Cambridge International AS & A Level

ECONOMICS 9708/43
Paper 4 Data Response and Essays May/June 2023
MARK SCHEME
Maximum Mark: 70

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 May/June 2023 series for most
Cambridge IGCSE, Cambridge International A and AS Level and Cambridge Pre-U components, and some
Cambridge O Level components.

This document consists of 14 printed pages.

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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.

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).

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.

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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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Section A Data response

Question Answer Marks

Follow the point-based marking guidance at the top of this mark scheme.

1(a) The article refers to concentration ratios. Explain what is meant by a 4

concentration ratio and how it is calculated.

The concentration ratio is the sum of the market share percentage held by the
largest specified number of firms in an industry. It ranges from 0% to 100%,
and an indicates the degree of competition in the industry. Low concentration
ratio in an industry would indicate greater competition among the firms in that
industry. (2)

It is calculated by adding together the total sales for each of the specified
number of largest firms in the industry. (E.g. a 4 firm concentration ration
takes the sales of the largest 4 firms) That sum is then divided by the total
sales of the industry and converted to a percentage. (2)

1(b) Explain, with an example, whether the article is correct in saying that 4
neither the producer nor the consumer pays for negative externalities.

A negative externality is a cost that is incurred by a third party. (1) Negative

externalities exist when individuals bear a portion of the cost associated with a
good’s production without having had any influence over the related
production decisions. (1)

Accept any relevant example of the effect of production on a third party. (1 for
example, 1 for application).
Maximum 3 marks if only consumption externality discussed.

Max 3 mark if only consumer

1(c) Apart from negative externalities, describe two reasons why the article 4
says increased concentration in an industry may not improve consumer
welfare.

2 marks for each reason. 1 for identification, 1 for explanation.

2 marks for each reason. 1 for identification, 1 for explanation.
2 marks for each reason. 1 for identification, 1 for explanation.

 it allows increased power to monopolies with resulting higher profits that

benefit the shareholders and producer management not the consumer.
 it results in unequal bargaining power between employers and workers.
Workers have little scope for arguing for pay rises.
 it allows an unequal negotiation between large organisations and small
independent suppliers. Large organisations can insist on low purchasing
prices and small suppliers have limited power to resist. This has been
noticeable in large supermarkets dealings with small farmers.

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Question Answer Marks

1(d) The article says that monopolies are tolerated because they are efficient. 8

Assess, with the help of a diagram, whether economic theory supports

the idea that monopolies are efficient.

Definition of efficiency:
 Productive efficiency producing at the lowest cost for the particular
output. (2)
 Allocative efficiency where every good or service is produced up to the
point where the last unit provides a marginal benefit to consumers equal
to the marginal cost of producing it. (2)

Diagram should illustrate:

Correctly drawn and labelled Monopoly diagram. (3marks)

Conclusion: the theory does not support this opinion. (1)

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Question Answer Marks

EITHER

2 To improve allocative efficiency economists frequently advise 20

governments to remove existing subsidies to the private sector
providers of education.

With the help of a diagram, evaluate this advice.

Use Table A: AO1 Knowledge and understanding and AO2 Analysis and
Table B: AO3 Evaluation to mark candidate responses to this question.

AO1 and AO2 out of 14 marks. AO3 out of 6 marks.

Indicative content

Responses may include:

AO1 Knowledge and understanding and AO2 Analysis

 The distinction between public and private ownership should be clearly

explained

 Education should be identified as a merit good and the significance of

merit goods explained.

 The links between a merit good, positive externalities and allocative

efficiency should be analyzed.

 Analysis of the relationship between the private provision of education,

the use of subsidies and potential efficient outcomes should be provided.

 A diagram should be provided to illustrate the impact of a subsidy on the

provision of education by the private sector

Where no diagram – max marks top L2

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Question Answer Marks

2 AO3 Evaluation

 The use of subsidies to encourage the provision of education in the

private sector might not be entirely successful because of the difficulties
involved when attempting to assess the precise level of subsidy required
to achieve an allocatively efficient outcome.

 Subsidies provided by the public sector are often expensive and their use
will automatically create opportunity costs. For example, money spent on
state subsidies to health care

 Subsidies in the private sector will mean that access to education is still
based on an ability to pay, this might create inequitable outcomes in
society.

 The pursuit of profit supported by subsidies might enable private firms to

cut costs and reduce any unnecessary bureaucracy thus leading to a
more efficient use of scarce resources.

 Direct state provision of education might lead to less efficient outcomes

and reduce the time taken to ensure a high standard of education is
available on an equal basis throughout the population.

 A conclusion should be attempted which examines the net benefits of

each alternative i.e. private or public sector provision of education.

 Also, the impact on price and output in some circumstances takes a long
time to become effective.
 Advertising is often costly and it is not always certain that it will have a
sufficiently persuasive effect to ensure the correct level of output /
consumption is reached
 It is possible to show that government intervention can reduce the level of
inefficiency caused by the existence of negative externalities, but it is not
clear whether the net effect of government intervention will always be
positive. Some types of intervention will be more effective than others
depending on the nature of the good / service under consideration.

Accept all valid responses.

AO1 Knowledge and understanding and AO2 Analysis 14

AO3 Evaluation 6

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Question Answer Marks

OR

3 Some firms frequently use price discrimination. 20

Assess the view that when this occurs, price discrimination will always
benefit the producer at the expense of the consumer and society.

Use Table A: AO1 Knowledge and understanding and AO2 Analysis and
Table B: AO3 Evaluation to mark candidate responses to this question.

AO1 and AO2 out of 14 marks. AO3 out of 6 marks.

