Economics · Oct / Nov 2023 · Paper 21 · Question 1

Calculate the total number of people in Cambridge aged 18– 29 in 2019. 37 440 (1)

Identify two types of industries in Cambridge that operate in the tertiary sector. Education (1). Healthcare (1). Research and development (1). 2 If more than two types are given, consider the first three.

Identify two benefits of having highly knowledge-intensive exports. Exports highly priced (1). Price inelastic in demand (1). Increased demand for exports (due to increased global incomes) (1). 2 If more than two benefits are given, consider the first three. Accept high value for highly priced.

Explain how having a more educated labour force can reduce poverty. Logical explanation which might include: a more educated labour force will be more skilled / more productive (1)

enabling them to earn higher wages (1)

able to afford basic necessities (1). a more educated labour force may have more job opportunities / less unemployment (1)

wages may be higher than unemployment benefits (1). a more educated labour force has access to more information on health (1)

increasing the ability to work (1)

have access to better healthcare (1).

Draw a demand and supply diagram to show the effects of increased global income on the market for education in Cambridge. D&S diagram: Axes correctly labelled – price and quantity or p and q (1). Original demand and supply curves correctly labelled (1). New curve shifted to the right (1). Equilibriums – shown by lines P1 and Q1 and P2 and Q2 or equilibrium points marked as E1 and E2 (1).

Analyse the relationship between the percentage of population with a university degree and GDP per head. Coherent analysis which might include: Expected relationship: Positive / direct relationship (1)

the higher percentage of population with a university degree, the higher the GDP per head (1). Analysis of expected relationship: as percentage of population with a university degree increases, the more skills / qualification they will have (1)

therefore, they have higher productivity and can earn more (1). Supporting evidence: e.g. Indonesia lowest percentage of population with a university degree, lowest GDP per head ;

Canada, Switzerland and UK have the highest three in each category;

Colombia has the second lowest percentage of population with a university degree and the second lowest GDP per head (2). Exception: Switzerland (1)

has lower percentage of population with a university degree than Canada or the UK, but higher GDP per head (1). Analysis of the exception: Other influences, e.g. quality of secondary education, proportion of the population employed in banking (1). 5 Responses do not have to be in the format suggested but they should address the expected / normal relationship, offer supporting evidence of that, highlight any exceptions to that, and analyse the overall data.

Discuss whether or not free trade is beneficial for a city such as Cambridge. Award up to 4 marks for logical reasons why it might, which may include:

increased export revenues (1)

increased revenue / profits for producers (1)

higher growth in the city (1).

cheaper imports of goods and materials / lower costs for firms (1)

lower prices (of exports) (1).

reducing the level of unemployment (1).

economies of scale (1)

e.g. purchasing / technical / marketing / managerial / financial (1).

from increased imports (1)

higher quality goods / variety of goods (1).

or more transfer of ideas and knowledge (1)

leads to more innovation (1)

lower prices (1)

profit incentive (1)

6 Apply this example to all questions with the command word DISCUSS (1g, 1h, 2d, 3d, 4d and 5d) Each point may be credited only once, on either side of an argument, but separate development as to how / why the outcome may differ is rewarded. Generic example mark Tax revenue may decrease… ...because of reason e.g. incomes may be lower. Tax revenue may increase because incomes may be higher i.e. reverse of a previous argument. Tax revenue may increase because of a different reason i.e. not the reverse of a previous argument e.g. government spending on subsidies may stimulate the economy more than spending on education. Guidance Award up to 4 marks for logical reasons why it might not, which may include:

economic shocks in other countries can negatively affect revenues of firms (1)

reduce economic growth and development in the city (1).

other economies might have relatively lower costs (1)

cheap imports / more imports (1)

stop development of infant industries (1)

may lead to job losses in the city (1).

leads to increased inequality / uneven distribution of income (1).

due to more production / more need for cross-border transport (1)

creating external costs / negative externalities (1).

reduce health (1).

Discuss whether or not firms in Cambridge will continue to grow. Award up to 4 marks for logical reasons why it might, which may include:

easy to find workers (1)

to produce goods and services (1)

or lower cost of labour (1)

more innovation / new ideas / high quality products (1)

may be up-to-date with modern technology (1)

such as access to ultra-fast broadband (1)

productivity is higher (1)

faster production / less delays (1)

easy to export / high demand for their exports (1)

easy to reach customers (1)

faster deliveries (1)

increased demand for goods and services (1). Award up to 4 marks for logical reasons why it might not, which may include:

high cost of production (1)

higher capital start-up costs (1)

lower profits (1)

poor air quality (1)

may discourage workers from locating in Cambridge (1)

difficult for firms to find workers (1)

small market (1)

limited demand (1)

limited scope for revenue / profits for Cambridge firms (1)

limits potential growth from other sectors (1)