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TINOFAMBA NEVANOFAMBA (SIHAMBA LABOHAMBAYO)

NOV 2022 A LEVEL ECONOMICS P2 MS

QUESTION 1

a (i) Define the term value addition. [2]

It is the process of changing or transforming a product from its original state to a more
valuable state.
or
It is the improvement a company gives its product or service before offering it to consumers.

COMMENTS

 A complete and delineating definition of the term value addition is expected.

 Correct definition 2 marks.
 No context answering in Economics.
(ii) Apart from export earnings what other benefits can be derived from the production
of garlic? [2]

 It improves human health / play a pivotal role in health.

 Garlic cloves are used raw and cooked in dishes.
 Acts as food flavouring.
 Employment creation through the ones that work in it being produced.
 It adds to the quantity of food basket.
ORA

COMMENTS

 Candidates should be able to identify other benefits other than export earnings which can
be derived from the production of garlic.
 Candidates must know the purpose of the data response such as to direct or focus their
thinking towards particular economic issues. They must make informed decision from
the given data.

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(b) With the help of a diagram, explain the effects of an increase in demand for garlic on
the price of garlic. [4]

An increase in demand for garlic from D0 to D1 with supply being held constant will result in an
increase in price of garlic from P0 to P1.

COMMENTS:

 Candidates are expected to draw the diagram showing the effects of an increase in
demand for garlic on the price of garlic first and explain thereafter. In other words, the
focus is on the diagram.
 Candidates are expected to be very precise in drawing the diagram. The origin must be
marked by a zero, both the vertical and horizontal axis must be correctly labelled.

Correct diagram showing the effects of an increase in demand for garlic on the price of
garlic with wrong explanation.

 The candidate will get marks for the diagram and no marks for the explanation.

Wrong diagram with the correct explanation of the effects of an increase in demand for
garlic on the price of garlic.

 The candidate will get no marks under such scenario because explanations should come
from the diagram.

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The diagram requires candidates to show direction of change e.g. after rise in demand
annotations like D0 and D1 must be used to show demand before price rise and demand after
price rise respectively.

c (i) Calculate the percentage increase in the total global imports for garlic between 2018
and 2019. [2]

Percentage increase in the total global imports = current imports- previous imports x 100
Previous imports

= 2,467 – 2, 1 x 100

2, 1

= 17, 48%

Or

= 0,367 x 100%
2, 1
= 17, 48 %

Note: 100% = 2, 1 billion

Less = 0,367 billion

COMMENTS:

 Candidates should be able to calculate (calculative skills) the percentage increase in the
total global imports, showing all the relevant workings to be awarded full marks.
 If a certain candidate writes a wrong formula and makes a wrong calculation of the
percentage increase in the total global imports no marks will be awarded for that
candidate because it could be more of guess work.

(ii) Assess the effects, to Zimbabwe of relying an exporting primary products. [4]

Positive effects (Advantages of relying on exporting primary products)

 Can be a source of employment, tax revenue, export earnings, economic growth and
development, since Zimbabwe is a developing country her comparative advantage is in
producing primary products.
 Does not require costly investment and borrowing to finance investment.
 Attracts foreign direct investment.

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Negative effects (Disadvantages of relying on exporting primary products)

 Prices are low on the international markets compared to imported manufactured goods.
 Earnings are not stable and can be easily affected by supply shocks e.g. natural disasters.
This may impact negatively on the BOP.
 The economy will be vulnerable to volatile global prices.
 Significant risks from over specialisation especially when TOT from her main exports
decline.

ORA

COMMENTS:

 The response given on such a question must be two sided This means a candidate must
give advantages and disadvantages to Zimbabwe of relying on exporting primary
products.
 When explaining the advantages or disadvantages to Zimbabwe of relying on exporting
primary products candidate should address the following questions:

1. Why / how?

2. So what?

 The focus is on explanation not point identification.

 Ensure each point (effect) is explained separately without mixing.
 Explain the negative side with same detail as the positive.

(d) Discuss the policy measures which can be used by government to assist Small to
Medium Enterprises (SMEs). [6]

Question demands: An explanation on the policy measures which can be used by the
government to assist SMEs and their demerits.

Suggested marking points

 Providing information, advice and management support through departments and

agencies.

