Read the source material carefully before answering Question 1. Source material: Is there a future for Australian coal? Australia fact file Australia is a major producer of coal. Most coal is used to produce electricity. In this process, carbon dioxide is emitted. Global demand for coal has declined in recent years as countries have tried to reduce pollution. There has been a switch to, for example, gas, offshore wind and solar power. Coal is mined in each of Australia's six states but most is mined in Queensland and in New South Wales. In Queensland, some of the firms are very large. These firms employ both low-paid, unskilled workers and high-paid, specialist mining engineers, site managers and accountants. The firms use the latest excavators, mining drills, crushing equipment, earth movers and drones to detect maintenance issues. Coal can be stored to meet changes in market conditions but storage costs can be high. It can also take years to construct a new coal mine. Table 1.1 shows the output and consumption of the seven largest producers in 2020. Table 1.1 The output and consumption of the seven largest producing countries 2020 Global coal production has fallen in recent years with most countries switching to renewable sources of energy. However, there are some countries where coal production is set to increase. There are plans in both Australia and India, for example, to open new coal mines. The Indonesian government sets a maximum price on coal to encourage the country's power stations to use it. The Australian coal industry contributes to its government's tax revenue. There are, however, other influences on Australia's government's budget balance including changes in tax rates and state support for some of the country's industries.

Mark scheme

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

1. [1] 0.56 / 14 × 100
2. [1] Allow 4 without percentage
3. [2] Two from: gas; offshore wind / wind power; solar power / panels
4. [2] One mark for the economy of scale identified and one mark for an explanation.
5. [1] Managerial / labour economy
6. [1] employing specialist workers e.g. mining engineers.
7. [1] Technical economy
8. [1] employing efficient / technologically advanced equipment e.g. drones.
9. [1] External economy of scale
10. [1] example e.g. skilled labour force.
11. [4] One mark each for each of two influences identified and one mark each for each of two explanations.
12. [1] Storage time
13. [1] expensive to store so inelastic supply.
14. [1] Construction of new mine / production time
15. [1] takes a long time, so inelastic supply.
16. [1] Stocks
17. [1] may make supply elastic.
18. [4] Demand and supply diagram: Axes correctly labelled – price and quantity or p and q (1). Demand and supply curves correctly labelled (1). Price line set below the equilibrium (1). Demand shown as greater than supply (1) e.g. has the two dotted lines downwards (it does not have to be labelled Qs and Qd).
19. [5] Responses do not have to be in the format suggested but they should address the expected / normal outcome, offer supporting evidence of that, highlight any exceptions to that, and analyse the overall data.
20. [1] Large coal-producing countries may have a surplus to sell / may have grown their production in order to sell abroad
21. [1] most of the evidence supports this relationship.
22. [1] Five of the seven countries consume less coal than they produce
23. [1] calculation e.g. US could have exported 11 million tonnes / Australia could have exported 394 million tonnes or simply the difference.
24. [1] Countries that produce more coal than they consume may benefit from economies of scale / can export because their prices are low.
25. [1] China or India are an exception
26. [1] as they consumed more coal than they produced.
27. [1] they may have been net importers
28. [1] since had used up stocks of coal / need more energy as a developing country
29. [1] may not be able to export coal if world demand for coal is low / countries may both import and export coal.
30. [6] Award up to 4 marks for logical reasons why it might, which may include: may increase GDP / economic growth (1) increasing living standards / raise incomes / reduce poverty (1); may reduce unemployment (1) structural unemployment (1); may improve current account position / have a surplus (1) as Australia seems to be a net exporter of coal (1); may increase tax revenue (1) increasing government's ability to spend (1); economies of scale (1) result in lower prices for households and industries (1).
31. [6] Award up to 4 marks for logical reasons why it might not, which may include: may increase pollution (1) lowering living standards / cause health issues (1) reduce tourism / negative impact on current account (1); other forms of power may not be developed (1) example (1); some workers may leave other jobs (1) these jobs may have better working conditions (1); coal mining is a relatively dangerous industry (1) so life expectancy may be reduced / creates chronic illnesses / workers unable to work (1); Global demand for coal may fall (1) impact upon Australia e.g. unsold stock (1); May rapidly deplete stocks (1) leading to lower exports (1) and less employment (1).
32. [6] Award up to 4 marks for logical reasons why it might, which may include: unemployment is forecast to increase (1) so there may be more government spending on unemployment benefits (1) less income tax revenue (1); there may be more government spending on retraining unemployed workers (1); some of the rise in population may result in more government spending (1) e.g. on pensions / healthcare / education (up to 2 marks); budget deficit in previous years (1) would mean interest would have to be paid on the debt that has built up (1).
33. [6] Award up to 4 marks for logical reasons why it might not, which may include: population and the labour force are forecast to increase (1) so there may be more taxpayers / fewer claiming benefits (1); tax revenue may rise (1) due to higher profits / higher tax rates (1); GDP is forecast to increase (1) more people in work (1) which would be likely to increase direct and indirect tax revenue (1); state support for industries may fall (1) may have been high in 2021 due to Covid-19 (1).