O-LevelEconomicsThe allocation of resources2281/22 · Oct/Nov 2023 · Q520 Marks

In 2020, Singapore experienced a decrease in both its population size and its labour force. 2020 was a year of great change in a number of Singaporean markets. Some moved from disequilibrium to equilibrium. Despite all these changes, Singapore managed to increase its exports of goods and services.

(a)Identify two benefits of a decrease in a country's population size.[2]
(b)Explain how a market moves from disequilibrium to equilibrium.[4]
(c)Analyse, using a production possibility curve (PPC) diagram, the effect of a decrease in the size of a country's labour force on its economy.[6]
(d)Discuss whether or not an increase in exports will benefit an economy.[8]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

[2] Two from: may be fewer dependents; less pressure on resources; less food needed; move population towards the optimum level / reduce overpopulation; reduce overcrowding / more land space; reduce pollution / less negative externalities; lower imports; lower government expenditure (on healthcare/education); less unemployment / less unemployment benefit; may increase GDP per head.
[4] One mark for reference to a change in price.
Maximum of 2 marks for diagrams which show initial disequilibrium and change in price which restores equilibrium.
Logical explanation which might include:
If demand is greater than supply / there is a shortage / excess demand (1) price will rise (1).
If supply is greater than demand / there is a surplus / excess supply (1) price will fall (1).
Demand will again equal supply / demand would not initially have been equal to supply (1).
[6] Up to 4 marks for the diagram: Axes correctly labelled with different outputs (1). Initial curve drawn as a curve/line sloping downward to the axes (1). New curve drawn as a curve/line sloping downward to the axes (1). Shift to the left indicated by arrow or letters (1).
Up to 2 marks for coherent analysis which might include: A decrease in the size of the labour force reduces resources / factors of production available (1) this lowers productive capacity / the maximum output that can be produced (1).
Note to gain the marks for the curves, these must be drawn to the axes.
[8] In assessing each answer, use the table opposite.
Why it might:
may increase export revenue, improve the current account balance
may increase total demand
may increase investment
may increase output / economic growth
may reduce unemployment
may increase incomes.
Why it might not:
may cause demand-pull inflation
opportunity cost of selling more products on the home market
may lead to shortages on the home market
may deplete resources
may push up the exchange rate, reversing the increase in exports in the long run
may make the economy more subject to external shocks.