 Low interest through the small enterprise development corporation.

 Trade exhibitions such as ZITF to promote exports.

 Providing training facilities through universities and polytechnic colleges.

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  Provision of reasonable premises.

 Tax holidays.

 Offering subsides.

 Creating and supporting specific loans to SMEs.

 Providing collateral.

ORA

COMMENTS

 Introduction paragraph, conclusion paragraph or judgement is not required, just present

your answer in small paragraphs each with an explanation on how the policy measure
assist SMEs and counter argument.
 Candidate should avoid listing the points/policy measures which can be used to assist
SMEs. Point listing one mark each side. Candidates should explain how the policy
measures assist SMEs and their demerits
 Candidates are encouraged to avoid inserting a full stop between the policy measure
identified (point) and the explanation to make more sense. Candidates are encouraged to
give the policy measure and immediately explain how it assist SMEs.
 Explain the negative side with the same detail as the positive.
 When explaining how the policy measure assist SMEs or the demerit of the identified
policy measure to assist SMEs, a candidate should make sure that the following questions
are addressed:
1.Why / how?
2. So what?
Example

Policy measure (point): Providing collateral

Why /How: Problem in raising both short term and long term finances due to
lack of collateral security.
So what: Improve the performance and profitability of SMEs.

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 Sample paragraph

The government can provide collateral since SMEs face problems in raising both short term
and long term finances due to lack of collateral security and this policy measure will enable
SMEs to have access to debt finances and this will improve the performance and profitability
of SMEs.

DINE WITH THE LEGENDS ECONOMICS PAPER 2 MADE SIMPLE

Question 2

a(i)Define the term carbon tax. [2]

It is a tax levied on the carbon emissions required to produce goods and services.

Or

It is a type of penalty that businesses must pay for excessive greenhouse gas emissions.

COMMENTS:

 Definition of carbon tax must be complete and delineating.

 Correct definition 2 marks.
 One definition is enough.

(ii) From the extract, identify information which explains a positive externality. Give a
reason for your answer. [2]

Health care is a merit good which is a good example of an activity which provides external
benefits to third parties. For infectious diseases health care act as a positive externality because
those who did not pay for the service will also benefit since they will not get infected.

Or

Health care because merit goods are considered positive externalities because they have social
benefit greater than private benefit.

COMMENTS:

 Candidates must not copy word to word or verbatim of what is in the extract to
get full marks.
 Copying word to word will result in candidates losing all the marks.
 Candidates are expected to rephrase what is in the extract to get full marks.

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b (i) With the aid of a diagram show how a pollution can reduce carbon emissions. [4]

The government imposes a tax equal to the amount of pollution raising the supply curve to S2
(SMC=S2). Quantity of carbon emissions will fall from Q1 to Q2. Q2 is socially efficient
because at this level SMC =SMB.

COMMENTS:

 Candidates are expected to draw the diagram first showing how a pollution tax
reduces carbon emissions and explain thereafter.

Correct diagram showing how a pollution tax reduces carbon emissions with wrong
explanation.

 Candidates will get marks for the diagram and no marks for the explanation.

Wrong diagram with a correct explanation of how a pollution tax reduces carbon
emissions.

 The candidate will get no marks under such scenario because explanations have to
come from the diagram.

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  Candidates are expected to be very precise when drawing the diagram. The origin
must be marked by a zero; both horizontal and vertical axis should be labelled.
 The diagram requires candidates to show direction of change e.g. after imposition
of pollution tax annotations like S and S2 must be used to show supply without
pollution tax and supply after pollution tax respectively.

c (i) Explain any long term effect of carbon emissions to the global economy. [4]

Positive effects

 It increases the growing season since carbon emissions results in global warming which
in turn results in high temperatures, hence we are now able to grow crops which cannot
be grown during the winter period and this increases the world GDP.
 It also spread the growing of tropical crops such as maize in colder regions due to higher
temperatures which result in an increase in food globally and linkage between countries
by supplying food.
 Carbon emissions causes global warming and global warming can result in floods which
increases surface water storage.

Negative effects

 Carbon emissions also results in global warming which will cause erratic rainfall which
can cause drought, hence shortage of raw materials globally.
 It also results in outbreak of diseases such as TB and cancer due to pollution and the
effect to the global economy is that we don’t have a health workforce and this will reduce
the world output.
 Pollution of the environment will lead to reduced industrial production as businesses will
be required to cut their carbon emissions and this will reduce the world’s GDP.

