Please check the examination details below before entering your candidate information

Candidate surname Other names

Jena l Khair Harique

Centre Number Candidate Number

Pearson Edexcel International Advanced Level

Time 1 hour 45 minutes
Paper
reference WEC11/01
Economics
 

International Advanced Subsidiary

UNIT 1: Markets in action

You must have: Total Marks

Source Booklet (enclosed)

Instructions
• Use black ink or ball-point pen.
• centrethe
Fill in boxes at the top of this page with your name,
number and candidate number.
• Answer ALL questions in Sections A, B and C.
• Answer ONE question in Section D.
• Answer
s
the questions in the spaces provided
– there may be more space than you need.

Information
• The total mark for this paper is 80.
• The marks for each question are shown in brackets
– use this as a guide as to how much time to spend on each question.
• Calculators may be used.
Advice
• Read each question carefully before you start to answer it.
• Check your answers if you have time at the end.

Turn over

P70678A
©2022 Pearson Education Ltd.
L:1/1/1/1/
*P70678A0128*
 SECTION A

Answer ALL questions in this section.

Questions must be answered with a cross in a box . If you change your mind about an answer,
put a line through the box and then mark your new answer with a cross .

1 Which one of the following is a function of the price mechanism?

A An increase in the price of hand sanitisers, caused by an increase in demand,

will ration them to those who are most able to pay
B A decrease in the price of carrots, caused by excess supply, provides farmers
with the incentive to increase supply
C A decrease in the price of tinned meat is a signal to producers that demand
for it is increasing
D An increase in the price of petrol is a signal to the government to impose a
maximum price

(Total for Question 1 = 1 mark)

2 A clothing manufacturer originally organised production so that each worker made

a garment from start to finish. However, in 2020, the manufacturer introduced the
division of labour to garment production.
Which one of the following is a likely advantage of introducing the division of labour?

A An increase in boredom

B An increase in the cost of making each garment

C An increase in output per worker

D An increase in the time required for training

(Total for Question 2 = 1 mark)

2
*P70678A0228*
3 The table shows the estimated income elasticity of demand for four items.

Item Income elasticity of demand

Caribbean holidays +2.02

Healthcare +0.70

Electricity +0.40

Bus travel –0.70

Which one of the following can be deduced from the table?

A Caribbean holidays are an inferior good

B Demand for healthcare is income elastic

C Electricity is a normal good
D Demand for bus travel is price inelastic

(Total for Question 3 = 1 mark)

3
*P70678A0328* Turn over
4 The diagram shows the market for vaccinations against measles.

Costs and G
benefits per
MPC=MSC
vaccination
A

P1
P2
IC B

F E
MPB MSB

0 Q1 Q2 Quantity of vaccinations

Which one of the following can be deduced from the diagram?

A The social optimum output is Q1

B The market equilibrium output is Q2
C Welfare gain is shown by the area BCE

D Welfare gain is shown by the area ABC

(Total for Question 4 = 1 mark)

4
*P70678A0428*
5 The European Union (EU) has a tradeable permit scheme for carbon emissions.
The price of a carbon permit was below €5 in 2013 and increased to €25 in 2019.
Which one of the following is the most likely reason for the increase in the price of
carbon permits?

A The EU issued too few permits in 2013

B The EU issued too many permits in 2019
C The demand for permits decreased between 2013 and 2019

D The supply of permits was reduced between 2013 and 2019

(Total for Question 5 = 1 mark)

5
*P70678A0528* Turn over
6 The table shows the total utility received by a consumer from consuming glasses of
fruit juice.
MU
Glasses of fruit juice Total utility

1 2
L2 5

C 3 8
3
41 4

5
9

7
IF
6 3
4
Which one of the following can be deduced from the table?

A Utility is maximised when three glasses of fruit juice are consumed

B Diminishing marginal utility sets in with the consumption of the fourth glass
of fruit juice
C Diminishing marginal utility sets in with the consumption of the fifth glass
of fruit juice
D Utility is maximised when six glasses of fruit juice are consumed

(Total for Question 6 = 1 mark)

TOTAL FOR SECTION A = 6 MARKS

6
*P70678A0628*
 SECTION B
Answer ALL questions in this section in the spaces provided.
7 In 2020 dairy farmers in India sold milk at a market equilibrium price of Rs20 per litre.
This price resulted in many farmers making a loss. Therefore, dairy farmers asked the
Indian Government to introduce a minimum price of Rs30 per litre.
Draw a diagram to illustrate the impact of the introduction of a minimum price for
milk in India.

