Cambridge International AS & A Level

ECONOMICS 9708/21
Paper 2 Data Response and Essay October/November 2022
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 October/November 2022 series for most
Cambridge IGCSE™, Cambridge International A and AS Level components and some Cambridge O Level
components.

This document consists of 15 printed pages.

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9708/21 Cambridge International AS & A Level – Mark Scheme October/November 2022
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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) Explain how ‘a product’s price acts as a signal of its scarcity’. 2

For a reference to a situation where there are limited resources to

satisfy unlimited wants and needs and so price rations the available
resources among competing buyers (1 mark)

For a development in terms of a rising demand for a product, relative

to its supply, will push up prices and act as an incentive to increase
the quantity; the existence of scarcity giving rise to the need to make
choices between the different uses that can be made of the scarce
resources (1 mark)

2 marks maximum

1(b) Explain one possible reason why the Government of Iran may 2 Possible reasons could include:
have decided to raise the minimum price of fuel in 2019.
• the need to reduce the demand for fuel; an
For an identification of one possible reason (1 mark) increase in the price could be effective if
the PED for fuel is elastic
For a more developed explanation of one possible reason (1 mark) • this could benefit the country’s current
account on the balance of payments if a
2 marks maximum substantial amount of fuel is imported,
although Iran does have a large amount of
crude oil reserves
• this will encourage producers to increase
the supply of fuel which will help them to
increase their profits
• an increase in producer profits could lead
to a substantial increase in government
revenue from the taxes on profits
• if subsidies have been reduced, the money
saved could be reallocated

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Question Answer Marks Guidance

1(c) Explain, with the help of a diagram, how an effective minimum 4 Effective minimum price:
price would affect the market for a basic food, such as rice in • a minimum price in a market is where a
Haiti. price floor is established
• to be effective, this needs to be above
For an explanation of the effect of a minimum price in a market the equilibrium price
(Up to 2 marks) • the equilibrium price in a market would
For a correctly drawn and labelled diagram to show the operation of a be higher than would be the case if
minimum price in a market for a basic food, such as rice in Haiti there was no government intervention
(Up to 2 marks) • farmers are therefore guaranteed
4 marks maximum these prices
• this is likely to have a positive effect on
their incomes
• it could lead to excess supply/surplus
• this could lead to the possibility of food
rotting in warehouses
Diagram:
• One mark for correctly labelled P, Q, D
and S
• One mark for showing a minimum price
line above the equilibrium, for showing
a price higher than the equilibrium
price and for showing the change in
quantity

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Question Answer Marks Guidance

1(d) ‘Governments use stocks to smooth fluctuations in the price of a 6 Government action might help the workings
commodity like cocoa’. of the price mechanism:
• it can help to stabilise a market
Consider whether government action to smooth fluctuations • stocks can be used to smooth
helps the workings of the price mechanism. fluctuations in the price of commodity,
such as cocoa, avoiding/reducing large
For an explanation of how government action to smooth price price variations
fluctuations may help the workings of the price mechanism • a government could buy stocks when
(Up to 3 marks) there was an excess supply of a
For an explanation of how government action to smooth price product in the market
fluctuations may not help the workings of the price mechanism • a government could sell stocks when
(Up to 3 marks) there was an excess demand for a
5 marks maximum product in the market

Reserve 1 mark for a conclusion Government action might not help the
workings of the price mechanism:
6 marks maximum • it could distort the market by not
allowing prices to reflect changes in
the conditions of demand for, and
supply of, a product
• the consideration of how such action
by a government might not help the
workings of the price mechanism can
be discussed in relation to the different
functions of the price mechanism, i.e.
rationing, signalling and the
transmission of preferences

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Question Answer Marks Guidance

1(e) Discuss whether maximum price controls will always be 6 The advantages of establishing a maximum
effective in controlling inflation. price in a market in the form of a price
ceiling:
For a discussion of the advantages of using maximum price controls • the price will be lower than what would
to control inflation (Up to 3 marks) otherwise be the case if there was no
government intervention
For a discussion of the disadvantages of using maximum price • this would lead to a lower rate of
controls to control inflation (Up to 3 marks) inflation in an economy
• this helps the poor afford the
5 marks maximum necessities of life
• these could include essential
Reserve 1 mark for a conclusion foodstuffs, housing rents and transport
• specific examples given include the
6 marks maximum price of foodstuffs, including bread in
Benin and rice in Haiti
The disadvantages of establishing a
maximum price in a market in the form of a
price ceiling:
• lower prices could stimulate demand-
pull inflation
• the creation of a shortage as a result of
the excess demand created in the
market
• hoarding
• black/illegal markets which can charge
relatively high prices
• queuing or rationing
• if the controls are not effective, it will
not control inflation

