Economics · May / June 2025 · Paper 21 · Question 1

Calculate the value of Gabon’s oil production as a percentage of Gabon’s GDP. 30%. 1 Accept 30 without %.

Identify two external benefits of rainforests. Two from:

Explain what effect an increase in tourism may have on Gabon’s current account of the balance of payments.

Explain two reasons why the Gabonese Government wants to reduce reliance on oil. Logical explanation which might include:

revenue from the industry will decline / employment in the industry will decline / GDP will decline /cause recession / conserve for future generations / may need to import oil / price for oil may rise (1).

an external cost / harms health / reduces standard of living / protect the environment / attract tourists (1). 4 One mark each for each of two reasons identified and one mark each for each of two explanations. Only these two reasons are acceptable.

Draw a demand and supply diagram to show the effect of the discovery of new gold deposits on the market for gold. Coherent analysis which might include: 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 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 literacy rate and the percentage of the labour force employed in agriculture. Coherent analysis which might include: Expected relationship:

the higher the literacy rate, the smaller the % of the labour force employed in agriculture (1). Supporting evidence:

a low literacy rate may mean workers have to undertake unskilled jobs in agriculture / a high proportion of workers employed in agriculture may mean that high literacy rate is not required (1). Exception:

Gabon has a high literacy rate but also a high % of the labour force employed in agriculture (1). Analysis of exception:

Discuss whether or not a government should pay private sector firms to give work experience to unemployed young people. Award up to 4 marks for logical reasons why it should, which may include:

increase their confidence / motivation to get a job / get higher paid jobs (1)

young people may make mistakes and cost firm money while being trained (1)

reduce unemployment (1)

reduce the cost of unemployment benefits (1)

reduce future training costs (1)

increase tax revenue (1)

leads to economic growth (1). Award up to 4 marks for logical reasons why it should not, which may include:

the young may be given unskilled jobs (1)

poor working conditions / not regulated (1)

government spending could be used to e.g. improve state education (1)

government incurs additional expenditure / raises taxes to pay for it (1)

the young may have been employed by the private sector without payment by the government (1)

reduce their output (1)

firms may be corrupt (1). 6 Apply this example to all questions with the command word DISCUSS (1 (g), 1 (h), 2 (d), 3 (d), 4 (d) and 5 (d)) 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.

Discuss whether or not a growth in the size of firms in Gabon’s textile industry will reduce their average cost of production. Award up to 4 marks for logical reasons why it might, which may include:

workers can specialise / increase labour productivity (1)

employ specialists (1)

using advanced capital equipment (1)

receiving a discount as buying in bulk (1)

reducing transport costs (1)

spreads fixed costs over more output (1)

easier / cheaper to borrow (1)

introduce new products / new production methods (1)

able to suffer fall in demand for one product or supply problems connected to one product (1)

example (1). Award up to 4 marks for logical reasons why it might not, which may include:

may be slower to make decisions (1)

6 Maximum of 2 marks for just listing different types of economies and diseconomies of scale or just stating economies of scale and diseconomies of scale may be experienced without references to examples. Essentially full marks can be gained for identification and explanation of two economies of scale and one diseconomy of scale OR one economy of scale and two diseconomies of scale. Note there is no marks awarded for simply stating that average costs may or rise or for drawing a diagram showing average costs changing as a firm grows in size. Guidance

may be more difficult to keep everyone informed (1)

may be less contact between managers and workers / decreasing productivity (1).