COMMENTS

 Candidates are advised to explain fully otherwise a candidate will score no marks.
 The focus is on the explanation.
 When explaining the long term effects of carbon emissions to the global economy
candidates should make sure the following questions are addressed in order to get all the
marks.

1. How/why?

2. So what?

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  Candidates should understand that most of knowledge required does not come from the
extract but from the candidate’s understanding of economic principles and economic
theory.

(ii) Besides the imposition of taxes, analyse any other two measures which government can
use to curb negative externalities. [4]

Embargo

The government may place laws and regulations that prohibit the production, sale and
consumption of goods and services that generates negative externalities.

Limitations

 It may be socially inefficient to ban everything for example the government can ban cars
in the city centres, this would reduce pollution but could have adverse effects on
businesses.
 Some firms may try to run away from government control and they may end up doing
their activities at night. Therefore, it requires the government to employ more inspectors.

Extension of property rights

It is a method of internalising negative externalities as initiators of external costs will be forced

to pay them and adjust their production and consumption decisions to more socially efficient
levels.

Limitations

 Ownership of particular things such as air and water cannot be ambiguously assigned to a
particular agent.
 Where there are many individuals or firms imposing negative externalities it will be
difficult to claim compensation from them all
 Appropriate compensation levels are almost impossible to establish. For compensation to
be paid it must be possible to establish the nature and extend of negative externalities
imposed.

Negative advertising campaigns

The government can run some negative advertising campaigns so as to discourage the
consumption and production of goods or services that generates negative externalities.

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Limitations

 The measure increase government expenditure which may lead to budget deficit and
crowding out effect.
 Some individuals are ignorant; they don’t take adverts seriously.

Candidates can also consider the following measures:

 Regulations through EMA

 Setting minimum prices.
 Fines for overconsumption.
 Controlling supply through licensing.
 Nationalisation.
 Quota system.

COMMENTS:

 The response given on such question must be two sided. This means that a candidate
must explain how the identified policy reduces negative externalities and also the
limitation(s) of the identified measure must be explained.
 Candidates to explain any two policies which can be used by the government to curb
negative externalities.

(d)Asses the need for government intervention in the market system. [6]

Question demands: Explain reasons for government intervention in the market system and its
demerits.

Reasons for government intervention in the market system

 Discourage demerit goods \encourage merit goods.

 Provide public goods e.g. National defense from general taxation.
 Limit the power of monopolies\ prevent monopolies.
 To avoid excessive prices of goods or services with important social welfare.
 To redistribute income.
 To prevent economic swings.
 To control negative externalities.

Disadvantages of government intervention in market system

 Government failure time legs, poor information.

 Government ownership may lead to less choices.
 May discourage investments.

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  Waste government time to focus on strategic issues.
 Disincentive effects of higher taxes.
 Government influenced by powerful pressure groups.
 Lack of incentives to be efficient in the public sector.

COMMENTS:

 Introduction paragraph, conclusion paragraph or judgement is not required. Candidates

should just present their positive and counter arguments.
 Candidates should avoid listing points. Point listing one mark each side. Candidates will
be penalised if points are listed.
 When explaining the reasons and demerits of government intervention in the market
system the following questions must be addressed:

1. why/how?

2. so what?

Example

Point: Provide public goods.

Why: Non provision of public goods under the market system because of the characteristics that
makes them unprofitable.

How: Introduce compulsory payment schemes using taxation tool.

So what: Promotes social welfare and development of the nation as a whole.

Sample

The non-provision of public goods under the market system because of the characteristics which
makes them unprofitable provides the rationale for the government to intervene in the market and
introduce compulsory payment schemes using the taxation tool and this promotes social welfare
and development of the nation as a whole.

COMMENTS:

 I encourage candidates to avoid inserting a full stop between the point and the
explanation. The candidates should at least find a suitable word between the point and
explanation to make more sense. In other words, candidates are encouraged to give a
point and immediately explain it.
 Explain the negative side with same detail as the positive.

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 KURAPA VANORAPA NYIKA KURAPA NYIKA

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