Mark Scheme (Results)

November 2023

Pearson Edexcel International GCSE

In Economics (4EC1)
Paper 01 Microeconomics and Business
Economics
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November 2023
Question Paper Log Number P73498A
Publications Code 4EC1_01_2311_MS
All the material in this publication is copyright
© Pearson Education Ltd 2023
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 A trade union is an organisation that aims to improve Mark
number
Answer
1(a) AO1 1 mark

The only correct answer is:

D working conditions

A is not correct because trade unions do not focus on the

objectives of firms
B is not correct because the government does not receive revenue
due to trade union actions
C is not correct because the environment is not a focus of trade (1)
union activity

Question Figure 1 below shows a change in demand for tickets to a sporting Mark
number event. Which one of the following statements is true?

Answer
1(b) AO2 1 mark

The only correct answer is:

C An increase in demand is shown by a shift to the

right

A is not correct because when the price falls, the quantity

demanded rises
B is not correct because the demand curve slopes downwards
from left to right (1)
D is not correct because a decrease in demand is shown by a shift
to the left

Question What is meant by the term economies of scale? Mark

number
Answer
1(c) AO1 2 marks

Award up to 2 marks for a correct definition

Falling average costs (1) due to expansion of the firm (1)

Accept any other appropriate response

(2)
Question State one main feature of an oligopoly. Mark
number
Answer
1(d) AO1 1 mark

Award 1 mark for a correct feature

• Few firms
• Large firms dominate
• Different products
• Barriers to entry
• Collusion
• Price competition
• Non-price competition

Accept any other appropriate response (1)

Question Define the term excess supply Mark

number
Answer
1(e) AO1 1 mark

Award 1 mark for a correct definition

• Where supply is greater than demand

Accept any other appropriate response (1)

Question Calculate, to two decimal places, the price elasticity of supply Mark
number (PES) for the firm. You are advised to show your working.

Answer
1(f) AO2 2 marks

Award 1 mark for showing correct calculation

4.3%/3.7% (1)

Award 1 mark for correct price elasticity of supply

= 1.16 (1)

Award 2 marks if price elasticity of supply is correctly calculated

as 1.16, even if no calculations are shown

Do not award marks for a formula (2)

Question Using the diagram below, draw the likely effects on the market Mark
number for electric cars following the introduction of a subsidy on
electric cars. Label the new curve, the new equilibrium price
and the new equilibrium quantity.

Answer
1(g) AO2 3 marks

Award 1 mark for a rightward shift of the supply curve, labelled

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

(3)

Question Explain one possible advantage of privatisation for consumers Mark

number in Brazil.

Answer
1(h) AO2 3 marks

Award 1 mark for identifying an advantage

Award 1 mark for developing the response
Award 1 mark for the response being in context

• Consumers may benefit from lower prices (1) because a

private firm is likely to want to be efficient (1) so it will aim
to produce food at its lowest possible cost (1)

• Better quality may be available to consumers (1) because

private firms will aim to make a profit (1) meaning they
need to retain customers by providing quality food
products (1)
(3)
Accept any other appropriate response
 Question With reference to the data above and your knowledge of economics, analyse
number how market failure is likely to occur at the TSFG venue.

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

AO2 and AO3

• Market failure exists where resources are not allocated efficiently

• Examples of market failure include externalities, missing markets, lack of
information, factor immobility and lack of competition
• There is a lack of competition selling food and drinks at the TSFG, meaning
customers have limited choice of where to buy refreshments inside the
grounds
• This means higher prices can be charged because customers cannot get
refreshments anywhere else
• As people spend several hours at the venue, they are likely to need
something to eat and/or drink during their visit
• Therefore, the high prices and reduced choice leads to an inefficient
allocation of resources

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 A firm employing 135 workers has a total output of 33,750 Mark
number units each month. What is the monthly labour productivity of
the firm?

Answer
2(a) AO2 1 mark

The only correct answer is:

C 250 units

A is not correct because labour productivity is measured in units

B is not correct because this would be a multiplication instead of
a division calculation and the wrong units are used
D is not correct because this would be a multiplication instead of
a division calculation (1)

Question Which one of the following is a possible cause of positive Mark

number economic growth?

Answer
2(b) AO1 1 mark

The only correct answer is:

D Increasing technological advancements

A is not correct because this would reduce demand for goods

and services, therefore reducing economic growth
B is not correct because this would be more likely to reduce
economic growth
C is not correct because increasing unemployment would lead
to fewer resources being utilised (1)

Question What is meant by the term opportunity cost? Mark

number
Answer
2(c) AO1 2 marks

Award up to 2 marks for a correct definition

The cost of the next best alternative (1) given up (when making a
choice) (1)

Accept any other appropriate response

(2)
Question Calculate the total fixed costs for the firm in March. You are Mark
number advised to show your working.