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Question Answer Marks Guidance

2(a) Explain two factors that will determine the price elasticity of 8 Definition of PED: the measurement of the
demand for a particular brand of car and how this price elasticity extent to which a change in price leads to a
of demand may change over time. change in quantity demanded

For Knowledge and Understanding: Formula of PED: percentage change in the

For a correct definition of price elasticity of demand quantity demanded of a product divided by the
For a correct formula of price elasticity of demand. (Up to 2 marks) percentage change in the price of a product.

2 marks maximum Factors affecting PED:

• the availability and price of substitutes:
For Application: the market contains many firms and so
Application of one factor affecting the PED for a particular brand of PED for a particular brand of car is
car, taking into account how this may change over time. likely to be relatively elastic
(Up to 3 marks) • the price of the product relative to
income: the higher the relative
Application of a second factor affecting PED for a particular brand of proportion of income accounted for by
car, taking into account how this may change over time. a particular brand of car, the more
(Up to 3 marks) elastic the PED is likely to be, although
this could change over time as
6 marks maximum incomes rise
• loyalty: if consumers have a strong
loyalty to a particular brand of car, this
will tend to make PED relatively
inelastic
• need or want: the degree to which a
particular brand of car is seen as a
necessity or a luxury
• the time period: the PED for any
particular brand of car is likely to
increase over time, so it is more likely
to be relatively elastic in the LR than in
the SR

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Question Answer Marks Guidance

2(b) Discuss whether knowledge of price elasticity of demand or 12 The usefulness of knowledge of price
income elasticity of demand would be of greater use to a elasticity of demand:
business that produces cars. • the business will be able to predict the
effect of a change in the price of a car
For Analysis: on demand reasonably accurately
Analysis of the usefulness of knowledge of the price elasticity of • if demand is price elastic, a fall in price
demand to a business that produces cars. (Up to 4 marks) will lead to an increase in revenue
• if demand is price inelastic, a fall in
Analysis of the usefulness of knowledge of the income elasticity of price leads to a decrease in revenue
demand to a business that produces cars. (Up to 4 marks) • if PED is unitary elastic, a change in
price will not lead to a change in
8 marks maximum revenue

For Evaluation: The usefulness of knowledge of the income

For exercising some judgement on whether knowledge of price elasticity of demand:
elasticity of demand or income elasticity of demand would be of • the business will benefit from knowing
greater use to a business that produces cars.(Up to 4 marks) about the effect of changes in income
in an economy, e.g. as incomes
Reserve 1 mark for a conclusion increase, production can shift from a
basic car
4 marks maximum • knowledge of YED will enable the
business to plan for the future, e.g.
having the resources to meet demand
• increases in income in an economy
may lead the business to produce
better and more luxurious cars with
more features and functions (luxuries
have a YED of more than 1 and so the
business will be able to know whether
to produce more luxury goods)

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Question Answer Marks Guidance

3(a) Explain, with the use of a diagram(s), how the production 8 Production possibility curve:
possibility curve of an economy could be affected by a decrease • a PPC is based on a two-product
in the quantity of labour available, but an increase in its quality. economy
• a PPC shows the range of
For Knowledge and Understanding: combinations of two products that may
For knowledge and understanding of the production possibility curve be produced if the existing level of
of an economy. (Up to 2 marks) resources in an economy is being fully
utilised
2 marks maximum
A decrease in the quantity of labour:
For Application: • this would lead to a reduction in the
For a diagram and explanation of how a decrease in the quantity of productive potential of an economy (1)
labour would shift the PPC to the left. (Up to 3 marks)
Diagram:
For a diagram and explanation of how an increase in the quality of • correct labelling of axes and PPC
labour would shift the PPC to the right. (Up to 3 marks) drawn in such a way that it touches
both axes (it can be straight or curved)
6 marks maximum (1)
• the PPC shifts to the left (1)

