In 2012, the Indian Prime Minister announced that the Government was going to spend US$90 million on sending a spaceship to the planet Mars. Some economists argued that it would be better to use the factors of production, such as land and labour, to improve education or to build more roads.

Mark scheme

Marking points from the official mark scheme (May/June 2014). The mark or mark type is shown in brackets.

1. [4] Land is a natural resource (1) whilst labour is human resources/workers (1).
2. The payment for land is rent (1) whilst the payment for labour is wages (1).
3. Land is geographically immobile (1) whilst there is some limited geographical mobility in the case of labour (1).
4. Note: a maximum of 4 marks overall.
5. [4] Up to 2 marks for defining opportunity cost- best alternative (1) forgone (1).
6. Up to 2 marks for recognising that if a government changes its spending on one area (1) it will have an impact on how much it can spend on another area/areas (1).
7. Up to 2 marks for recognising that a government has limited tax revenue (1) and limited ability to borrow (1).
8. Up to 2 marks for recognising that a country has limited resources (1) and so if more resources are devoted to one area, less can be devoted to other areas (1).
9. Note: a maximum of 4 marks overall.
10. [5] Up to 3 marks for the diagram:
11. 1 mark for the original curve or downward sloping line which must touch the axes.
12. 1 mark for axes correctly labelled in terms of two different products or types of products.
13. 1 mark for showing the curve or line shifted out to the right.
14. Up to 2 marks for written analysis:
15. 1 mark for an increase in resources moves the PPC to the right.
16. 1 mark for more resources enables an economy to produce more of both products/increase productive potential/economic growth.
17. 1 mark for whether output increases or not will depend on what happens to the production point.
18. [7] Up to 5 marks for why it might:
19. Up to 3 marks for: identifying it may create employment (1) in the short term building the roads and in the long term maintaining them (1) and so raise incomes (1).
20. Up to 4 marks for: may lower congestion (1) and so lower transport costs (1), lower transport costs will reduce inflation (1) and so will increase international competitiveness (1).
21. Up to 3 marks: may make it more attractive for MNCs to set up in the economy (1) as it will lower transport costs for MNCs (1) and will increase the market in the country that the MNCs can sell to (1).
22. Up to 5 marks for why it might not:
23. Up to 2 marks: it will involve an opportunity cost (1), could have built more schools, etc. (1).
24. Up to 2 marks: may generate external costs (1), e.g. noise, air pollution (1).
25. Up to 2 marks: may lower revenue for train companies (1), as passengers and freight may switch from rail to road (1).
26. Up to 2 marks: may not be sufficient to keep up with demand for road use (1) as incomes rise, demand for road use may exceed the increase in capacity (1).
27. Up to 2 marks for: there may not be sufficient demand (1) and so resources will be wasted (1).
28. Maximum of 4 marks for a list or list-like response.
29. Note: a maximum of 7 marks overall.