A number of book publishers operate in Pakistan. These include multinational companies (MNCs). They employ a range of specialist workers. A number of these specialists estimate the price elasticity of demand (PED) for their firms' books. There is a debate about whether some books should be subsidised by the government.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. A firm that produces / operates (1) in more than one country (1).
2. A firm that has its headquarters in one country (1) but also produces / operates in other countries (1).
3. Monotony / boredom / lower efficiency (1) doing the same task over and over again (1).
4. Workers may not develop a range of skills (1) this may limit their earning potential (1).
5. Workers may become dependent on other workers (1) this may reduce their earning potential (1).
6. There may be a greater risk of unemployment (1) which could lead to lower income / living standards / due to lack of wider skills (1).
7. A more elastic demand (1) would mean that the firm could raise revenue (1) by lowering price (1) profit would rise (1) if revenue rises by more than costs (1).
8. A more inelastic demand (1) would mean the firm could raise revenue (1) by raising price (1) profit would rise (1) if a lower output increases the gap between revenue and cost (1).
9. Up to 5 marks for why it should:
10. A subsidy would increase the supply of books / reduce costs of production (1) lower their price (1) and cause demand to rise (1).
11. More books being purchased may raise education standards / literacy (1) increase productivity (1) raise output / result in economic growth (1).
12. A subsidy may reduce the price of school textbooks (1) reducing the cost of education (1).
13. Some publishers may be making a loss (1) and may be in danger of going out of business (1) this would cause unemployment (1).
14. Up to 5 marks for why it should not:
15. Some book publishers may be making high profits (1) and so do not need a subsidy (1).
16. The subsidy may encourage the book publishers to become inefficient (1) not cutting their costs (1) and improving the quality of the books they produce (1).
17. There will be an opportunity cost involved (1) e.g. spending on education (1).
18. Waste of resources (1) e.g. growth of internet / e-books (1)
19. There may be an external cost (1) e.g. trees (1).
20. Certain books should not be subsidised (1) example (1).