Cambridge International AS & A Level

ECONOMICS 9708/23
Paper 2 Data Response and Essay May/June 2021
MARK SCHEME
Maximum Mark: 40

Published

This mark scheme is published as an aid to teachers and candidates, to indicate the requirements of the
examination. It shows the basis on which Examiners were instructed to award marks. It does not indicate the
details of the discussions that took place at an Examiners’ meeting before marking began, which would have
considered the acceptability of alternative answers.

Mark schemes should be read in conjunction with the question paper and the Principal Examiner Report for
Teachers.

Cambridge International will not enter into discussions about these mark schemes.

Cambridge International is publishing the mark schemes for the May/June 2021 series for most Cambridge
IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level components.

This document consists of 13 printed pages.

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Generic Marking Principles

These general marking principles must be applied by all examiners when marking candidate answers. They should be applied alongside the
specific content of the mark scheme or generic level descriptors for a question. Each question paper and mark scheme will also comply with these
marking principles.

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

• the specific content of the mark scheme or the generic level descriptors for the question
• the specific skills defined in the mark scheme or in the generic level descriptors for the question
• the standard of response required by a candidate as exemplified by the standardisation scripts.

GENERIC MARKING PRINCIPLE 2:

Marks awarded are always whole marks (not half marks, or other fractions).

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

• marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit is given for valid answers which go beyond the
scope of the syllabus and mark scheme, referring to your Team Leader as appropriate
• marks are awarded when candidates clearly demonstrate what they know and can do
• marks are not deducted for errors
• marks are not deducted for omissions
• answers should only be judged on the quality of spelling, punctuation and grammar when these features are specifically assessed by the
question as indicated by the mark scheme. The meaning, however, should be unambiguous.

GENERIC MARKING PRINCIPLE 4:

Rules must be applied consistently, e.g. in situations where candidates have not followed instructions or in the application of generic level
descriptors.

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GENERIC MARKING PRINCIPLE 5:

Marks should be awarded using the full range of marks defined in the mark scheme for the question (however; the use of the full mark range may
be limited according to the quality of the candidate responses seen).

GENERIC MARKING PRINCIPLE 6:

Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should not be awarded with grade thresholds or
grade descriptors in mind.

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Social Science-Specific Marking Principles
(for point-based marking)

1 Components using point-based marking:

• Point marking is often used to reward knowledge, understanding and application of skills. We give credit where the candidate’s answer
shows relevant knowledge, understanding and application of skills in answering the question. We do not give credit where the answer
shows confusion.

From this it follows that we:

a DO credit answers which are worded differently from the mark scheme if they clearly convey the same meaning (unless the mark
scheme requires a specific term)
b DO credit alternative answers/examples which are not written in the mark scheme if they are correct
c DO credit answers where candidates give more than one correct answer in one prompt/numbered/scaffolded space where extended
writing is required rather than list-type answers. For example, questions that require n reasons (e.g. State two reasons …).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check for evidence it is understood and not used
wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all possibilities
f DO NOT give further credit for what is effectively repetition of a correct point already credited unless the language itself is being tested.
This applies equally to ‘mirror statements’ (i.e. polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of syllabus terms must allow for clear and
unambiguous separation from other syllabus terms with which they may be confused (e.g. Corrasion/Corrosion)

2 Presentation of mark scheme:

• Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
• Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
• Content in the answer column in brackets is for examiner information/context to clarify the marking but is not required to earn the mark
(except Accounting syllabuses where they indicate negative numbers).

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3 Calculation questions:
• The mark scheme will show the steps in the most likely correct method(s), the mark for each step, the correct answer(s) and the mark
for each answer
• If working/explanation is considered essential for full credit, this will be indicated in the question paper and in the mark scheme. In all
other instances, the correct answer to a calculation should be given full credit, even if no supporting working is shown.
• Where the candidate uses a valid method which is not covered by the mark scheme, award equivalent marks for reaching equivalent
stages.
• Where an answer makes use of a candidate’s own incorrect figure from previous working, the ‘own figure rule’ applies: full marks will be
given if a correct and complete method is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.

4 Annotation:
• For point marking, ticks can be used to indicate correct answers and crosses can be used to indicate wrong answers. There is no direct
relationship between ticks and marks. Ticks have no defined meaning for levels of response marking.
• For levels of response marking, the level awarded should be annotated on the script.
• Other annotations will be used by examiners as agreed during standardisation, and the meaning will be understood by all examiners
who marked that paper.