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Pair n
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

S
Rslitre
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

30 Minimum
Trr it
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Price
Rs20
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

D
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Quantity of
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

0 Q2 Q1 03
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Titties
1 1
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Excess
supply
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Surplus
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

(Total for Question 7 = 4 marks)

7
*P70678A0728* Turn over
 8 In 2020 the German city of Munich had the highest risk of a housing market bubble in
the world. Between 2010 and 2020 the average price of a house more than doubled.
With reference to Munich’s housing market, explain what is meant by a
‘market bubble’.

A bubble created Consumers

is
by speculation
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

buying in the hope of selling at a higher

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Ln price Price rise much above the

may
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

fundamental value due to herd behaviour

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Between 2010 and 2020 the average price

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

of a house in Munich more than doubled

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

The house prices be at a risk of

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

may
falling after and euphoria stage is over
App
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

panic stage sets in the bubble this may

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

burst Demand for housing may also fall

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

when potential buyers ten no longer borrow

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

money
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

(Total for Question 8 = 4 marks)

8
*P70678A0828*
9 In the USA the price elasticity of demand for residential natural gas is –0.1.
Explain one reason why the price elasticity of demand for residential natural gas is
only –0.1.

PED is the responsiveness of QD to a

change in
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

price
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

Inelastic demand means a change in price would

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

cause a less than proportionate inange in QD For

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

inelastic demand PEDY 1

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

Here the PED for residential

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

pnignffintelastfg.is
0.1 very close to zeroa Natural gas
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

only
is an absolute necessity for plus it
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....
looking
does not have substitutes as
many close
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

if QD will not fall

gain even price rise by
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

much
. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

. .. . . . . . .. .................... ... .. .. ... .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . .. .......................................................................................................................... ... .. ... ... ... ...... . ...... ..... ...... ....

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(Total for Question 9 = 4 marks)

9
*P70678A0928* Turn over
10 The table shows the average world price of sugar and world sugar consumption
in 2019 and 2020.

Average sugar price, Quantity of sugar consumed,

per kg million kg

2019 $11.28 172 620

2020 $15.06 171 600

Ceteris paribus, calculate the price elasticity of demand for sugar. Show your workings.

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Ain QD
PED
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1 A in price
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17760926722020 100
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15.067.2127 700
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1
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0 0176
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(Total for Question 10 = 4 marks)

10
*P70678A01028*
11 The cross elasticity of demand for meat with respect to fish is estimated to be +0.13
in Bangladesh.
Explain the likely impact of a 10% increase in the price of fish on the demand for
meat in Bangladesh.

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XED is the responsiveness of QD for a

good to
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a in price of a related good

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change
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Meat and fish has XED and value being less

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than one are weak substitutes

they
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Iii vile
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XED AinQD Meat

1 Ain price fish S
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meet
0.13
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e
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meet
i 1 Ain QD D
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D
7.3.1
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0 Qe Q1 Quantity f
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meet
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(Total for Question 11 = 4 marks)

TOTAL FOR SECTION B = 20 MARKS

11
*P70678A01128* Turn over
 SECTION C
Study Figure 1 and Extracts A, B and C in the Source Booklet before answering Question 12.
Write your answers in the space provided on the following pages.
12 (a) Define the term ‘indirect tax’ (Extract B, line 20).
(2)
(b) With reference to the titles of Extract A and Extract B, explain the difference
between positive statements and normative statements.
(4)
(c) With reference to Figure 1 and Extract A, analyse two reasons why between
1 April 2020 and 1 January 2021 the world price of cotton increased.
Illustrate your answer with a supply and demand diagram.
(6)
(d) With reference to Extract B, examine two external costs associated with the
production of clothing.
(8)
(e) With reference to Extract C, discuss the impact of the removal of the subsidy paid
to Indian clothing manufacturers on consumers and manufacturers.
Illustrate your answer with an appropriate diagram.
(14)

12
*P70678A01228*
12 (a) Define the term ‘indirect tax’ (Extract B, line 20).
(2)

It is an expenditure tax which could

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specific
be and ad valorem This
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type of tax increases cost of production

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and decreases supply which pushes

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the market price up

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(b) With reference to the titles of Extract A and Extract B, explain the difference
between positive statements and normative statements.
(4)

