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Economics · May / June 2026 · Paper 22 · Question 2

0455

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In 2023, a foreign multinational company (MNC) expanded its copper mine in Mongolia. The mine was opened ten years before when it created more than 15 000 jobs, reducing unemployment in the country. While mining increased in Mongolia, mines in some other countries were closed. Over time, the closure of mines has contributed to the decline of the primary sector in some countries. In contrast, the tertiary sector in most countries has increased.

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  • 2(a)[2]

    Identify two disadvantages of working as a miner.

    danger/hard work/health/safety issues (1)
    poor/difficult working conditions (1)
    low pay (1). 2 If more than two disadvantages are given, consider the first three.

  • 2(b)[4]

    Explain why government measurement of unemployment may be inaccurate. Logical explanation which might include:

    The claimant count (1)

    may include workers who are working informally but claiming unemployment benefits (1)

    or who are not actively looking for work (1)

    may not include workers who are unemployed but not entitled to benefits (1)

    The Labour Force Survey (LFS) (1)

    may have sampling errors/bias (1)

    e.g. may not pick a representative sample (1)

    answers may be misinterpreted (1)

    respondents may not provide accurate data (1)

    time (lag) between the survey and publication (1). 4 Note: reward but do not expect reference to ‘underemployment’. e.g., Underemployment (1)

    people working less hours than desired/working in jobs below their skill level (1).

  • 2(c)[6]

    Analyse why an MNC may close a mine in a host country. Coherent analysis which might include:

    Reduction in demand (1)

    greater competition from other mines (1)

    loss of revenue/profit (1)

    Rise in costs of production (1)

    e.g. wages/indirect taxation (1)

    reduce profit (relative to in other countries) (1)

    Mineral deposits may run out (1)

    no incentive/product to sell (1).

    Corporate income tax may increase (1)

    reducing profit/incentive to produce (1)

    Laws/regulations may be passed/pressure groups (1)

    e.g. requiring improved working conditions/NMW/reduce pollution/increased trade union power (1)

    may result in the mine becoming unprofitable/facing legal action (1)

    Political instability (1)

    closure/disruption to mining operations (1)

    Climate change/adverse weather (1)

    the mine cannot be used (1)

    Population decline/labour shortage (1)

    the mine cannot be staffed/output cannot be produced (1)

    Appreciation of host country’s exchange rate (1)

    discourages exports (1)

    MNC become less internationally competitive (1). 6 Note: Listing any reasons Max 3 marks.

  • 2(d)[8]

    Discuss whether or not a larger tertiary sector will increase a country’s economic development. In assessing each answer, use the table opposite. Coherent discussion which might include: Why it might increase economic development:

    Many highly skilled and highly paid jobs are in services
    may raise GDP/employment
    may have good working conditions
    may mean greater provision of education and healthcare
    may increase HDI Why it might not increase economic development:
    some tertiary sector jobs e.g. in hospitality may be low paid
    poor working conditions in some tertiary jobs e.g. refuse collectors
    low productivity jobs can dominate (retail, hospitality, basic services)
    uneven development/inequality, growth in services often benefit urban areas/ those with service sector skills
    relatively small primary sector industries that can earn high incomes e.g. oil
    relatively small secondary sector to make products/take more advantage of economies of scale
    some tertiary industries may create external costs e.g. tourism/transport/plastics. 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 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 Guidance Level Description A mark of zero should be awarded for no creditable content.
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