An increase in the quality of labour:

• this would lead to an increase in the
productive potential of an economy (1)

Diagram:
• correct labelling of axes and PPC
drawn in such a way that it touches
both axes (it can be straight or curved)
(1)
• the PPC shifts to the right (1)

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Question Answer Marks Guidance

3(b) Discuss whether supply side policies will be successful in 12 Potential advantages of supply side
increasing the quantity and quality of the factor enterprise in a policies:
modern economy. • lower taxes could encourage people to
become entrepreneurs
For Analysis: • higher expenditure on education and
Analysis of the potential advantages of supply side policies in training/reskilling could improve the
increasing the quantity and quality of the factor enterprise in a modern quality of the factor enterprise, making
economy. (Up to 4 marks) entrepreneurs more innovative and
more willing to take a risk
Analysis of the potential limitations of supply side policies in • deregulation could lead to laws being
increasing the quantity and quality of the factor enterprise in a modern reduced to make the setting up of an
economy. (Up to 4 marks) enterprise easier
• financial support from the government
8 marks maximum would enable more enterprises to
survive and to stay in business
For Evaluation:
For exercising some judgement on whether supply side policies will Potential limitations of supply side policies:
be successful in increasing the quantity and quality of the factor • the effects of supply side policies can
enterprise in a modern economy.(Up to 4 marks) take a long time to show, e.g. training
• some entrepreneurs might become too
Reserve 1 mark for a conclusion dependent on government support and
so become inefficient
4 marks maximum • the policies will not guarantee that all
enterprises will be successful
• a policy of privatisation might actually
reduce the quantity of the factor
enterprise needed
• questionable whether enterprise can
be taught/trained

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Question Answer Marks Guidance

4(a) Explain, with the use of a diagram(s), two factors that could 8 Definition of a floating exchange rate
bring about a depreciation in the value of a country’s exchange system:
rate in a freely floating exchange rate system. • one in which the exchange rate is
determined by the intersection of the
For Knowledge and Understanding: demand for a currency and the supply
For a correct explanation of a floating exchange rate system of a currency or not fixed by the
(1 mark) government

For a correct diagram showing a floating exchange rate system Diagram:

(1 mark) • vertical axis needs to indicate that it is
the price of a currency rather than any
2 marks maximum price in order for the diagram to be
given a mark, assuming that D and S
For Application: are correctly labelled
Explanation of one factor that could bring about a depreciation in the
value of a country’s exchange rate in a freely floating exchange rate Factors that could bring about a
system. (Up to 3 marks) depreciation:
• a decrease in the demand for a
Explanation of a second factor that could bring about a depreciation currency, e.g. if fewer exports are sold
in the value of a country’s exchange rate in a freely floating exchange • an increase in the supply of a currency,
rate system. (Up to 3 marks) e.g. if more imports are bought
• lower interest rates
6 marks maximum • a higher rate of inflation compared with
trading competitors because exports
will be less competitive
• a deficit in the balance of payments on
current account will contribute to a
depreciation

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Question Answer Marks Guidance

4(b) Discuss whether protectionist policies would be the most 12 Potential advantages of protectionist
effective way to correct a current account deficit on the balance policies:
of payments in an economy.
• tariffs would make imports more
For Analysis: expensive and discourage the
The potential advantages of protectionist policies to correct a current consumption of them
account deficit on the balance of payments in an economy. • quotas would restrict the volume of
(Up to 4 marks) imported products
• embargoes would place a complete
The potential limitations of protectionist policies to correct a current ban on certain imported products
account deficit on the balance of payments in an economy. • excessive administrative burdens (‘red
(Up to 4 marks) tape’) would make it much more
difficult to actually get products into a
8 marks maximum country
• export subsidies would help to make
For Evaluation: domestic products more price
For exercising some judgement on whether protectionist policies competitive in international markets
would be the most effective way to correct a current account deficit on
the balance of payments in an economy. (Up to 4 marks) Potential limitations of protectionist
Reserve 1 mark for a conclusion policies:
• tariffs may not be very effective if the
4 marks maximum demand for the imported products is
relatively price inelastic
• some quotas may not be that
restrictive
• an embargo could lead to retaliation
• there may be ways of getting round the
excessive administrative burdens
• the effect of export subsidies would
depend on the PED for the products
and could also lead to retaliation

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