QUESTION:6 Crisis In the chocolate market ‘There are concerns that the price of chocolate could rise significantly in the next few years. This is because of increasing demand for chocolate, particularly in emerging countries, and supply problems in the countries that produce cocoa beans. Cocoa beans, the main ingredient in chocolate, are grown mainly in the west coast of Alrica by small farms using labour-intonsive methods. In 2012 Cote d'ivoire (Ivory Coast) produced 37% of the world's output of cocoa beans, followed by Indonesia which produced 13%. Céte d'ivoire is becoming well known for supplying good quallly cocoa beans. Concentrating on supplying the product its resources are most suited fo has increased output in the country. Gross Domestic Product per head rose to US$1240 in 2013. Some farmers and farm workers, however, stil live on less than USS2 a day. In Indonesia, the income of most cocoa farmers and farm workers increased along with the riso in the country’s average income between 2013 and 2014. Their purchasing power was, however, affected by the consumer prices indax rising from 108.0 in 2013 to 115.2 in 2014. While people’s Indonesia is improving with more doctors per head, the government is soaking to ‘standards. ‘Among the problems being experienced by cocoa bean producers are an ageing labour force, with the industry experiencing difficulties attracting young farmers and farm workers. The industry also regularly experiences problems caused by pests and diseases, including black pod disease. Al the samo time pooplo in Asia, particularly China, are eating more chocolate and drinking mora chocolate drinks. Peoplo in the Unitad States of Amorica and the European Union aro also ating more chocolate, although concerns about the health effects of eating large quantities of chocolate aro boginning to atfoct demand. For many people, however, chocolate is addictive, Chocolate producers sock to take advantage of this by increasing the gap betwoon revenue and costs. Most chocolate producers come from developed countries and most are public limited companies trying to keep their shareholders happy. These producers take advantage of their market power to keep the price they pay for cocoa beans relatively low whilst the price they charge to consumers who buy their chocolate is Kept relatively high. })_Using information from the extract, identify two indicators of improved living standards in Indonesia. ie {b) Explain whether the extract suggests the demand for chocolate is price-olastic or price- inolastic in developed countries. 2] {e) Using information from the extract, explain two reasons why cocoa bean farmers do not uso much capital equipment, 4] {d) Calculate the rate of inflation in Indonesia in 2014, 13) fe) Analyse two benefits of specialisation referred to in the extract, [4] () Discuss whether the price of chocolate is lkoly to increase in the future, 6) (g) Using information trom the extract, explain what is likely to be the main goal of chocolate producers. [4] {h) Discuss whether free trade always benefits producers. [8] Scanned with CamScannerQUESTION:7 ‘The New Suez Canal In August 2015 the Egyptian Government opened a second Suez Canal, alongside the original canal, to enable more and larger ships to sail from the Mediterranean Sea to the Gull of Suez. It cost more than USS8 billion to build, with land having to be purchased, capital equipment acquired and wages paid to the workers bullding the canal, This was al a time when there were calls for Increased spending on healthcare, In particular improving the quality of public hospitals and improving education, especially adult tleracy. ‘The Egyplian Government believes that tne canal wil attract more ships, both those carrying goods ‘and those carrying people. The number of goods and people using sea transport Is Influenced by fa varlely of actors. These Include the speed of the transportation, the level of economic aclivity ‘and the price of other forms of transport. Some goods have lo be transported quickly, and recent years have shown how sensitive demand for sea transport Is to recessions and economic booms. Fig. 1 shows how the market for sea transport has recently been alfected by the change In the markel for alr transport. price of sea transport 0, Q, a, quantity of sea transport Fig. 1 The market for sea transport ‘The Egyptian Government is hoping that new Industries connected to the shipping Industry will be bull along tne canal. Developing infant Industries may help to reduce the country's unemployment rate, which in 2015 was 12.5%. 1n 2015, the country ad a population of 80 milion, a population growth rate of 1.5% and a labour force of 28 million, Ils death rate was falling. The government's spending on healthcare was equivalent to 4% of Gross Domestic Product (GDP). 2015 also saw GDP at US$280 billion with an economie growth rate of 5%. Scanned with CamScanner(a) Detine ‘private cost' and give an example from the extract. [2] (b)_ Explain opportunity cost and give an example trom the extract. [4] (c) Calculate, using Information from the extract: (0) the number of people unemployed In Egypt in 2015 {2} J (ID the amount the Egyptian Government spent on healthcare In 2015, [2] (d) Analyse how a global recession could affecl demand for sea transport. [5] (e) Discuss whether a fall in a country’s dealh rale will always result In an Increase In Ils population size. [5] (0 Explain, using information from the extract and Fig. 1, whal happened to the market for sea Iransporl as a result of the fall in the price of alr transport. [4] (g) Discuss whether a government! should protect Infant industries, [6] Scanned with CamScanner