Read the source material carefully before answering Question 1. Source material: The destruction of forests in Indonesia Indonesian fact file palm oil production (million metric tons) 2017 Indonesia 36.0 2017 world 60.0 rice production (million metric tons) 74.2 483.9 unemployment rate (%) 5.4 5.7 population growth rate (%) 1.2 1.4 Indonesia is the world's largest producer of palm oil. The costs involved in producing palm oil include rent of land, fertiliser, palm oil seeds, maintenance of irrigation systems and casual labour. Fires are set to clear forests to make way for palm oil plantations. These fires destroy the homes of many species of wildlife and release harmful gases into the air. Since 2011, Indonesia has been paid to conserve its forests by the Norwegian government. While Indonesia is the largest producer of palm oil, it is the third largest producer of rice. Indonesia exports 85% of its palm oil but sometimes has to import rice to meet domestic demand. Its international trade in palm oil and rice is influenced by changes in its foreign exchange rate. The price of the Indonesian currency, the rupiah, fell in 2017. Rice production also contributes to air pollution. Rice farmers burn the stubble left after harvesting to clear the fields and to raise the fertility of the land so they can produce more rice. Some environmentalists argue that stubble burning should be banned. The Indonesian economy, along with the world economy, continues to grow. Economic growth can cause pollution. It can also affect a country's GDP per head ranking and Human Development Index (HDI) ranking as shown in Table 1.1. Table 1.1 GDP per head ranking and HDI ranking for selected countries in 2016 country Luxembourg Mauritius Indonesia Cuba Ghana Ethiopia GDP per head ranking 2 64 99 120 134 167 HDI ranking 20 64 113 68 134 174 Indonesia experiences net emigration. Some Indonesians work abroad and send money home to their families. People also come from abroad to work in Indonesia, some in relatively highly paid jobs in the country's expanding tourism industry. Indonesia currently attracts fewer tourists than its neighbours, Singapore and Malaysia. It does, however, have many natural tourist attractions and is currently price competitive.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

1. [1] 60%
2. [1] fertilisers
3. [1] palm oil seeds
4. [1] casual labour
5. [1] Palm oil not produced / rice not produced / tourism lost as a result of building fewer hotels / lost opportunity to Norwegian government to spend on e.g. education
6. [1] (next) best alternative forgone
7. [2] Loss of wildlife habitats, leading to extinction of species / harmful effect on animals not involved in the economic decision.
8. [2] Harmful gases/air pollution/pollution, causing unpleasant atmosphere for local residents / illnesses / global warming.
9. [1] Axes correctly labelled - price and quantity or p and q
10. [1] Demand and supply curves correctly labelled
11. [1] Supply curve shifted to the left
12. [1] Equilibriums – shown by lines P₁ and Q1 and P2 and Q2, or by labelling equilibrium points as E₁ and E2
13. [1] Generally, the higher the GDP per head ranking, the higher the HDI ranking / positive relationship / direct relationship
14. [1] The top country, the top two or top three countries with the highest GDP per head ranking have the highest HDI ranking
15. [1] the country, two countries with the lowest GDP per head ranking have the lowest HDI ranking
16. [1] Cuba or Indonesia supportive data – Cuba has a lower GDP per head ranking than Indonesia but a higher HDI ranking than Indonesia
17. [1] GDP is a component of HDI / HDI ranking influenced by additional factors – education and/or life expectancy / higher GDP per head enables more to be spent on education and healthcare
18. [1] may be skilled workers
19. [1] who may be more productive
20. [1] may be motivated to work harder
21. [1] to improve quality of life
22. [1] bring in new ideas
23. [1] improving production methods / use advanced technology
24. [1] may pay taxes
25. [1] enabling the government to spend more
26. [1] fill vacancies left by Indonesians going to work abroad
27. [1] increase size of labour force
28. [1] increase productive capacity
29. [1] reduce dependency ratio
30. [1] may increase exports / total (aggregate) demand
31. [1] may result in economic growth / increase output
32. [1] population is already increasing
33. [1] immigration may take it above the optimum level / lead to overpopulation / put pressure on resources
34. [1] pressure may be put on housing / education / food
35. [1] may put downward pressure on wages
36. [1] may replace Indonesian workers / cause unemployment
37. [1] lowering living standards
38. [1] may need training
39. [1] increasing firms' costs
40. [1] may increase pollution
41. [1] may send money home to relatives
42. [1] may have to import more e.g. rice
43. [1] negative impact on the current account of the balance of payments
44. [1] it is currently price competitive
45. [1] if the exchange rate continues to fall
46. [1] price of tourism for foreign visitors will fall
47. [1] it has natural tourist attractions
48. [1] may preserve forests
49. [1] global economy is growing
50. [1] incomes are rising
51. [1] enabling foreigners to afford more holidays
52. [1] people coming from abroad to work in high paid jobs
53. [1] skilled / highly motivated
54. [1] raise quality of tourism
55. [1] Indonesian government may subsidise the tourism industry
56. [1] lowering costs of production
57. [1] the industry may be promoted /advertised
58. [1] air travel is falling in price
59. [1] air travel is a complement to holidays
60. [1] foreign investment may be attracted into the industry
61. [1] pollution may discourage visitors
62. [1] worried about health
63. [1] there are substitutes
64. [1] Indonesia has competition from neighbouring countries
65. [1] natural areas of beauty may be destroyed
66. [1] new palm oil plantations / natural disasters
67. [1] net emigration
68. [1] may mean there are not enough workers
69. [1] Covid-19 may continue to reduce tourism