Mark Scheme (Results)

Summer 2019

Pearson Edexcel International GCSE

In Economics (4EC1)

Paper 01 Microeconomics and Business

Economics
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Summer 2019
Publications Code 4EC1_01_1906_MS
All the material in this publication is copyright
© Pearson Education Ltd 2019
General Marking Guidance

• All candidates must receive the same

treatment. Examiners must mark the first candidate in
exactly the same way as they mark the last.
• Mark schemes should be applied positively. Candidates
must be rewarded for what they have shown they can do
rather than penalised for omissions.
• Examiners should mark according to the mark scheme
not according to their perception of where the grade
boundaries may lie.
• There is no ceiling on achievement. All marks on the mark
scheme should be used appropriately.
• All the marks on the mark scheme are designed to be
awarded. Examiners should always award full marks if
deserved, i.e. if the answer matches the mark
scheme. Examiners should also be prepared to award
zero marks if the candidate’s response is not worthy of
credit according to the mark scheme.
• Where some judgement is required, mark schemes will
provide the principles by which marks will be awarded
and exemplification may be limited.
• When examiners are in doubt regarding the application
of the mark scheme to a candidate’s response, the team
leader must be consulted.
• Crossed out work should be marked UNLESS the
candidate has replaced it with an alternative response.
Question Answer Mark
number
1(a) AO1 1 mark

A Land (1)

Question Answer Mark

number
1(b) AO2 1 mark

A $190 000 (1)

Question Answer Mark

number
1(c) AO1 2 marks

Award 1 mark for reference to amount willing to be

purchased and 1 mark for reference to price

The quantity of goods/services consumers are willing and

able to buy (1) at a given price (1) (2)

Question Answer Mark

number
1(d) AO1 1 mark

Award 1 mark for correct formula

Private costs + external costs (1)

Question Answer Mark
number
1(e) AO1 1 mark

Award 1 mark for reference to the relevant sector of the

economy
(1)
The provision of services in the economy

Question Answer Mark

number
1(f) AO2 2 marks

Award 1 mark for showing correct calculation

$12 100 ÷ 2 000 (1)

Award 1 mark for correct average cost per unit (AC)

= $6.05 (1)

Award 2 marks if average cost per unit is accurately

calculated, even if no calculations are shown

Award 1 mark if students show calculation and put 6.05

without the dollar sign

Do not award marks for the formula (2)

Question Answer Mark
number
1(g) AO2 3 marks

Award 1 mark for leftward shift of supply, labelled

Award 1 mark for higher equilibrium price, labelled
Award 1 mark for lower equilibrium quantity, labelled

(3)

Question Answer Mark

number
1(h) AO2 3 marks

Award 1 mark for identifying a relevant reason

Award 1 mark for developing the reason
Award 1 mark for the response being in the context of
music concerts

• One reason is that there are no substitutes (1) if they

want to see the artist performing live (1) the consumer
will have no choice but to pay a high amount (1)

Accept any other appropriate response (3)

Question Indicative content
number
1(i) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Inca Kola was a major competitor of Coca-Cola and the market leader
• Coca-Cola had a slightly lower share of the market than Inca Kola, with
32.0% compared to 32.9%
• Inca Kola was well established in Peru (since 1935)
• Buying a share of the company was a way to benefit from the success
rather than struggle to compete
• The purchase meant Coca-Cola no longer needed to compete with Inca
Kola for market share
• Coca-Cola’s purchase means they have much more control over the
Peruvian fizzy soft drinks market
• Coca-Cola also gets a share of Inca Kola’s profits

Mark Descriptor
Level
0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Answer Mark
number
2(a) AO1 1 mark

B What to produce (1)

Question Answer Mark

number
2(b) AO2 1 mark

C Y (1)

Question Answer Mark

number
2(c) AO2 2 marks

Award 1 mark for showing correct calculation.

-12 ÷ 15 (1)

Award 1 mark for correct price elasticity of demand (PED).

