Read the source material carefully before answering Question 1. Source material: Chilean cherries Content removed due to copyright restrictions. Producing just a few products can be risky for a country. Content removed due to copyright restrictions. Fig. 1.1 Population pyramids of Chile and Haiti 2018 There is, however, evidence of market failure and inequality in how resources are allocated. Answer all parts of Question 1. Refer to the source material in your answers.

Mark scheme

Marking points from the official mark scheme (May/June 2021). The mark or mark type is shown in brackets.

1. [1] (a) $11.76bn / $11760 000 000 / $11 760m (1).
2. [2] (b) Two from: demand may fall / new competitors may appear; supply/output may fall / diseases / natural disasters / bad weather may affect agricultural output / costs may rise; non-renewable resources may run out; structural unemployment may occur; reliance on imports no longer produced by home country / overdependency on other countries.
3. [2] (c) A luxury product (1) they do not have to be purchased / not essential / not a necessity (1).
4. [2] (c) Has close substitutes (1) example / rise in price will cause some people to switch to rival products (1).
5. [4] (d) Logical explanation which might include: Chile has a higher proportion of its population aged over 65 / Haiti a lower proportion aged over 65 (1).
6. [4] (d) Chile has a lower proportion of the population aged under 15 / Haiti has a higher proportion aged under 15 (1).
7. [4] (d) Chile is likely to have a lower birth rate / Haiti is likely to have a higher birth rate (1).
8. [4] (d) Chile likely to have a lower death rate / Haiti is likely to have a higher death rate (1).
9. [4] (d) Chile's population pyramid indicates a relatively high level of development/high income country / Haiti's population pyramid indicates a relatively low level of development/low income country (1).
10. [4] (d) Chile's population pyramid is less pyramid shaped / more stationary / constrictive / bulges out in the middle / more egg-shaped / Haiti's is more pyramid shaped / more expansive (1).
11. [4] (d) Lower dependency ratio in Chile / higher dependency ratio in Haiti (1).
12. [4] (d) Higher proportion of population of working age in Chile / lower proportion of population of working age in Haiti (1).
13. [4] (d) Higher population size in Chile / lower population size in Haiti (1).
14. [4] (d) Chile has a higher average age / older population / Haiti has a lower average age population / younger population (1).
15. [4] (e) Coherent analysis which might include: Chile has high production standards (1) cherries are likely to be of a high quality (1).
16. [4] (e) China does not impose tariffs on Chilean cherries (1) may keep their price low (1).
17. [5] (f) Coherent analysis which might include: Most astronomers have a university degree (1) high cost of training/ long period of training (1) well qualified / well educated / high level of knowledge (1) highly productive / highly skilled / efficient (1) in short supply (1) high demand (1) more inelastic demand (1) more inelastic supply (1).
18. [5] (f) Most work in the public sector (1) government may be more willing / able to pay higher wages (1) public sector workers are more likely to belong to a trade union (1) have stronger bargaining power (1).
19. [6] (g) Award up to 4 marks for why they might: evidence of market failure (1); merit goods may be underproduced (1) as under-consumed (1); demerit goods may be overproduced (1) as overconsumed (1); external costs could be reduced (1) external benefits may be increased (1) external costs / external benefits are not taken into account by the private sector (1); public goods may not be produced (1) no profit incentive to make them (1) as there can be free riders (1); inequality (1) poor consumers may lose out / there may be poverty (1) resources may not be devoted to producing what the poor need (1) may not be able to afford prices charged (1); government subsidies (1) can lower prices (1); government could set maximum prices (1) lower prices of necessities (1); government could control (private sector) monopoly power (1) prevent abuse of market power (1); government investment in education (1) could lower prices / raise quality of output (1).
20. [6] (g) Award up to 4 marks for why they might not: government failure may occur (1) e.g. government may lack information (1); market forces can provide wide choice of products (1) may be consumer sovereignty (1); profit incentive (1) industries may respond to changes in consumer demand (1); efficient industries (1) prices may be low (1) quality may be high (1); government intervention in the form of nationalisation (1) may reduce competition (1); government taxes / tariffs / regulation / minimum wages (1) may increase costs (1) raise prices (1); maximum prices could reduce availability of products (1); government limits on immigration (1) may reduce availability of products / raise prices (1).
21. [6] (h) Award up to 4 marks for why it might: wages may be low in Chile (1) work involves unskilled labour (1); employment may be rising in Haiti (1) the country could keep more of its skilled workers (1); larger labour force / more workers (1) higher total demand (1) increase GDP / increase economic growth / increase productive potential (1) increase living standards (1) increase exports (1); rise in the numbers employed in Haiti could increase tax revenue (1) may enable more spending on e.g. education (1); fewer parents may leave behind dependent relatives (1) reduce burden on the government (1); jobs could be found in other countries (1).
22. [6] (h) Award up to 4 marks for why it might not: wages may be higher in Chile (1) fewer emigrant workers may send money home (1) living standards may be lower (1) lower spending (1); less money coming into the country (1) may increase a current account deficit (1); job opportunities may be higher in Chile (1) unemployment may rise in Haiti (1); if unemployment rises in Haiti, cost of unemployment benefits may rise (1) opportunity cost / higher taxation (1); opportunities to gain new skills may be reduced (1) these skills could be brought back into the country (1); may reduce pressure to invest / spend on capital equipment (1) reduce advances in technology / reduce increases in efficiency / productivity (1); may increase overcrowding / overpopulation (1) increase external costs / pollution (1) pressure on resources (1).