Scribd Logo
Upload

Welcome to Scribd!

  • 2006 Economics Paper 1 Marking Scheme

    Uploaded by

    api-3704874
    6K views5 pages

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    6K views5 pages

    2006 Economics Paper 1 Marking Scheme

    Uploaded by

    api-3704874

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    of 5
    Marking Scheme ‘The answers provided in the marking scheme are for reference only. ‘They are not the only possible answers. Alternative answers are acceptable so long as they are well reasoned. ‘The examination emphasises the testing of understanding, the practical application of knowledge-and the use of processing skills. Candidates are advised to study this document in conjunction with the examiner's comments on candidates’ performance in this booklet. For essay-type questions, candidates are expected to demonstrate an understanding of the question, an ability to deploy relevant knowledge of the subject in response to the questions, and to present their answers logically and coherently. Paper 1 Section A 1. (a) No because P, is above the equilibrium price. () Unit Price A Figure 1 PB Quantity QWwHQ Diagram - original total expenditure = area 0 P, EQ, 0 new total expenditure = area 0 Py E’Qn 0 OR: indication of the decrease in total expenditure, e.g., the shaded area Verbal Elaboration = price | from P, to Pp and quantity transacted | from Q. to Qe + total expenditure of consumers decreases 2. (a) Not affected because it only affects the value of studying law at a university but not the opportunity cost which is the value of studying medicine at a university (b) Affected / decreased because the value of the highest-valued option forgone, i.e. the value of studying medicine at a university, decreases / changes. 3. Conglomerate expansion because ‘movie production and hotel business are two different lines of production. OR Lateral expansion because the products are related but not competitive. Possible motives of conglomerate expansion or lateral expansion - product diversification to spread risk ~ making use of brand name to sell another product / promoting goodwill 141 + more flexible use of resources 1@, max : 2 - to benefit from economies of scale + any other relevant point [Mark the FIRST TWO points only ] ‘The law states that when variable factors are added continuously to the fixed factors, (holding technology constant], the marginal product will eventually decrease. Labour (Units) 4 5 6 Marginal Product (Units) 60 30 20 OR: Diminishing marginal product of labour sets in when labour increases from 4 units to 5 units as the marginal product falls from 60 to 30 units «', The data illustrate the law of diminishing marginal returns. 5. (a) $(50 000 + 60 000 — 30 000) — $5 000 = $75 000 (©) ${(60 000 + 50 000) - 65 000}+ $(65 000 - 30 000) = $80 000 6. @) 10% (©) Yes because when total deposits reduce to $1 150 (=$1 500 ~ $350), it only needs a reserve of $115 (© $1150 x 10%) to back up the deposits. [Since] the reserve assets only reduce to $150 (= $500 ~ $350) [, there is still an excess reserve of $35.] ‘The function of money performed in the case ‘The prices of goods and services in some shops are expressed in Renminbi (RMB). unit of account 2. Some shops accept cash payment in RMB. medium of exchange / i means of payment 3. Some banks accept RMB savings deposits, | | | store of value 8. @ In Country A, the opportunity cost in the production of clothing is Eo = 2 units of computers. In Country B, the opportunity cost in the production of clothing is = = 3units of computers. Therefore, Country A has the comparative advantage in producing clothing, (b) Country A gains 2.5 - 2 =0.5 units of computers from 1 unit of export. Effective Communication for Section A 31 max ne Unit Price A Digw) 5 D(Sept) . the golden 7 week's price Sept. price 0 3 Quantity @ Diagram : = Sept. price > equilibrium price 1 ~ ab = excess supply in Sept. 1 Verbal Elaboratior ~ initial excess supply in Sept. 1 i) Diagram: = demand curve shifts to the right to position D’D’ in the golden week - price raised to a new level (there is an excess supply at the new price) ~ excess supply in the golden week = a’b’ =a°b?

    You might also like