Positive statements are objective statements

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which can be proven to be fine

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or false based on emperied evidence

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Extrait A World Cotton Price rises

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The above statement could be proven

by
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looking at the date in Figure 1 As per the

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figure price in April 2020 was below 0.55 lb

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and Jan 2021 rose to above 0.80 lb

by
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Normative statements are subjective

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statements and carries Vale judgement

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Extract B Clothing manufacturers should reduce

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environmental costs

The above statement reflects opinion and

uche judgement as it carries the word sd 13
*P70678A01328* Turn over
 (c) With reference to Figure 1 and Extract A, analyse two reasons why between
1 April 2020 and 1 January 2021 the world price of cotton increased.
Illustrate your answer with a supply and demand diagram.
(6)

As per figure I in April 2020 the world

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price of cotton was 0.55 lb and it rose

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

to 0.80 lb
by Jan 2021 a
suggestive
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

increase of
roughly 457
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

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As per extract since there was a surge in

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demand for surgical gowns

foremast and
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bedsheet all of which requires cotton the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

demand for cotton increased Moreover

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d e high temperature cotton crop decreased

to
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

in Pakistan 4th largest prod ur of cottonglobally

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

The effet is shown in the combined

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

diagram below
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Priceof a Se
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cotton g
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

insp n
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. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Pe
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Dy
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

D
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

0 Qe Qe Quantity of
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cotton in ponds
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

14
*P70678A01428*
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

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. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

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. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

15
*P70678A01528* Turn over
 (d) With reference to Extract B, examine two external costs associated with the
production of clothing.
(8)

External cost are the cost to the third parties

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arising
from the production or consumption
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

of a
good or service
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As per extract clothing manufacturers produce

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101 of annualglobal carbon emissions

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This heavily towards global

contributes
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

warming leading to
ice caps
melting
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

and surge in flooding This may

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

cause displacement of homes for many

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Moreover 871 of clothing is burned

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which increases air pollution leading to

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an increase in respiratory diseases such as

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asthma
This can put pressure on government's
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budget behind health care

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

However predation of clothing

may
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

generate considerable external benefits

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as well The industry employs 75 million

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

people directly who then spend erecting

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

positive multiplier effect which can

a
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

improve economic growth

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Lastly in reality it is diffult to measure

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

16
in precision the size of external tests generated via
*P70678A01628* clothing
production
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

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. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

17
*P70678A01728* Turn over
 (e) With reference to Extract C, discuss the impact of the removal of the subsidy paid
to Indian clothing manufacturers on consumers and manufacturers.
mm on
Illustrate your answer with an appropriate diagram.
(14)

Subsidy is a monetary grant given by the government

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

to the producers which reduces cost of production

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

and encourages higher supply

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

As per extra t c the Indian government

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

used to subsidise its clothing industry

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

whim accounted for 121 of the country's

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

experts seeing it as a protectionist measure

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the US and the Turkish government opposed it

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

and later the Indian government stopped

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

providing subsidy
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

In this regards Indian clothing mannfecturers

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

will non Saffer from increased cost of

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

predation S
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Subsidy
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Proton Y
S
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Clothing
J
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

z
Pa
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Pe X
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

G
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

D
B
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

0 Quantity of
Qe Qe
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

clothing
18
*P70678A01828*
 with Subsidy PeAT CSdecreased
a Consumer Surplus
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

withoutSubsidy PITA MJype

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

7 With Subsidy PexB

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Prodnier Surplus
PS reduced
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....
WithoutSubsidy Pay
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

7
With Subsidy 7 Pxygeo Revenne
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Producer Revenue
Withoutsubsidy Peggy falls
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Government spending will reduce

by
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

The Indian government can reallocate

PxYXPe
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the fund towards other sectors sun as

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

education healthcare or publictransport

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

The clothing industry in India employs 35

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

million workers Due to the removal of

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the subsidy some workers might lose their

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

features
jobs as clothing man reduce
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

production
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Daring the time Indian clothing man features

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

receivedthe subsidy some of the firms

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

may have become complacent andinefficient

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

After the subsidy is removed the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

US and Turkish clothing makers are

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

likely to better compete whilst some Indie

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

clothing manufacturers might have to leave

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the merit d e to being uncompetitive 19

*P70678A01928* Turn over
 This world also reduce export reverses
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

generated from the clothing industry to

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Indian
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

However to what extent the removal of

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the subsidy world impact pen consumers

