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Duration: 2Hours 15 Minutes Date: 14th June 2023

Nature of Assessment: End of Year Assessment – June 2023
Name of the Student:
Subject: Economics (0455) Paper -2
Year: 10i Section: 1 -2 Invigilators Name: Invigilator’s Sign:
(to sign after the above information is checked)

Assessment Objectives: Total Marks

• Definition, drawing and interpretation of appropriate diagrams of demand.

• Define, draw and interpret of appropriate diagrams of supply. 90
• Explore the causes of shifts in a demand curve with appropriate terminology, for example increase and
decrease in demand.
• Explore the causes of shifts in a demand curve with appropriate terminology, for example increase and
decrease in supply.
• Calculation of PED and PES using the formula and interpreting the significance of the result.
• Explore the concept of market failure and its causes.

Total No of pages: 05
Critical Thinking Analysis (PACIER) Question wise break up

SKILLS Question no Total marks Marks % of marks

obtained obtained
Problem solving Q1(g), Q4 (b),Q5 (a) 4+4+2
Analysis Q1(d),Q1 (h) Q2(c), 3+6+6+6+6
Q3(c),Q4(c)
Creative thinking Q3(a) (d), Q4 (a) (d) 2+8+2+8
Interpretation Q1(a) (e), Q2(a), 2+4+2+4
Q3(b)
Evaluation Q1(c), Q5(b)(c)(d) 4+4+6+8
Reasoning Q1(b)(f), Q2(b), (d) 2+5+4+8
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100
90
80
70
60
50
40
30
20
10
0

Section A

What Went Well:

Even Better If:

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Section A
Answer this question.
1 New York: A Global Financial Centre
New York is the best city in the world in terms of human capital according to the Global Financial
Centres Index. This, along with economic freedom that encourages new business start ups, has
contributed to high economic growth rates. In fact, the city’s economic growth rate is higher than the
GDP growth rate for the entire USA. Overall, New York’s economy grew 3.4% in 2015, faster than the
2.4% recorded nationally. However, land area is scarce, especially in the Manhattan district of New
York, where most economic activity is concentrated.
The financial sector is the most important sector in the city’s economy – New York is home to the first
and second largest stock exchanges in the world and 3 of the top 10 largest banks in the USA have their
headquarters in New York. Improvements in education also contribute to New York’s fast economic
growth rate as New York continues to attract students from all over the world and from various areas
of study.
Unemployment rates in the city continue to fall. In addition, average weekly wages in New York are
consistently higher than the rest of the USA. Table 1.1 shows the average weekly hours worked and
average weekly wages in New York between 2011 and 2017.
Table 1.1 Average weekly hours worked and average weekly wages in New York, 2011–17

New jobs that are created today are in middle and low-paying jobs, not in high-paying jobs. Finance
industry workers are 20% of the workers in the city, but they earn more than half of all the wages paid
in New York. The pay gap between workers in the finance industry and the 1.6 million other workers in
the city continues to widen. This is often due to the lack of skills of the lower paid workers and also the
male-dominance in the finance industry.
In addition to the income inequality, continuous economic development in the city has affected the
environment. The ever-expanding finance industry is also creating the risk of a repetition of the 2007–
08 Global Recession with the possibility of bank failures. Rising trade protection by the US government
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may negatively affect American cities such as New York, especially while Asian cities such as Singapore,
Hong Kong, and Shanghai continue to open up to free trade.
(a) State a factor of production and identify an example of it from the extract. [2]
(b) Explain, using information from the extract, two causes of economic growth in New York. [4]
(c) Calculate, using information from the extract, the total number of workers in New York. [2]
(d) Analyse, using Table 1.1, the relationship between average weekly hours worked and average
weekly wages. [5]
(e) Explain, using information from the extract, one reason for differences in earnings between
different jobs in New York. [2]
(f) Explain, using information from the extract, the possible negative effects of economic growth
in New York. [4]
(g) Discuss the advantages and disadvantages of a city having a large tertiary sector. [5]
(h) Discuss whether or not a central bank should reduce commercial bank lending. [6]

Section B
Answer any three questions.
2. Sales of bottled water in China doubled between 2010 and 2015. In 2013 China overtook the USA as
the biggest market for water by volume, but not value as the price of a bottle was higher in the USA.
The increase in global consumption of bottled water has increased the size of firms producing bottled
water but has also increased pollution.
(a) Why is pollution an example of market failure? [2]
(b) Explain two causes of a shift of a supply curve to the right. [4]
(c) Analyse why the price of a product may be higher in the USA than China. [6]
(d) Discuss whether large firms or small firms benefit consumers more. [8]

3. Among the reasons for Malaysia’s continued economic growth are rises in consumer spending and
the country’s ability to adapt to changes in global demand. For example, when the price of natural
rubber fell, most rubber plantations changed to palm oil production. The government has tried to
promote the growth of different sectors, including the primary sector.
(a) State two sectors, other than the primary sector, in an economy. [2]
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(b) Explain two possible reasons for a fall in the price of a product such as natural rubber. [4]
(c) Analyse the influences on spending. [6]
(d) Discuss whether or not the growth of the primary sector is beneficial to a country. [8]

4. An increasing number of Pakistani firms are employing managers educated at the country’s
universities. Pakistan’s universities are also increasing the number of entrepreneurs in the country.
Every entrepreneur and every manager faces a number of challenges including raising finance,
sometimes by borrowing. Some entrepreneurs and managers also negotiate with trade unions. These
organisations can influence a country’s economic growth rate.
(a) Identify two risks that entrepreneurs have to bear. [2]
(b) Explain two reasons why firms may prefer to employ local managers rather than foreign managers.
[4]
(c) Analyse why households and firms may borrow more during times of rapid economic growth. [6]
(d) Discuss whether the activities of trade unions are likely to increase or decrease a country’s
economic growth rate. [8]

5. In Saudi Arabia, output of cement has risen as a result of an increase in demand from the
construction industry for building houses, schools, hospitals and roads. The market for cement is also
being affected by price changes, export bans and mergers between companies making cement.
(a) Define demand. [2]
(b) Explain two factors that would increase the supply of entrepreneurs in an economy. [4]
(c) Analyse how information on the price elasticity of demand for its product can influence a
firm’s pricing decisions. [6]
(d) Discuss whether a merger of two firms in the same industry will be likely to reduce the price of
the product. [8]