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Question Answer Marks Guidance

1(a)(i) Use the information in Fig.1.1 to describe the changes in 2 The data clearly shows that overall during the period
the number of journeys by bus in Great Britain from bus passenger journeys outside of London have fallen
1997/98 to 2017/18. BUT within London, over the same period bus
passenger journeys have increased.
Various possibilities including: Within London, passenger journeys increased up to
• Bus passenger journeys outside London have fallen 2013/14 but declined thereafter.
over the period/from c 3.2 bn to c 2.7bn
• Bus passenger journeys in London increased up to
2013/14 but have then fallen slightly/overall have
increased/from c 1.3 bn to c2.3 bn
• Overall bus passenger journeys have increased
(1 mark for any of these)

1(a)(ii) Using the information in Fig.1.2, explain one of the 2 Explanations are likely to focus on price elasticity of
changes you have identified. demand/consumer preferences and/or cross elasticity
of demand/degree of substitutability between bus
Various possibilities including: journeys and other forms of transport.
• Public transport fares have increased above the rate
of inflation
• Bus passenger fares have increased faster than rail
fares for most of the period
• Bus fares have increased at their largest rate of
growth since 2016
• Substituting bus journeys for rail journeys

Identify the factor (1 mark) and explain with reference to the

selected change in 1(a)(i) (1 mark)

OFR applied if candidate wrongly identifies changes for

part a but then provides a valid explanation 1 +1

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Question Answer Marks Guidance

1(b) Explain how opportunity cost can be applied to the Great 2 Valid examples could include money committed to
British government’s decision to subsidise public subsidising public transport may have been used for
transport. new roads, education, health services etc.

A simple understanding of what opportunity cost is (1 mark)

Which is applied to a valid example in context (1 mark)

1(c) Explain whether public transport in Luxembourg has 2 Explanation must refer to factors of production being
become a free good as a result of all prices being needed to provide transport services i.e. there is a cost
removed. involved which is not the case with free goods

Explain what is meant by a free good (1 mark) Do not reward answers that clearly confuse free goods
with public goods
Explain why this is not a free good (1 mark)

1(d) Discuss whether a minimum price for fuel would be 6 A minimum price for fuel above the equilibrium price
effective in reducing the congestion caused by the would increase the price for car users and in theory,
demand for roads exceeding supply. lead to reduced demand and reduced congestion.
However, this would only be effective if the demand for
For an analysis of the effect of introducing a minimum price in fuel was price elastic. In addition, it will lead to excess
a market. (up to 3 marks) supply and the possible formation of informal markets.
It also depends on the ability of the government to
For analysis which explains why a minimum price may not be maintain and enforce the minimum price.
effective. (up to 3 marks)

MAXIMUM of 5 marks for analysis

1 mark for a justified conclusion as to whether a minimum

price would be effective in reducing congestion

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Question Answer Marks Guidance

1(e) Discuss whether making public transport free to 6 Various alternative policies could be
consumers is the best way to allocate resources in
public transport markets. – Maximum prices for bus and rail fares
– Transfer payments for bus and rail transport users
Analysis of the benefits of free public transport – Subsidies
(up to 3 marks)

Analysis of the benefits of any other valid policy

(up to 3 marks)

MAXIMUM of 5 marks for analysis

Award up to 1 mark for an evaluation of which policy is likely

to be the most effective

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Question Answer Marks Guidance

2(a) Market research has estimated that the cross-elasticity of 8 An increase in the price of flights to Barbados will lead
demand for hotels in Barbados with respect to the price to a larger percentage fall in demand for hotel
of flights to Barbados is –2.5, and that the cross- accommodation (complements) and a smaller
elasticity of demand for flights to Antigua with respect to percentage increase in demand for flights to Antigua
the price of flights to Barbados is +0.5. (substitutes).

Explain what is meant by cross-elasticity of demand and In the explanations, reference must be made to the
what these values mean in terms of the effect of changes significance of the size of the coefficient for the third
in the price of flights to Barbados on mark

(i) the demand for hotels in Barbados, and

(ii) the demand for flights to Antigua.