Answer
2(d) AO2 2 marks

Award 1 mark for showing correct calculation

20 250 + 5 125 (1)

Award 1 mark for calculating correct total fixed costs

= 25 375 Tk (1)

Award 2 marks if total fixed costs are correctly calculated as

25 375 Tk, even if no calculations are shown

Award 1 mark if total fixed costs are calculated as 25 375, even if

no calculations are shown

Do not award marks for a formula (2)

Question Describe one reason why an entrepreneur is a factor of Mark

number production.

Answer
2(e) AO1 2 marks

Award 1 mark for reference to the reason and 1 mark for

development of the reason

• An entrepreneur comes up with a business idea/takes a

risk (1) therefore it is classed as enterprise (1)

• An entrepreneur manages the other factors of

production (1) in order to make goods/services (1)

Accept any other appropriate response (2)

Question Explain one advantage for firms of an increase in the retirement Mark
number age.

Answer
2(f) AO2 3 marks

Award 1 mark for identifying a relevant advantage

Award 1 mark for developing the advantage
Award 1 mark for the advantage being in context

• Firms will be able to retain their skilled workers (1) because

workers will not be able to access their pension until the age
of at least 57 (1) reducing the cost of recruitment and training
(1)

• Supply of labour may increase (1) because people may need

to continue working for another two years (1) thus reducing
the price of labour/wage rate for firms

(3)
Accept any other appropriate response
Question With reference to the data above and your knowledge of economics, assess the
number likely effectiveness of the tourist tax in dealing with negative externalities, such
as overcrowding.

Indicative content
2(g) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Negative externalities are spillover effects on third parties due to

consumption/production
• Overcrowding in Venice may cause pollution, litter and congestion issues for
residents and other visitors
• One method of government intervention to reduce negative externalities is
the use of taxation
• A tourist tax is a compulsory financial charge made by the government on
individuals
• A tourist tax would make it more expensive to visit Venice
• Therefore, it is likely to reduce the number of tourists in Venice from the
estimated 24 million who visit each year
• The higher the tourist tax, the fewer tourists there are likely to be, meaning
at its highest charge of €10, the reduction should be greatest
• As a result, the negative externality, such as overcrowding, may be reduced

AO4

• However, as Venice is so popular, some tourists may decide it is worth

paying the tourist tax
• This may especially be the case at the lower rates of tourist tax, where a
tourist may not consider €3 unaffordable compared to the price of their trip
• It takes time to collect the tourist tax, meaning there may be more
congestion when people arrive in Venice
• Even a reduction in numbers may not be enough to deal with the
externalities caused by the high number of visitors each year
• Those visitors who are prepared to pay the tourist tax will be generating
revenue for the city which may be used to help combat the externalities in
other ways
• Other methods of government intervention may be more effective
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 Which one of the following is a reason why a firm may decide to Mark
number stay small?

Answer
3(a) AO1 1 mark

The only correct answer is:

B To sell a niche product

A is not correct because bureaucracy should be reduced

C is not correct because risk cannot easily be spread
D is not correct because there is less chance of taking over (1)
competitors

Question The introduction of a minimum wage above the equilibrium wage in Mark
number a labour market, is most likely to:

Answer
3(b) AO1 1 mark

The only correct answer is:

D decrease quantity of labour demanded and increase the
wage rate

A is not correct because employers are less likely to demand labour

and the wage rate will be higher than the equilibrium
B is not correct because employers are less likely to demand labour
C is not correct because the wage rate will be higher than the (1)
equilibrium
Question On the diagram below, draw and label economies of scale, Mark
number diseconomies of scale and the point at which the firm is most
efficient.

Answer
3(c) AO2 3 marks

Award 1 mark for economies of scale labelled

Award 1 mark for diseconomies of scale labelled
Award 1 mark for point at which firm is most efficient labelled

Most efficient point

(3)
Question With reference to the data above and your knowledge of economics, analyse why
number education in Japan may be an external benefit.

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

AO2 and AO3

• External benefits are positive spillover effects from the production or

consumption of a good/service which allow third parties to benefit
• Education, such as the system provided in Japan would provide an external
benefit to people who do not receive the education themselves
• This is because students may do socially useful or highly skilled jobs in the
future
• Therefore, productivity will be higher and so will the standard of living for
society, in a country such as Japan
• As a result, future generations may benefit from the consumption of
education by others, even if they did not receive (a high standard of)
education themselves

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 With reference to the data above and your knowledge of economics, assess the
number benefits to Simona of making these changes.