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

cud man features would depend upon

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the magnitude of the subsidy provided

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

No information regarding the site of the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

subsidy has been mentioned

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Moreover even though the Indian nothing

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

manfaiterers may become less price

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

competitive but foreign buyers may still

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

prefer buying Indian nothing if they

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

think the quality to be superior making

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

demand le price elastic for Indian moths

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

globally
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

To abet it since the government stopped

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

providing subsidy there we 72 be lesser

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

likelihood to increase taxes when means

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

consumers won't be burdened

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

In conclusion whether Indian clothing manfature

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

de become les price (Total for Question 12 = 34 marks)

competitive depends upon TOTAL FOR SECTION C = 34 MARKS

unit labor cost and labor proanitivity in India

20
compared to *P70678A02028*
for instance US and
Turkey
SECTION D
Answer ONE question from this section.
Write your answer in the space provided.
National
EITHER
a
net
8 Ipa
13 In 2007 Ireland’s Government spending as a percentage of GDP was 35.9% and by
Income
2019 it had fallen to 25.1%.
Evaluate the possible benefits of an economy moving closer to being a
‘free market economy’.
mm
(Total for Question 13 = 20 marks)

OR
14 In Australia 50% of consumers are still with the bank they first joined. Banking with
one of the 4 largest banks is costing consumers about AUD1 500 per year. In the UK
consumers loyal to their broadband supplier pay 12% more than those who switch to
better deals.
Evaluate ways that would encourage and enable consumers to make
rational decisions.

(Total for Question 14 = 20 marks)

21
*P70678A02128* Turn over
 Indicate which question you are answering by marking a cross in the box . If you change your
mind, put a line through the box and then indicate your new question with a cross .

Chosen question number: Question 13 Question 14

Write your answer here:

In a free market economy resources are

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

allocated the price mechanism with little

by
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

to no government intervention
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Mixed economy is one where the resources

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

are allocated
by the price mechanism and the
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

government
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Ireland is a mixed economy with government

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

spending 35.9 of GDP in 2007 andp.rsIitsetpoiints

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

2019 It reduced by 20.8 over 12 years

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

A movement towards more free market

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

means more resources are allocated by the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

price mechanism and less by the government

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

As such in a free market economy resources

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

will be Vallelated efficiently to where

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

expected profit is highest MoreoverYompetition

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

between firms would create better and more

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

innovative products for consumers Resonvie

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

allocation would be determined

by the pattern
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

of consumer demand rather than

by the
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

consumer sovereignty
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

government
Owing to competition firms would lower
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

22
Prins thus increasing consumer surplus
*P70678A02228*
 To add to it chances of government failure
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

would diminish such as excessive administrative

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

and regulatory costs

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

More entrepreneurship and risk taking in

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

the hopes of getting greater rewards would

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

be encouraged Workers would also have the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

incentive to put more effort and work harder

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

However free market economies give rise to

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

income and wealth inequality People who

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

are not able to work because of no faultof

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

their own will not be able to earn

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Furthermore de merit generates negative externalities

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

would be over produced and over consumed

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Merit goods such as education healthcare will

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

be underconsumed and underproduced Public

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

goods such as flood defence system will

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

provided by private profitmaximising

not be
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

firms All these combinedly may lead to

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

significant misallocation of resources and

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

market failure Additionally since in a

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

free market economy financial markets

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

will not be regulated this can cause

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

finituations more frequently in the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

economic cycle one the country may be

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

more likely to suffer from financial crisis

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

leading to recessions 23
*P70678A02328* Turn over
 Finally in a free market economy some firms
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

could becometoo powerful acquiring significant

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

market share and start to exploit monopoly

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

power this compromising market efficiencies

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

Price charged could be high and consumers

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

suffer
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

may
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

lenchsion in terms of magnitude

In
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

there has been a sizeable reduction in gout

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

spending as a proportion of GDP fell by

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

10.8 percentage points On balance Ireland

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

is economy despite the

still a mixed
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

reduction in
govt spending The 25.17
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

figure reflects public goods and other

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

merit good are still provided by the

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

state whether Ireland has really benefitted

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

from moving closer to a free market

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

cannot be judged diet lack

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

economy
of evidence and data provided Information
. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

regarding GDP per capita Inequality levels

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

price levels no of new start ups

. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . . ..... ...... ...... ....

labour productivity't's sun were

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required to get a filler picture

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*P70678A02428*
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*P70678A02528* Turn over
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. . . .. . . . . . ........................ .. .. .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . .. . . ............................................................................................................................ .. ... .. ... .. ...... . .. ...... ..... ...... ...

