Latvia.

Q2 2018. [1]
3 In summer 2018, many countries suffered a water shortage because of a long spell of very dry
3 In summer
weather.
(ii) 2018, many
Use Calculate
a supply and countries
demand
the value suffered
diagram
of Vietnam’s aexplain
waterofshortage
toexports how
fruitthe because
andexchange
vegetablesof a
to long
rate spell
against
China ofeuro
inthe
the very dry
first was
four
weather.
maintained
monthsas of shown
2018. in Fig. 1.1. [4]
[1]
(a) Explain whether you would expect the price elasticity of supply of water to be relatively elastic
(a)
(b) Explain
(d) or whether
(i) relatively you
oneinelastic.
Explain what would
is meant
possible demand expect theand
by afactor
‘budget price elasticity
deficit’.
one possibleof supply of water
factor to could
that be relatively elastic
have caused [8]
[2]
or
therelatively
increaseinelastic.
in Vietnam’s export sales of fruit and vegetables. [8]
[4]
(b) (ii)
(b)
Merit, Demerit, Public Goods WS 2
Consider
(c) Consider
shortage
used
Explain
the short-term
Analyse,
the
in
how short-term
byancomplying
economy
the
and long-term
using a diagram,
and
Latvianwith
government
how fiscal
and discuss
long-term
policies
policies
whether
to lower
administrative
that could
measures
thethat
these
burdens could
are
be adopted
to reduce
beto
likely
relatively
on high
trade
the budget
adopted
be
rate
will
to deal
to
successful.
of inflation.
affect Vietnam’s
withcould
deficit a water
deal withsupply
a water
be
[12]
[4]
of
shortage in an economy
fruit and vegetables and discuss whether these are likely to be successful.
for export. [12]
[2]
1 2020 JUN P22
(e) Discuss whetherQ04it A is better for Latvia to specialise in banking services rather than having a
4 (a)
(d) Explain, using examples,
more diversified
Discuss whether the risksthe
economy. of difference between
Vietnam relying veryprivate
heavily goods andChinese
on the public goods
marketandfor why
[6]
the
4 (a) public
Explain, using
goods examples,
will not be the
supplied difference
by privatebetween private
enterprise.
export of its fruit and vegetables are greater than the potential benefits. goods and public goods and why
[8]
[6]
public goods will not be supplied by private enterprise. [8]
(b)
2 2020 Consider the
JUNaggregate
(e) Using problem
P22 Q04demand B of the provision of merit goods in a market economy
and aggregate supply analysis, discuss the possible impact on and assess
(b) whether
Consider the
Vietnam’sdirect problem
economy of aofsustained
provision ofthe provision
such goods of the
is
Section
increase meritmost
inBits goods
net in a way
effective
exports. market economy
to deal andproblem.
with this assess[6]
whether direct provision of such goods is the most effective way to deal with this problem. [12]
© UCLES 2020 Answer one question.
9708/22/M/J/20
[12]
© UCLES 2020 9708/22/M/J/20
3 2020 NOV P21 Q02 A Section B
2 (a) Explain, with the help of examples, how imperfect information among consumers affects their
consumption of merit goods and demerit
Answer goods.
one
4 question. [8]

(b) Discuss
4 2021 why Q02
JUN P21 in most
A mixed economies, resources
Section B are mainly allocated using market forces
2 and the whether
(a) Explain price mechanism. [12]
private goods, free goods and public goods will all be sold in a free market
economy. Answer one question. [8]

3 5 2021
(a) Discuss
(b) Cross
JUNelasticity
whether
P22 Q02 ofthe
demand for bread of
A direct provision with
4 respect
goods andto the price
services byof rice
the is +1.4 while
government the cross
prevents the
2 elasticity
price
In 2018 of demand
mechanism
the UK from
government,forworking
bread with respect
abouttothe
effectively.
concerned therise
priceinofobesity,
butter isparticularly
–0.7. amongst young [12]
people, imposed a tax on producers of sugar-sweetenedSection B drinks.
Explain why the cross elasticity of demand figures for bread differ. [8]
3 (a)
(a) With
Statethe aid is
what of meant
diagrams,by aexplain
demerithow
Answer consumer
good,
oneand surplus
with
question. is affected
the help by a decrease
of a diagram(s) in thehow
explain price a
(b) of
Explain
taxa on theproduct
luxury implications
producers can of price
withimprove
many theelasticity
substitutes, ofofdemand
and
allocation ofresources and
an essentialin income
product
the elasticity
marketwith
forfew of demand for
substitutes.
sugar-sweetened [8]
2 business
drinks. how
(a) Explain decisions. Discuss which
the fundamental economicmeasure
problemis likely to be more
is addressed in useful to a economy
a planned business.and in [12]
[8]
a
(b) market
Discusseconomy.
the extent to which knowledge of the income elasticity of demand for its product[8] is
(b) likely
6 2021Compare
NOV to be
P23 more
the useful
likely
Q02 to a business
effectiveness
B of athan knowledge
policy of imposing of the cross elasticity
minimum prices on of demerit
demandgoods for its
4 (b)
(a) Discuss
Explain,
product. with
with onethe otherthepolicy
view aid
thatofto
ina improve
adiagram, the impact
mixed public
economy theofand
health a subsidy
only role oftogovernment
consider domestic
which policyproducers
is more
should beoflikely
toa provide
product
to[12]
be
on the goods
exportand
successful.
public revenue from that
the supply product.
of merit goods should be left to the private sector. [8]
[12]

4 (b)
Discuss
(a)
With the whether supply-side explain
aid of a diagram(s), policiesone
are demand
an effective
factorway
and of
one correcting a deficit
supply factor that on an
would
33 economy’s
cause
Explainthe
(a)
(a)
Using thehowcurrent
value
concept account
theofconcept of
aofcurrency the balance
in a floating
of cross-elasticity
price elasticity of payments.
exchange ratecan
of demand
of demand, explainsystem to depreciate.
be used
why to distinguish
increasing [12]
between
the price [8]
of the
goods that
product
© UCLES 2020 is: are substitutes, those that are complements and those that have no relationship.
9708/21/O/N/20
(b) Discuss how likely it is that monetary policy would be successful in reducing inflation in [8] an
economy
(i) a badwithideaafor
floating
a firmexchange
producingrate. [12]
a product that constitutes a large proportion of household
(b) An economy
income, andis experiencing a fall in average incomes during a severe recession.

Discuss
(ii) theidea
a good extent
for to which
a firm the concepts
producing of income
a product elasticityaofsmall
that constitutes demand and price
proportion elasticity
of household
of demand
income.might be useful to an entrepreneur in this economy and consider which would be [8]
more useful. [12]
(b) Discuss whether cross elasticity of demand or income elasticity of demand is likely to be
more useful in assisting a firm in its pricing decisions. [12]
4 (a) Explain what is meant by deflation and use aggregate demand and aggregate supply
diagrams to explain how it might arise in an economy. [8]
4 (a) Explain how inflation is measured and why a rising rate of inflation may be of concern to
(b) consumers
Discuss whether a government should use monetary policy or fiscal policy to solve the
and producers. [8]
problem of deflation in an economy. 9708/21/M/J/21
© UCLES 2021 [12]
(b) Discuss whether a policy of increasing interest rates is the best way of controlling a rising rate
of inflation in an economy. [12]