Economics · May / June 2022 · Paper 21 · Question 4
2281
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The question as text
Uganda specialises in agricultural products and has a relatively small secondary sector. In the 1990s, the Ugandan government privatised most of its firms, including banks and railways. Some economists thought this privatisation was unsuccessful because poverty increased and unemployment remained high. In recent years, the Ugandan government has used supply-side policy measures to reduce unemployment.
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4(a)[2]
Define privatisation.
Privatisation is the sale of state-owned / public sector firms / public sector assets (1) to the private sector / investors / individuals (1).
Guidance: Award 1 mark for an understanding of the private sector. Accept change / movement / turned from public to private sector.
4(b)[4]
Explain the difference between absolute and relative poverty.
Logical explanation which might include:
Absolute poverty is a lack of basic necessities (1) e.g., food, clothing or housing / e.g. $1.90 a day (1).
Relative poverty is being poor in comparison to other people (in their country) (1) example of a measure such as less than 60% of average income / not able to participate fully in normal activities in their country (1).Guidance: No mark for stating those in relative poverty can meet their basic needs but not their wants.
4(c)[6]
Analyse how specialisation can benefit firms.
Coherent analysis which might include:
Understanding of specialisation of a firm / workers become skilled at producing a particular product (1) lower cost of production (1) gain a good reputation / high quality of good or service (1) increase demand (1) increase output (1) raise revenue (1) increase profit (1).
May enable firms to gain advantage of economies of scale (1) example (1) become (internationally) competitive (1).
Easier to mechanise / improve technology (1) speeds up / faster production / become more efficient (1).
Guidance: Maximum of one mark for any number of examples of economies of scale. Note that some students only write about division of labour which is not the question but some of the features also apply to specialisation of firms.
4(d)[8]
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