For knowledge and understanding of the concept of cross

elasticity of demand. What it measures (1 mark) and the
formula (1 mark)

(i) Identify that this would suggest hotels are a complement to

flights due to the negative sign (1 mark) explain why the
value is negative (1 mark) with reference to the size of the
coefficient (1 mark)
(up to 3 marks)

(ii) Identify that this would suggest that flights to Antigua are a
substitute for flights to Barbados due to the positive sign (1
mark) explain why the value is positive (1 mark) with
reference to the size of the coefficient (1 mark)
(up to 3 marks)

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Question Answer Marks Guidance

2(b) Growing pressures on the budget and on the 12 The effectiveness of the tax will depend on the PED for
environment from increasing tourist numbers to holidays in Barbados; incidence will vary with rate of
Barbados led the government to announce a new indirect tax.
tax on incoming tourists in June 2018.
A diagram would help here although it is not essential.
Discuss the likely effectiveness of the new indirect tax in
raising tax revenue and reducing tourist numbers. There are no KU marks awarded in part b for merely
explaining/defining terms or phrases within the
For an analysis of how the new tax will raise tax revenue and question
reduce tourist numbers (up to 4 marks)

For an analysis of other factors which may reduce the

effectiveness of the new indirect tax (up to 4 marks)

Up to 4 marks for an evaluation of the likely impact on the

market of the new indirect tax, that may also consider other
ways in which the government could raise additional revenue
and reduce tourist numbers. Reserve 1 mark for a reasoned
conclusion as to whether the new indirect tax would be truly
effective

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Question Answer Marks Guidance

3(a) Explain what is meant by aggregate supply and explain 8 A shift outwards of the AS curve can be due to
one reason why the aggregate supply curve of an
economy would shift outwards in – an increase in the supply of labour
– net investment
(i) the short run, and – other factor inputs
– devaluation of the exchange rate
(ii) the long run. – government regulations
– discovery of new resources
For explanation of aggregate supply e.g. total output in an – better education and training
economy (1 mark) that distinguishes between short run and – advances in technology
long run (1 mark) (up to 2 marks)

Identify a reason (1 mark) plus up to 2 marks for an

explanation of why this causes the SRAS to move outwards.
(up to 3 marks)
Identify a reason (1 mark) plus up to 2 marks for an
explanation of why this causes the LRAS to move
(up to 3 marks)

3(b) Discuss whether an increase in aggregate demand would 12 A good answer should consider firms, government and
be of overall benefit for an economy. consumers/workers

For an analysis of the benefits of an increase in aggregate The benefits for an increase in AD may include
demand to the economy (up to 4 marks) economic growth, higher employment etc
The problems may include inflation, current account
For an analysis of the possible problems for an economy if deficit etc
aggregate demand increases (up to 4 marks)
There are no KU marks awarded in part b for merely
Up to 4 marks for an evaluation which clearly compares the explaining/defining terms or phrases within the
benefits and the problems for an economy resulting from an question
increase in AD with one mark reserved for a reasoned
conclusion

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Question Answer Marks Guidance

4(a) Explain how a free trade area differs from a customs 8 The description of the principle of comparative
union and explain two reasons why countries move advantage is not required.
towards tariff-free trade.
The main difference is in terms of a common external
Up to 2 marks for an explanation of the difference between a tariff in a customs union. Reference to common policies
free trade area and a customs union. as in the case of the EU is also OK.
Knowledge and understanding of what is meant by a free
trade area (1 mark) and knowledge and understanding of Various benefits of free trade include
how this differs from a customs union (1 mark) – specialisation
– higher living standards
Identify a reason why countries may move to tariff free trade – cheaper and better quality products and more
(1 mark) and up to 2 marks that clearly explains the benefits choice
to countries × 2 (3 marks maximum per reason) – increased employment
– to benefit from the principle of comparative
advantage

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Question Answer Marks Guidance

4(b) Discuss the view that the gains from tariff-free trade are 12 This is an unusual statement, given that economic
greater for countries who are net importers than for theory tends to concentrate on the benefits of increased
countries who are net exporters. exports not imports.

Up to 4 marks for an analysis of the benefits/gains The benefits from tariff-free imports can include
/advantages and disadvantages from tariff-free trade for cheaper supplies, better quality and range of goods,
countries who are net importers. Maximum of 3 marks for puts pressure on domestic producers to be more
answers that only considers either advantages or efficient etc. But the disadvantages may include a
disadvantages threat to domestic businesses.

Up to 4 marks for an analysis of the benefits/gains The benefits for net exporters include higher growth,
/advantages and disadvantages from tariff free trade for increased employment etc. but the disadvantages may
countries who are net exporters. Maximum of 3 marks for include higher inflation.
answers that only considers either advantages or
disadvantages There are no KU marks awarded in part b for merely
explaining/defining terms or phrases within the
Up to 4 marks for an evaluation that clearly compares the question
impact of tariff free trade on both countries who are net
importers and those who are net exporters with 1 mark
reserved for a valid conclusion as to whether the statement
may be justified.

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