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Economics · May / June 2026 · Paper 22 · Question 5

0455

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The question as text

The birth rate has fallen in many countries. However, the birth rate has risen in Denmark where fath provide free childcare. These firms can have elastic or inelastic demand for their products. A relatively high proportion of Danish adults work in the public sector and most of them belong to a trade union. Some governments prevent workers from joining trade unions.

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  • 5(a)[2]

    Define ‘birth rate’. Number of (live) births (1)

    per 1000 of the population (1).

  • 5(b)[4]

    Explain two possible benefits of an increase in a country’s birth rate. Logical explanation which might include:

    Increase in the size of the labour force (in the future) (1)

    increase output/economic growth (1)

    Increase size of (child related) markets/consumption/total demand (1)

    encourage firms to expand output/GDP (1)

    enable firms to take advantage of economies of scale (1)

    Move country towards optimum population (1)

    raise efficiency/ (future) real GDP per head (1). 4 One mark each for each of two benefits identified and one mark for each of two explanations. If more than two benefits are given, consider the first three. Can have increased GDP/economic growth as the development from both reasons if the economics is correct.

  • 5(c)[6]

    Analyse how a firm could make demand for its product more price-inelastic. Coherent analysis which might include:

    Advertising/marketing (1)

    information provision (1)

    packaging/ branding (1)

    to make the product seem special/superior (1)

    making demand seem addictive (1)

    necessary (1)

    Eliminate substitutes/competition (1)

    by merging (1)

    less willing to switch/product becomes unique (1)

    Reduce the price of a complement (1)

    consumers use the two goods together (1)

    Make the product better quality (1)

    customers are less likely to switch (1)

    Create limited time to respond (1)

    consumers cannot delay their purchase/look for alternatives (1). 6 Note: Listing any determinant of PED up to 3 marks Maximum 3 marks if there is no valid development of the determinant(s) given. Analysis/development must relate to ‘… demand for its product…’ Nothing for a simple ‘change in price’ effect. However, allow the following as a secondary, indirect effect: If the price of the product is reduced (1)

    the purchase becomes a smaller proportion of income (1). In this case the price reduction can be credited if it is developed with the ‘smaller proportion of income’ point. Allow just one mark in total for any correct statement of price inelastic demand. This must contain responsiveness/sensitivity/proportionality.

  • 5(d)[8]

    Discuss whether or not governments should prevent workers from joining trade unions. In assessing each answer, use the table opposite. Coherent discussion which might include: Why it should prevent workers from joining trade unions:

    may avoid industrial action
    may stop production being disrupted
    may reduce large wage rises
    may reduce costs/cost-push inflation
    may maintain employment levels
    may increase international price competitiveness
    may improve the current account balance
    may make it easier to introduce new methods of production
    may attract MNCs Why it should not prevent workers from joining trade unions:
    will increase workers’ ability to engage in collective bargaining
    may raise workers’ living standards
    may improve working conditions
    may increase job security
    may make communication/negotiation between workers and employers easier/cheaper
    may improve motivation/raise productivity/output 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. Max L2 if no reference to context of question
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