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Wycherley International School-Gampaha

Term I- 2024/2025
Term Examination-November
Economics
Paper 2 Structured Questions
Grade 10 B

Name:………………………………………… Duration -: 2 hrs. & 15 minutes

INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● You may use a calculator.

INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].

Question Number Allocated Marks Achieved Marks

Section A 30%
Section B 60%
Total 90%
70%
Paper I 30%
100%
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Section A

Answer this question.

1 Ice cream market

Vanilla is used in the production of soft drinks, cakes and perfumes. Its main use, however,
is in the production of ice cream. Fig. 1 shows the different costs of making ice cream for one
firm.
Fig. 1 The costs of producing ice cream for one firm

Madagascar is the world’s largest supplier of vanilla followed by Mexico and Tahiti. At the start of
2019, economists expected the price of ice cream to increase as the price of vanilla had risen by
130% in 2017. This was largely because of the poor harvests in Madagascar which reduced the
output of vanilla in 2017.
Ice cream is seen as a luxury product in most countries. It has a range of substitutes and this is one
reason why producers do not always pass on higher costs to consumers. In 2017, there were a
number of other changes in the production of ice cream including a rise in the productivity of the
workers.
As well as vanilla, Madagascar produces a number of other primary products including coffee and
sugar. Nearly 80% of the country’s labour force is employed in the primary sector. The country has
a relatively low Gross Domestic Product (GDP) per head and a relatively low Human Development
Index (HDI) value as shown in Table 1. This limits the amount that people in Madagascar save
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Table 1 GDP per head and HDI in selected countries in 2017

Country GDP per head (US$) HDI

Argentina 22400 0.84

Bangladesh 3600 0.570

Cuba 10200 0.769

Egypt 11500 0.690

Ghana 4300 0.579

Madagascar 1500 0.510

Half of Madagascar’s population live in poverty. The government is trying to reduce poverty by
introducing a programme of cash benefits. It is hoped that one effect of this will be to increase
school enrolment and attendance of the children of poor families. To increase economic growth,
the government has sold off a number of state-owned enterprises and is moving the economy
towards a market system.

(a) Identify two variable costs of production in Fig. 1. [2]

(b) Explain, using information from the extract, two reasons why a rise in the price of vanilla might
not cause an increase in the price of ice cream. [4]

(c) Analyse, using a demand and supply diagram, the effect of a decrease in income on the
market for ice cream. [5]

(d) Analyse the relationship shown in Table 1 between countries’ GDP per head and their HDI
value. [4]

(e) Discuss whether or not a government should encourage people to save more. [5]

(f) Explain, using information from the extract, how cash benefits given to the poor can reduce
poverty. [4]

(g) Discuss whether or not a market system benefits consumer. [6]

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Section B
Answer any three questions.

1. Shengsi, once a fishing village, is now one of China’s richest cities with a large secondary sector.
This transformation was possible as local villages shared resources to develop their area. For
example, they constructed new housing to rent to migrants working in the factories in the city.
However, the supply of housing has not been able to keep up with demand and the government is
now setting a maximum price on housing.

(a) Define secondary sector using an example apart from construction. [2]
(b) Explain two key resource allocation decisions. [4]
(c) Analyse why workers may want to migrate to another country. [6]
(d) Discuss whether or not a government should introduce a maximum price on housing. [8]

2.In the UK, bus journeys outside London have fallen by nearly 20% since 1990. This fall in demand
has been largely due to a rise in bus fares, a rise in income and changes in the price and quality of
substitutes. On some routes there are monopolies operating and this lack of competition can push
up the price.

(a) Define a substitute and give an example. [2]

(b) Explain two advantages a firm may gain from being a monopoly. [4]
(c) Analyse how price elasticity of demand for a product influences the revenue a firm receives. [6]
(d) Discuss whether or not a government should subsidise public transport [8]
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3. Norway is a high-income country with a low unemployment rate and a surplus of imports over
exports. Recently, its government has made some important economic decisions. In 2022, it banned
everyone born after 2008 from buying cigarettes. Huge phosphate deposits discovered in
southwestern Norway could be large enough to supply electric vehicles, solar panels and fertilizer
for at least 50 years.

(a) Define current account surplus. [2]

(b) Explain two reasons why a government may discourage cigarette smoking. [4]
(c) Analyse why a country’s exports may decrease. [6]
(d) Discuss whether or not the discovery of phosphate deposit in a country will benefit its economy.
[8]

4 Free goods and economic goods are consumed in USA. In 2020, demand for both economic
goods and factors of production increased in USA. For example, consumers demanded more
football shirts and the government increased its spending on education for the country’s
population.

(a) Identify two free goods. [2]

(b) Explain two influences on demand for factors of production. [4]
(c) Analyse the effect of an increase in demand for football shirts on demand for football shorts and
demand for basketball shirts. [6]
(d) Discuss whether or not an increase in government spending on education would benefit
an economy. [8]

(Total =90)
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