= -0.8 (1)

Award 1 mark if students show calculation and put 0.8

without the minus sign

Award 2 marks if PED is correctly calculated, even if no

calculations are shown

Do not award marks for the formula (2)

Question Answer Mark

number
2(d) AO1 1 mark

Award 1 mark for reference to an invention or new idea

An idea which leads to a new product/process (1)

Question Answer Mark
number
2(e) AO1 1 mark

Award 1 mark for one correct factor:

• a decrease in advertising
• a decrease in income
• an adverse change in taste and fashion
• a decrease in price of substitute goods
• an increase in price of complementary goods
• a decrease in population

Accept any other appropriate response (1)

Question Answer Mark

number
2(f) AO1 2 marks

Award 1 mark for reference to the advantage and 1 mark

for development of the advantage

• The large number of vehicles competing means

there is a lot of choice (1) therefore it is easier for
passengers to hire an auto rickshaw (1)

Accept any other appropriate response (2)

Question Answer Mark

number
2(g) AO2 3 marks

Award 1 mark for identifying a relevant reason for the

difference in price
Award 1 mark for developing the reason
Award 1 mark for the response being in the context of
transport in Dhaka

• One reason is that there are likely to be fewer

vehicles competing outside the city centre (1)
because most of the 17 million people live in the
city centre (1) and so there is less potential business
for the drivers (1)
(3)
Accept any other appropriate response
uestion Indicative content
number
2(h) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Without the changes in technology, more parking spaces are demanded

than supplied and demand is increasing
• The introduction of Automated Parking Systems (APS) increases the
supply of spaces and so should shift the supply curve to the right
• Changes in technology allow the gap between demand and supply to
be reduced.
• The change in supply will also affect the equilibrium price, making
parking cheaper and more available
• Thus reducing the shortage of car parking spaces
• Possible use of diagram

AO4

• The increase in the number of vehicles may be faster than the increase
in the supply of car parking spaces meaning there is still a shortage
• There is already such a large excess in demand that the introduction of
APS will not make much difference
• It is likely to take time from the initial decision to having the APS in
place, meaning the supply curve may not shift straight away
• Some motorists do not like change or worry the technology will fail and
may be averse to the idea of automated parking, therefore not use the
APS
Level Mark Descriptor

0 No rewardable material.

Level 1 1–3 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Answer Mark
number
3(a) AO1 1 mark

D An inferior good (1)

Question Answer Mark

number
3(b) AO1 1 mark

B An increase in bureaucracy (1)

Questio Answer Mark

n
number
3(c) AO2 3 marks

Award 1 mark for drawing equilibrium wage rate, labelled

Award 1 mark for new quantity demanded, labelled
Award 1 mark for new quantity supplied, labelled

(3)
Question Indicative content
number
3(d) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• There may not be enough people in Canada undertaking the required

training to gain the specialist skills and qualifications required
• This may be because it takes too long or costs too much for the training
• Canada is a very big country and so it may be difficult for the specialist
workers to move from their geographic locations
• There may have been a faster increase in demand for the specialist
skills such as computer engineers and web designers, than the supply
of them
• Wages and rewards for the computer engineers/web designers may be
higher in other countries, encouraging workers to leave Canada

Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Indicative content
number
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Skills could be gained through education in schools and colleges leading

to qualifications in technical areas relevant to business
• Skills can also be gained through work place training by employers
• Through education and training, workers will be more skilled and may
therefore be more productive. This could lead to an increase in
international competitiveness
• Workers may be more motivated as a result of the training, leading to
greater job satisfaction, lower labour turnover and improved
productivity
• Through improved human capital the quality of labour is greater and
productivity can be increased. This could mean income per capita
increases

AO4

• However, the cost to the firm of staff training/the Canadian Government

of providing education may be too great compared to investing in
technological advances
• The firm may be reluctant to invest in human capital if it pays to train
workers but they then leave for alternative employment.
• Increasing technological developments may be more financially viable.
• To be effective the quality of the training needs to be of a high enough
standard to meet the requirements of the work place
• It takes a long time for the benefits of education to lead to increased
productivity. This could explain why Canada’s labour productivity growth
took time to become the 3rd most productive of the leading economies
• It depends on the nature of the industry, some industries are better
suited to having highly skilled workers e.g. service industries
• Whereas some industries suit increased automation and use of
technological advances rather than investing in human capital
Level Mark Descriptor

0 No rewardable material.

Level 1 1–3 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness (AO4).
Level 2 4–6 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness (AO4).
Level 3 7–9 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness (AO4).
Question Answer Mark
number
4(a) AO2 2 marks