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TOTAL FOR SECTION D = 20 MARKS

TOTAL FOR PAPER = 80 MARKS

26
*P70678A02628*
 BLANK PAGE

27
*P70678A02728*
 BLANK PAGE

28
*P70678A02828*
 Pearson Edexcel International Advanced Level
Time 1 hour 45 minutes
Paper
reference WEC11/01
 

Economics
International Advanced Subsidiary
UNIT 1: Markets in action

Source Booklet
Do not return this Booklet with the question paper.

Turn over

P70678A
©2022 Pearson Education Ltd.
L:1/1/1/1/
*P70678A*
 Sources for use with Section C

Cotton and clothing

Figure 1 World price of cotton, $ per lb, April 2020 to January 2021
m
$1.00

$0.95

$0.90

$0.85

$0.80

$ $0.75

$0.70

$0.65

$0.60

$0.55 I

$0
1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov 1 Dec 1 Jan
2020 2020 2020 2020 2020 2020 2020 2020 2020 2021

Extract A World cotton price rises

0
Between 1 April 2020 and 1 January 2021 the demand for face masks, bedsheets and
surgical gowns increased. All require cotton in their production. During the same period
there was a reduced cotton crop in Pakistan, the world’s fourth largest supplier. High
temperatures resulted in a decrease in the amount of cotton produced. Both these 5
factors caused an increase in the price of cotton.

2 P70678A
Extract B Clothing manufacturers should reduce environmental costs
Clothing retailers and manufacturers earn $2.4 billion globally and directly employ
75 million people. The clothing industry is the world’s third largest manufacturing sector.
The manufacture of clothing involves significant environmental costs. For example, on
average, producing one pair of jeans requires 3 781 litres of water and creates 33.4 kg of 5
carbon emissions. This includes the production of the cotton through to the delivery of
the final product to stores.
According to the United Nations, each year:
• clothing manufacturers use 93 billion cubic metres of water
• 20% of all wastewater comes from clothes dyeing by manufacturers 10

• after use, 87% of clothing is burnt or disposed of in landfill

• clothing manufacturers produce 10% of annual global carbon emissions. This is
more than all international flights and shipping combined.
Clothing retailers used to have four seasonal clothing ranges per year. However, many
clothing stores now offer new ranges weekly. Between 2000 and 2020 the number of 15
clothing items produced yearly increased from 50 billion to 100 billion. In 2019 a person
bought, on average, 60% more clothing than in 2000 and more items of clothing are
thrown away. Less than 1% of used clothing is recycled into new garments.
In response to the environmental damage caused by the clothing industry, Ireland’s
Government is considering the introduction of an indirect tax on clothing. 20

Extract C Indian Government to remove clothing subsidy

India employs 35 million workers in clothing manufacturing. Clothing accounts for
12% of India’s exports. To protect this important industry the Indian Government used

IF
to pay a subsidy to clothing manufacturers. However, the US Government and the
Turkish Government argued that this gave Indian manufacturers an unfair advantage. 5
Consequently the Indian Government removed this subsidy in 2018.

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Acknowledgements

Figure 1 based on data taken from https://markets.businessinsider.com/commodities/cotton-price

Extract A adapted from ‘Masks, surgical gowns & export boost the prices of organic cotton’, Madhvi Sally,
The Economic Times, 9 September 2020,
https://economictimes.indiatimes.com/markets/commodities/news/masks-surgical-gowns-export-boost-
sales-price-of-organic-cotton/articleshow/78019804.cms

‘Pakistan: Cotton area to decrease in 2020/21’, Sibylle Michel, Textile Network, 22 June 2020,
https://textile-network.com/en/Technical-Textiles/Fasern-Garne/Pakistan-Cotton-area-to-decrease-
in-2020-21

Extract B adapted from ‘How Much Do Our Wardrobes Cost to the Environment?’ The World Bank,
23 September 2019 https://www.worldbank.org/en/news/feature/2019/09/23/costo-moda-medio-
ambiente

Extract C ‘India textile export subsidy under WTO scanner’, Arun S and Banikinkar Pattanayak, The Indian
Express, 3 January 2020, https://indianexpress.com/article/business/economy/india-textile-export-subsidy-
under-wto-scanner/

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