence on technology which can failmay increase fraudmay cause negative externalities e.g. fracking. 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 sided 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 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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