Indicative content

Responses may include:

AO1 Knowledge and understanding and AO2 Analysis

 The key characteristics for effective price discrimination (PD) to take

place. (Ability to set price, separable markets with different price
elasticities of demand)

 The use of practical examples to illustrate the meaning of PD.

 An explanation / analysis of at least one model of PD to show the effects

on the producer in terms of price, output and profit.

 An explanation / analysis of PD on the consumer in terms of price and

quantity demanded.

 The use of relevant labelled diagrams (not mandatory)

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Question Answer Marks

3 AO3 Evaluation

If firms are rational profit – maximisers, the firms must benefit from their action
therefore the initial point that the producer will always benefit is true.

As total spending on the good / service takes place this represents a transfer
of consumer surplus to the producers.

But it depends on whether the firms gain at the expense of consumer and
society.

If the price discrimination exists between domestic and foreign markets The
producer may also be able to drive competition from the foreign market if it
charges high domestic prices / recovers overheads domestically. This may
improve a country’s balance of payments.

Some consumers gain and some lose. The lower price in the low PED market
will benefit those consumers in that market whilst the opposite occurs in the
High PED market.

The increase in profits may allow the producer to increase its research and
development leading to innovative production techniques which lower long
term costs – dynamic efficiency. The benefits of the dynamic efficiency may
be enjoyed by consumers / society as lower prices.

The assessment of the statement should conclude with the view that it should
benefit the producer as a matter of rationality but whether this is always at
the expense of consumers / society is debateable.
Accept all valid responses.

AO1 Knowledge and understanding and AO2 Analysis 14

AO3 Evaluation 6

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Question Answer Marks

EITHER

4 An increase in a government’s budget surplus will increase 20

unemployment in the short run but it will make it easier to control a
balance of payments deficit in the long run.

Evaluate this statement.

Use Table A: AO1 Knowledge and understanding and AO2 Analysis and
Table B: AO3 Evaluation to mark candidate responses to this question.

AO1 and AO2 out of 14 marks. AO3 out of 6 marks.

Indicative content

Responses may include:

AO1 Knowledge and understanding and AO2 Analysis

 Knowledge of what is meant by a budget surplus, in relation to the

difference between government expenditure and government income.

 Reference to links between a government surplus, aggregate monetary

demand and unemployment.

 Explanation of the specific type of unemployment that might relate to an

increase in a governments budget surplus.

 Analysis of the links between changes in interest rates and

unemployment in the short run.

 Explanation of some of the key elements of the balance of payments

accounts and how they might be influenced by changes in fiscal policy.

 Analysis of the links between a budget surplus and the control of a

balance of payments in the long run.

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Question Answer Marks

4 AO3 Evaluation

 The impact of a budget surplus in the short run on the level of

unemployment will depend upon the main cause of the existing level of
unemployment.

 A budget surplus is more likely to have a negative effect on

unemployment when an economy has a lot of existing spare capacity.

 If structural factors are responsible for unemployment, supply side

policies might be more effective.

 A budget surplus might lead to lower interest rates and cause problems
for specific industries within an economy. For example, low interest rates
might cause a boom in the housing market.

 If a budget surplus leads to a subsequent fall in interest rate, this might

ultimately make it more difficult to control a balance of payments in the
long run.

 A conclusion should make an attempt to make an overall comparison

between the use of monetary policy and alternative fiscal or supply side
policies. A judgement should be made which directly addresses the
statement in question.

Accept all valid responses.

AO1 Knowledge and understanding and AO2 Analysis 14

AO3 Evaluation 6

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Question Answer Marks

OR

5 AO3 Evaluation 20

 Low – income countries might increase productivity due the transfer of

new technology from high income countries, however this might lead to a
substitution of capital for labour thus increasing the level of
unemployment.

 An increase in Foreign Direct Investment (FDI) might lead to the

exploitation of the indigenous raw materials, thus leading to a long run
decline in economic growth.

 Increases in productivity might provide opportunities to create more real

wealth but it will still depend upon a government in a low – income
country to ensure that any increases in wealth lead to equitable
outcomes.

It is relatively easy to link an increase in productivity to the availability of more

goods, however living standards are also influenced by an increase in the
provision of services such as health and education. It is not easy to
measure change

 In conclusion, it is clear that there is a potential role for an increase in

productivity to influence living standards in low re – income countries but
this will depend on many factors which have been referred to above,
some of which might have a less direct positive impact.

Accept all valid responses.

 The links between an increase in FDI and GDP and an increase in living
standards are not clear. Sometimes, labour is exploited by MNCs in low-
income countries. The majority of MNC profit might be repatriated rather
than re – invested in the low re – income country.
 Higher skilled work might be provided separately by the MNC therefore
training of the indigenous population does not take place. In some cases
it has been argued that MNCs extract key resources and then leave.
 It is not certain that a government will use the increase in tax revenue
to invested in key sectors such as health, education and the country’s
infrastructure.
 es in productivity in relation to services such as health and education.

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Question Answer Marks

5  A government in a low-income economy has to decide whether to allow

FDI into their economy which might produce short – term benefits but
result in long re – term consequences of resource depletion in the long
run.
 It is very difficult to measure changes in living standards. Increases in
GDP might not be divided equally among the population. FDIs might
introduce external costs of production which are likely to have a negative
effect on overall living standards.
 In conclusion, it is clear that there is a potential role for FDIs to improve
living standards but this will depend on many factors which have been
referred to above, some of which might have an overall negative impact.
Also, it is very important to ensure that an appropriate measure of the
standard of living is used, one which does not focus entirely on an
increase in access to material goods and services.
Accept all valid responses

AO1 Knowledge and understanding and AO2 Analysis 14

AO3 Evaluation 6

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