Section A:

1a) 2.9 – 2.2

= $ 0.7 bn

1b) - Trains

- Ships

1c) Air India’s share of India’s international and national air travel market in 1994 was 100%

1d) - Efficiency and competition: Privatization drives efficiency and competition, leading to
better-quality products and lower prices.

- Privatizing industries reduces financially burden, aiming to lessen dependance on tax

revenue for funding and allocate resources to other vital sectors

1e) India has the highest current account deficit in terms of $bn. Brazil, Kenya and India had a current
account deficit, whereas China and Russia had a current account surplus.

1f) - Tourism and Trade: Efficient air travel facilitates tourism by making destinations more
accessible, attracting tourists and boosting local economies.

- Job Creation: Airlines create employment opportunities such as pilots, cabin crew, ground
staff, and maintenance personnel. They stimulate job growth in related sectors like
tourism, hospitality, and manufacturing (e.g., aircraft production).

1g)

Reasons why the Indian government should increase the tax on airline fuel:

1. Revenue Generation: Higher taxes on airline fuel can generate additional revenue for the
government, which can be utilized for essential public services such as healthcare, education, and
infrastructure development.

2. Environmental Considerations: Increasing taxes on airline fuel can incentivize airlines to adopt
more fuel-efficient technologies and practices, leading to reduced carbon emissions and
environmental impact.

Reasons why the Indian government should not increase the tax on airline fuel:

1. Competitiveness: Higher fuel taxes could make Indian airlines less competitive globally, as they
would face increased operating costs compared to airlines from countries with lower fuel taxes.

2. Consumer Costs: Increased fuel taxes can lead to higher ticket prices for passengers, potentially
reducing demand for air travel and negatively impacting tourism and business travel, which are
crucial for economic growth.

3. Job loss: Excessive taxation on airline fuel may strain the financial state of airlines, especially
during periods of economic recession or industry challenges, potentially leading to job losses.
1h) Reasons why more people will apply to be pilots for Indian airlines in the future:

- Job Demand: With the industry expanding, there will be more job openings for pilots,
attracting individuals seeking employment opportunities.
- Career Appeal: Piloting offers a rewarding career with competitive salaryfor career
growth, making it an attractive choice for many.
- Accessible Training: Improved training programs and technological advancements make it
easier for pilots to acquire the necessary skills and qualifications.

Reasons why people may not apply to be pilots for Indian airlines in the future:

- Cost of Training: Pilot training can be expensive, individuals who cannot afford the high
costs with obtaining a pilot's license.
- Work conditions: The demanding nature of a pilot's job, including long hours and time
away from home, may discourage some people
- Better job options: Other jobs may offer higher wages and better working conditions.

Section B:

2. a) Free good is any good that is unlimited and not scarce, therefore has no opportunity cost.
Example – Air

2. b)

1. Nature of Work:

- Secondary Sector: Involves manufacturing and construction activities. For example, a steel mill
that converts iron ore into steel or a bakery that turns flour into bread.

- Tertiary Sector: Market the final product from secondary sector and communicate with consumers
to make sales and generate revenue

2. Product Output:

- Secondary Sector: Produces goods such as cars, furniture, and electronics. For instance, an
automobile factory producing cars or a furniture workshop making tables and chairs.

- Tertiary Sector: Provides services and goods to consumers like transportation, and hospitality. For
example, a consulting firm providing business advisory services or an airline offering transportation
services.

2. c)

an increase in the quality of resources would shift the curve outward, indicating an expansion in the
economy's production capacity. This shift signifies that with better resources, the economy can
produce more goods and services efficiently, leading to increased productivity and potential
economic growth.
2. d) Reasons why a fall in a country's birth rate may benefit an economy:

- Reduced Dependency Ratio: A lower birth rate can lead to a decrease in the dependency ratio
lessening the burden on the workforce and public resources allocated to healthcare, education, and
social welfare.

- Improved working benefits: With a declining birth rate, there may be less pressure on the labor
market, leading to increased wages, improved working conditions, and higher productivity as
companies invest more in training and keeping their employees.

Reasons why a fall in a country's birth rate may not benefit an economy (3 marks):

- Aging Population Challenges: A decline in the birth rate can lead to an aging population,
creating challenges such as increased healthcare costs, pension obligations, and a
shrinking workforce.
- Reduced Innovation and Entrepreneurship: A smaller working-age population resulting
from a low birth rate may lead to a decline in innovation, entrepreneurship, and
economic dynamism, as fewer young people enter the workforce so less innovation and
productivity growth.