ARAMS ES FOR TEACHERS’ USE ONLY 97. CE Eoon, I Marking Scheme Mark Section A 1, entrepreneur + be bears risk / makes decisions, 1 ~ labour ~ be provides human effort in production. 1 2 Aaswer) Indicate in the dize = wage rate W > equilibrium wage rate 1 -SaS° 1 > unemployment drops from Us 10 Us 1 Elzboration initial unemployment problem => wage rate > equilibrium wage rate 1 ost 1 + some workers have to leave the industry and find jobs in other (growing) industries 1 2 Wage rate initial wage rate Wp > equilibrium wage rate 1 We falls (10 W ) 1 + unemployment drops from Us 10 Us 1 Eleboration : + initial unemployment problem = initial wage rate > equilibrium wage rate 1 = excess supply / 4, > qe! workers of the industry have to accept lower wage rates 1 swage rates fall : LEKCON theeAPRESS py - Pun ICAURCAO bo wane Indicate in the di = wage rate W> equilibrium wage rate -03D' = unemployment drops from Upto Us Elaboration : ~ initial unemployment problem => wage rate > equilbrium wage rate +pt ~ more business (éerived demand 1) or labour producivty ofthe industry 7 ‘Assume that the factory has 100 workers, (The number is arbitrary.) Afis1 95 woskers ars employed, the change in MP caused by adding more and more workers in production can bbe found by converting the t2ole givea in the question into the following table : No. of workers coming to work | MP (units/ dsy) 5 ~ 96 60 7 $0 93 40 99 30 190 20 In other words, when the variable factor abou) is continuowsly added to the fixed factors (and, capital and entzeprencurship), the marginal product wil eventually diminish. This is the law of dirainishing marginal rerurns. (2) @issgree) = Salt is used as money. = Itis generally accepted 2s the medium of exchange, ad [Remark : Mere mention of the definition of money without saying disagree of giving any other elaboration : No mark.) (©) - uneasy to maintain 2 stable quality (loss in value, storage cost) = may be bulky 10 carry around a large amount of salt = may not be scarce eniough (cannot control the money supply) «= different kinds of salt may not have uniform qui «any other relevant point [Mark the FIRST TWO points only) 2@x2=4FABRSSARSSBY = FOR TEACHERS’ USE ONLY 97 CB Econ, [Marking Scheme 5. (@) oligopoly or monopolistic competition (&) price compatition - differentiated products (©) monopolistic competition ~ many sellers - other forms of non-price competition ~ free etry ~ imperfect information ~ any other relevant point [Mark the FIRST TWO points only] a oR. oligopoly = 2 few dominating firms + interdependency among competing fins or rivalry ~ other forms of non-price competition ~ imperfect information ~ entry barriers ~ any other relevent point | [Mark the FIRST TWO points only] if the initial export value of goods is significantly higher chan the initial import valuc of ‘goods and the éifference fs more than compensate for the difference in their individual gronch rates, then there is a case of visible rede surplus (@) Direct axes. (©) Direct taxes (salaries tax and profits tax) very with income / are progressive or, proportional to incomes (earings and profits). ‘When economic conditions change (good), incomes will change (high), direct tax revenue will also change (igh), (2) The sewage charges should be included because it is a payment for the services produced Sy the government, (©) The increased resale value should not be included because there is no production of goods oF services, 97-CE-ECON D-11 cither monopolistic competition or oligopoly, whic must match with (2), 1@x2=2