Mark Scheme

Extra assessment material

for first teaching
September 2017

International GCSE in Economics (4EC1)

Paper 1: Microeconomics and Business

Economics
Question Answer Mark
number
1(a) AO1 1 mark

A Primary (1)

Question Answer Mark

number
1(b) AO2 1 mark

C 200 units (1)

Question Answer Mark

number
1(c) AO1 2 marks

Award 1 mark for reference to the benefit and 1 mark for development
of the benefit.

• Increased immigration will increase the supply of labour (1) leading to

firms having a wider choice of available workers (1).
• The supply of labour may increase (1) so the wage rate may fall (1).
(2)

Question Answer Mark

number
1(d) AO1 1 mark

Award 1 mark for reference to the negative relationship between

quantity demanded and changes in income.

• A good for which demand will fall if income rises.

OR
• A good for which demand will rise if income falls.
(1)
Question Answer Mark
number
1(e) AO1 1 mark

Award 1 mark for reference to the relevant factor of production.

The human resource/workers used in production. (1)

Question Answer Mark

number
1(f) AO2 2 marks

Award 1 mark for calculating the difference in employment between

2015 and 2016.

Award 1 mark for calculating the percentage increase between 2015 and
2016.

9 240 000 – 9 122 000 = 118 000 (1)

(118 000 ÷ 9 122 000) × 100 = 1.29% (1)

Award 2 marks if percentage change is accurately calculated with no

workings shown.

Award 1 mark for answers to one decimal place i.e 1.3% (2)
Question Answer Mark
number
1(g) AO2 3 marks

Award 1 mark for rightward shift of demand labelled.

Award 1 mark for higher equilibrium price labelled.
Award 1 mark for higher equilibrium quantity labelled.

(3)

Question Answer Mark

number
1(h) AO2 3 marks

Award 1 mark for identifying a relevant advantage.

Award 1 mark for developing the advantage.
Award 1 mark for the response being in the context of airline travel.

• One advantage is that the consumer will have a choice (1) as the firms
will be competing to gain market share from their competitors (1), so
they may launch new flight routes to attract the customers (1).

• One advantage is that consumers may be offered lower prices (1) as

the large firms within the airline industry may be able to benefit from
economies of scale (1) such as bulk buying aviation fuel (1).

Accept any other appropriate response. (3)

Question Indicative content
number
1(i) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• There is a highly concentrated industry of tailors in the city of Hoi An.

• External economies of scale mean the tailors will benefit from falling average
costs as the whole industry grows.
• A lot of firms offering similar services in the same area means a lot of clothing
customers as well as tailors will be attracted to the area.
• The cheap prices, tailoring quality, accessibility of a wide range of material and
ease in which a suit/dress can be purchased may bring more customers to the
city.
• Tailors have reduced costs such as access to suppliers and equipment.
• Specialised equipment such as sewing machines can be shared between the
tailors to reduce costs.
• The reputation of the city for tailoring and attraction to customers could
encourage ancillary services such as further improvements to the roads in order
to serve the area.

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be excellent,
with a thorough analysis of issues (AO3).
Question Answer Mark
number
2(a) AO1 1 mark

D High barriers to entry (1)

Question Answer Mark

number
2(b) AO2 1 mark

B Brazil’s hourly minimum wage rose by 6.50% (1)

Question Answer Mark

number
2(c) (i) AO1 1 mark

Award 1 mark for correct formula in words or as an equation.

• Percentage change in quantity demanded divided by percentage

change in income.
OR
• %ΔQ
%ΔY (1)

Question Answer Mark

number
2(c) (ii) AO2 2 marks

Award 1 mark for showing correct calculation.

21 ÷ 15 (1)

Award 1 mark for correct income elasticity of demand (YED).

= 1.4 (1)

Award 2 marks if YED is correctly calculated, even if no

calculations are shown.

Do not award marks for the formula. (2)

Question Answer Mark
number
2(d) AO1 1 mark

Award 1 mark for one correct factor:

• a decrease in the cost of raw materials.

• a decrease in the cost of labour.
• a decrease in indirect taxes.
• a subsidy.
• improvements in technology.
• favourable natural conditions.

Accept any other appropriate response. (1)

Question Answer Mark

number
2(e) AO1 2 marks

Award 1 mark for reference to loss and 1 mark for reference to what is
given up.

The next best alternative (1) which has to be given up/foregone (1). (2)

Question Answer Mark

number
2(f) AO2 3 marks

Award 1 mark for identifying a relevant reason for not maximising

profits.
Award 1 mark for developing the reason.
Award 1 mark for the response being in the context of sports injury
treatment.

• One reason is that James’ priority may be caring for customer needs
(1) because he spends more time with his regular clients without
charging extra (1), meaning he can understand their specialist injury
requirements and treat them effectively (1).

• One reason is that James’ focus may be on helping athletes (1)

meaning he keeps prices low so athletes can be treated even if they
are on low incomes (1), so they can continue to train and follow their
sporting interests (1).

Accept any other appropriate response. (3)

Question Indicative content
number
2(g) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• The aim of the plan is to target those responsible for causing the air pollution.
• More awareness of the levels of pollution caused will mean firms take action to
reduce their emissions.
• By reducing the emissions, air pollution in Macau may be reduced.
• If air quality improves in Macau, health may improve leading to reduced health
costs for families and/or the government.
• Healthier workers should be more productive and have fewer absences.
• This may attract skilled foreign labour to Macau improving growth prospects for
local firms.