Indicative content
3(e) AO2 (3 marks)/AO3 (3 marks)/AO4 (3 marks)

AO2 and AO3

• Business aims may include maximising profit, caring for customers,

completing charitable work or maximising sales/revenue
• Simona prioritises caring for her customers by charging low prices and
being flexible with appointment times
• This flexibility has led to problems with provision of hairdressing services
due to delays and issues getting an appointment
• Therefore, demand has reduced and revenue has fallen
• This means that Simona has been unable to meet the loan repayments to
her bank and may risk her hairdressing business failing
• As a result, it may be a good idea to make these changes in order to
increase revenue for the hairdressing business
• This may help with financial difficulties as well as reduce the late/cancelled
appointments

AO4

• However, some customers may visit the hairdressers due to the low prices
• The customers may also welcome the flexibility of the services offered,
encouraging them to return and giving Simona’s business a good reputation
• This may mean a price increase and/or fee for late arrivals/cancellations
could reduce custom
• Therefore, making these changes may lead to further financial problems
rather than resolving them
• It may be more important to focus on caring for customers by managing
appointment times more carefully
• As a result, Simona may be able to continue to prioritise caring for
customers but at the same time solve some of her financial issues
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 Calculate, to two decimal places, the percentage change in profit Mark
number for the firm between 2020 and 2022. You are advised to show your
working.

Answer
4(a) AO2 2 marks

Award 1 mark for showing correct calculation

$22 950 - $20 250 $ 2 700

-------------------------- x 100 OR ------------ x 100 (1)
$20 250 $ 20 250

Award 1 mark for correct percentage change

= 13.33% (1)

Award 2 marks if percentage change is correctly calculated as

13.33%, even if no calculations are shown

Award 1 mark if percentage change is calculated as 13.33, even if

no calculations are shown

Do not award marks for a formula (2)

 Question With reference to the data above and your knowledge of economics, analyse
number why price elasticity of demand (PED) may be relatively inelastic at Marina Café.

Indicative content
4(b) AO2 (3 marks)/AO3 (3 marks)

AO2 and AO3

• Price elasticity of demand (PED) is the responsiveness of demand to a

change in price
• Inelastic demand means a rise in price will lead to a smaller percentage
change in the quantity demanded
• PED is likely to be more inelastic at Marina Café because it is situated in a
popular location, with sea and mountain views
• This means that the degree of necessity is likely to be higher for customers
wishing to enjoy the scenery at the same time as their drinks
• Therefore, Marina Café has few substitutes because not many of the cafés
will have the additional benefit of this location
• In addition, the price of a coffee is a small percentage of income, meaning
customers will be less likely to reduce their demand due to a rise in price
• As a result, customers may be prepared to pay €1.20 more at Marina Café
than at alternatives, or even pay more if the price was increased further

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 With reference to the data above and your knowledge of economics, evaluate
number whether introducing division of labour is the best way for Raphael to increase
productivity in his pastry-making factory.

Indicative content
4(c) AO2 (4 marks)/AO3 (4 marks)/AO4 (4 marks)

AO2 and AO3

• Division of labour means dividing the production process into different

stages where each worker specialises in one task
• Productivity is the amount of output that can be produced in a period of
time, with a given quantity of resources
• Division of labour leads to less time being wasted as workers will not have
to switch between different parts of production such as mixing
ingredients and shaping the dough
• This means the employees at the pastry-making factory can become more
productive as they are able to develop skills in the task they perform,
becoming more specialised
• This may be particularly important in order for Raphael’s factory to meet
demand from the restaurants and street vendors in Madrid, to whom it
sells
• It can be easier to integrate machinery into the production process as the
tasks are broken down into different stages

AO4

• However, the pastry-making factory employees may find doing the same
task, such as combining the cooled mixture with egg, very boring and
monotonous
• This could mean they lose concentration and may make mistakes, leading
to a lower rate of productivity
• Therefore, a delay in supplying the pastry for churros to restaurants and
street vendors in Madrid could occur and lead to a loss of business for the
factory
• This is especially likely as the restaurants are busy and may be unable to
meet their own customer’s demand for churros without the pastry
• Improving the quality of labour by training employees to use pastry-
making equipment could increase productivity more, as could investing in
more advanced facilities with which to bake
• It depends whether the pastry-making tasks require much training as they
maybe more suited to the division of labour process
• Raphael could introduce rotation of tasks to reduce the monotony or use
division of labour alongside other factors, such as advanced baking
facilities
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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