Award 1 mark for showing quantity demanded is 20 and quantity

supplied is 50 and 1 mark for correct calculation of excess supply

50 – 20 (1) = 30 (1)

Award 2 marks if excess supply is correctly calculated, even if no

lines are shown on diagram or calculation shown (2)

Question Indicative content

number
4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Collusion between firms reduces competition and means firms

cooperate with one another instead
• Cooperation between firms often means they agree to fix prices and
therefore restrict competition
• Consumers would therefore pay higher prices for laptops and games
consoles
• If firms make more profit as a result, it will be harder for new firms to
enter the market, making competition in the industry even less likely
• Online electrical equipment firms may collude by restricting availability
• This means they may only make a limited quantity of electrical items
available, encouraging consumers to make more hasty purchasing
decisions at higher prices
Level Mark Descriptor

0 No rewardable material.

Level 1 1–2 • Demonstrates basic knowledge and understanding by

developing relevant points. Limited application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will lack selectivity and organisation.
Interpretation of economic information will be limited, with a
lack of analysis of issues (AO3).
Level 2 3–4 • Demonstrates partial knowledge and understanding by
developing relevant points. Partial application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Interpretation of economic information will be
good, with some analysis of issues (AO3).
Level 3 5–6 • Demonstrates clear knowledge and understanding by
developing relevant points. Appropriate application of economic
terms, concepts, theories and calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Interpretation of economic information will be
excellent, with a thorough analysis of issues (AO3).
Question Indicative content
number
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• An oligopolistic market is one where there are a few dominant firms,

such as Albert Heijn, Super Unie and Jumbo (which have 83.5% of the
market between them)
• Due to brand names and advertising, set up costs are likely to be high,
therefore creating barriers to entry for any new firms trying to compete
• High profits may be enjoyed by the dominant firms such as Albert
Heijn, Super Unie and Jumbo because of these barriers to entry
• The dominant firms can benefit from economies of scale because they
are large scale producers. As output rises, average costs decrease,
further increasing profits (and dominance)
• Small firms can still compete and survive by specialising and/or catering
for niche markets, which are not served by the dominant firms

AO4

• However the supermarkets may have to compete via non price

competition such as advertising, loyalty schemes, customer service and
longer opening hours as they are likely to want to avoid price wars,
which can be expensive
• As the providers are interdependent, if one heavily invests in a major
advertising campaign, it is likely to have an impact on the others’
market share
• The market is constantly changing and so dominance may only
continue if the firms continue to develop new ways of attracting custom
• Successful small firms run the risk of being taking over or crowded out
by dominant supermarkets
• It may depend upon how market trends change with regards to use of
technology and online grocery shopping.
• If the supermarkets in the oligopoly cannot keep up, they may lose
dominance or be pushed from the market altogether
Level Mark Descriptor

0 No rewardable material.

Level 1 1–4 • Demonstrates isolated elements of relevant knowledge and

understanding; may lack development of relevant points.
Limited application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will lack selectivity and organisation.
Chain of reasoning may be attempted. Interpretation of
economic information will be limited, with a lack of analysis of
issues (AO3).
• Only offers one viewpoint, meaning there is an unbalanced and
incomplete evaluation, showing limited understanding and
awareness. A judgement or conclusion is unlikely to be
attempted (AO4).
Level 2 5–8 • Demonstrates partial selectivity and some accurate knowledge
and understanding by developing some relevant points. Partial
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate some selectivity and
organisation. Chain of reasoning will be present but may be
limited. Interpretation of economic information will be good,
with some analysis of issues (AO3).
• Offers more than one viewpoint but the argument may lack
balance, leading to an evaluation that may not demonstrate full
understanding and awareness. A judgement or conclusion is
attempted, but may not be fully supported (AO4).
Level 3 9–12 • Demonstrates specific and accurate knowledge and
understanding by developing relevant points. Appropriate
application of economic terms, concepts, theories and
calculations (AO2).
• Information presented will demonstrate excellent selectivity and
organisation. Chain of reasoning will be coherent and logical.
Interpretation of economic information will be excellent with a
thorough analysis of issues (AO3).
• Offers more than one viewpoint. The argument is well balanced
and coherent, leading to an evaluation that demonstrates full
understanding and awareness. A supported judgement or
conclusion is present (AO4).
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