AO4

• Unless it is enforced, the plan may not be adhered to.

• Implementation of the plan will cost the government money which has an
opportunity cost.
• It is likely to take time for the plan to be effective.
• Some firms may meet the targets but others may exceed them.
• The Chinese government may come up with alternative effective ideas to
reduce air pollution in Macau.
Level Mark Descriptor

0 No rewardable material.

Level 1 1–3 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Answer Mark
number
3(a) AO1 1 mark

C PED is unitary price elastic (1)

Question Answer Mark

number
3(b) AO1 1 mark

D A demand curve shows the amount demanded by

consumers at a given price (1)

Question Answer Mark

number
3(c) AO2 3 marks

Award 1 mark for economies of scale labelled.

Award 1 mark for diseconomies of scale labelled.
Award 1 mark for point at which firm is most efficient labelled.

Most efficient point

(3)
Question Indicative content
number
3(d) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Consumers aren’t always good at calculating what is/isn’t good for them.
• Constant adverts puts pressure on consumers to purchase unhealthy meals.
• The adverts fail to provide full information which would enable consumers to
maximise their benefit.
• It can be difficult to change habits, especially if it is different to actions of
friends.
• The number and popularity of unhealthy fast food restaurants encourages
consumers to copy others and purchase from these restaurants.

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Indicative content
number
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Workers have the opportunity to buy 24% and so would feel more involved and
motivated.
• The Kenyan sugar companies could be more competitive following privatisation
and be more profitable.
• This profit could be used to increase wages or stabilise employment of the
workers.
• More business may be conducted by the Kenyan sugar companies instead of
imports. This may secure work for the employees and create further job
opportunities.

AO4

• However, many firms aim to be more efficient after privatisation meaning they
may lay off workers in order to cut costs.
• Changes brought about by privatising the sugar companies could have a
negative influence on the workers and lead to unfavourable working conditions.
• Although there is a 24% share available to employees, they may not be able to
afford to purchase shares.
• As 76% is available to farmers and the public meaning they may be more profit
orientated which may disadvantage the workers and their conditions of
employment.
Level Mark Descriptor

0 No rewardable material.

Level 1 1–3 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Answer Mark
number
4(a) AO2 2 marks

Award 1 mark for showing correct calculation.

4.8 ÷ 3.6 (1)

Award 1 mark for correct price elasticity of supply (PES).

= 1.3 (1)

Award 2 marks if PES is correctly calculated, even if no

calculations are shown.

Do not award marks for the formula. (2)

Question Indicative content
number
4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Large firms tend to be more powerful.

• Idea Cellular/Vodafone could access greater economies of scale being the largest
operator in India.
• Therefore the merged Idea Cellular/Vodafone firm could have access to more
finance and greater bargaining power with suppliers.
• The new firm may be able to put pressure on smaller firms to leave the market
and use their dominance to be anti-competitive.
• This means they will be more competitive against rivals such as the >10 telecom
operators in India.
• The new large firm will have nearly 400 million customers and 40% market share.
• As a result of its size, the large firm could attract even more customers,
especially large contracts which smaller competitors may not be able to cope
with.

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Indicative content
number
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• There are >10 telecoms operators in India who have to keep prices low in order
to remain competitive.
• This is beneficial to customers as they are likely to be offered good deals on
telecoms contracts.
• Customers are likely to benefit for a quality service and better coverage as the
telecoms providers need to retain high levels of customer service to keep the
custom.
• New products and innovative ideas may be on offer as the firms try to get
ahead of their rivals.
• Customers will have more choice of products and contracts as the operators
may try to compete through this rather than on price.

AO4

• As the operators are less profitable they may not be able to focus as much on
innovation, resulting in a less favourable range of products for consumers.
• There may be uncertainty for customers as firms may decide it is not in their
interests to continue operating in such a competitive market leaving customers
with no service.
• As firms merge and become more powerful, the current competitive trend may
change, leaving the customer with less power.
• It depends on whether the level of competition continues or if the telecoms
firms continue to grow in size.
• Much will depend upon the individual behaviour and motivation of the firms in
the market.
Level Mark Descriptor

0 No rewardable material.

Level 1 1–4 • Demonstrates isolated elements of relevant knowledge and

understanding; may lack development of relevant points.
Limited application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will lack selectivity and organisation.
Chain of reasoning may be attempted. Interpretation of
economic information will be limited, with a lack of analysis of
issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness. A judgement or conclusion is unlikely to be
attempted (AO4).
Level 2 5–8 • Demonstrates partial selectivity and some accurate knowledge
and understanding by developing some relevant points. Partial
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Chain of reasoning will be present but may be
limited. Interpretation of economic information will be good,
with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness. A judgement or conclusion is
attempted, but may not be fully supported (AO4).
Level 3 9–12 • Demonstrates specific and accurate knowledge and
understanding by developing relevant points. Appropriate
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Chain of reasoning will be coherent and logical.
Interpretation of economic information will be excellent with a
thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness. A supported judgement or
conclusion is present (AO4).