Cambridge IGCSE™

ECONOMICS 0455/21
Paper 2 Structured Questions

2 hours 15 minutes

You must answer on the enclosed answer booklet.

You will need: Answer booklet (enclosed)

INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three
questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional
answer paper, ask the invigilator for a continuation booklet.
● You may use a calculator.

INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].

This document has 7 pages. Any blank pages are indicated.

[Turn over
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Section A

Read the source material carefully before answering Question 1.

Source material: Agricultural output in Africa The output of more fertilisers and better irrigation have
contributed to higher agricultural output for each unit of land in Africa in recent years. More significant,
however, has been the increase in the quantity of land used to grow crops. For example, in 1975 12% of
land was used for agriculture. By 2015 this had increased to 25%. In Mauritania, agricultural expansion
is particularly high at 7% per year.

Despite the rise in agricultural output, the quantity of high quality food that people would like to
consume is not keeping pace with the rise in population in all African countries. Africa’s population is
set to double by 2050, which will increase even further the demand for food. As incomes increase in
Africa, the desire for a range of products is increasing. People in Africa are, for example, wanting more
and better housing. Indeed, the desire for housing usually outstrips the growth in resources devoted to
housing. People constantly strive for better living standards. The expansion of the house building
industry is encouraging some farm workers to switch to working in the building industry. Changes in
the pattern of demand are causing not only agricultural workers, but also other workers to change their
occupation and where they work.

Agricultural output can fluctuate quite significantly as it can be influenced by, for example, floods,
droughts and heatwaves. The contribution of agricultural output varies between countries. For example,
in 2015 agriculture accounted for only 2% of South Africa’s output, but 21% of Nigeria’s output.

The total output that a country produces is influenced by the size of the labour force. The table shows
the size of the labour force and total output for a group of selected African countries.

Country Labour force (millions) Total output (US$ billions)

Ethiopia 49 62
Ghana 12 38
Mali 6 13
Nigeria 58 481
South Africa 21 315
The labour force and total output of five African countries

Answer all parts of Question 1. Refer to the source material in your answers.
1 (a) Calculate the value of agricultural output in South Africa in 2015. [1]

(b) Identify two reasons why the productivity of land has increased in Africa. [2]

(c) Explain the opportunity cost of working on a farm. [2]

(d) Analyse, using a PPC, the effect on an economy of a flood. [4]

(e) Explain two examples of the economic problem. [4]

(f) Analyse the relationship between the size of a country’s labour force and its output shown in
the table. [5]
(g) Discuss whether or not skilled workers are likely to be more occupationally and
geographically mobile than unskilled workers. [6]
(h) Discuss whether or not an increase in the output of food will reduce the output of
other products. 3 [6]
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Section B

Answer any three questions.

Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.

1 In late 2016 an Australian firm announced that it would be starting a project to use the power of
waves off the coast in Cornwall in the UK to generate electricity. More entrepreneurs are
becoming interested in making use of wave power which is a free good. More labour is likely to
be employed in the industry. The quantity of labour has increased in recent years
(a) Define an entrepreneur. [2]

(b) Explain the difference between a free good and an economic good. [4]

(c) Analyse, using a PPC, the effect on an economy of an increase in the supply of labour. [6]

(d) Discuss whether or not the quantity of labour in the UK is likely to increase in the future. [8]

2 In recent years, the mobility of labour, the number of women in the labour force and GDP have
increased in Bangladesh. In 2019, the central bank of Bangladesh approved three new commercial
banks. In that year, women on average earned 77% of the pay of men in Bangladesh. The
country’s economy experienced the world’s seventh highest economic growth rate, with an
increase in GDP of 7.4%.

(a) Identify two influences on the mobility of labour. [2]

(b) Explain two benefits that consumers may gain from having more commercial banks. [4]

(c) Analyse why women may be paid less than men. [6]

(d) Discuss whether or not an increase in the mobility of labor would benefit Bangladesh's
economy. [8]

3 Medan is the third largest city in Indonesia by population. It is sometimes known as the city of a
million shop-houses as many people start small firms at the street level of their homes. This has
led to an increase in the market supply of industries such as cafes and clothes shops. Also, due to
the growth in demand for food delivery, the unemployment rate has fallen. However, mobility of
labour is limited both within Medan and within Indonesia.

(a) Identify the difference between individual supply and market supply. [2]

(b) Explain two influences on the mobility of labour. [4]

(c) Analyse the reasons for the existence of small firms. [6]

(d) Discuss whether or not a reduction in the unemployment rate benefits an economy aims. [8]

4 Enterprise moves when the people who carry out the functions move. These people are called
entrepreneurs. The mobility of enterprise depends on the mobility of entrepreneurs. Enterprise is
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the most mobile factor of production. The skills involved in being an entrepreneur can be applied
in every industry. Someone who has borne uncertain risks and organized factors of production in
the car industry should be able to do this in, for example, the textile industry too. Apart from
being occupationally mobile, enterprise is also geographically mobile. Someone who has been
successful in starting up and running a business in one country is likely to be successful in another
country also.

(a) Define the term "entrepreneur." [2]

(b) Explain why enterprise is considered the most mobile factor of production. [4]
(c) Analyze how the mobility of entrepreneurs can contribute to economic development in a
different industry. [6]
(d) Discuss the potential benefits and challenges for an entrepreneur moving their business
operations to a different country. [8]

5 In Greece, rich households spend more than the average household. The amount of spending in
an economy influences whether its production point is on or inside its production possibility curve
(PPC). In 2020, household spending in Greece fell. This affected some firms’ plans to merge. It
also increased unemployment. More than half of those unemployed in Greece had been
unemployed for more than a year.

(a) Identify two reasons why rich households spend more than the average household. [2]

(b) Explain the significance of a production point inside a PPC and a production point on its PPC.
[4]

(c) Analyse why someone who has been unemployed for more than a year may not get another
job. [6]

(d) Discuss whether or not a decrease in household spending would lead to long-term economic
challenges for an economy like Greece. [8]
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