2025 TJC P1 Prelim Mark Scheme H2 Econs

2025 TJC H2 Economics Prelim Paper 1 Suggested Answers 1 H2 Question 1: The Economics of Tea Suggested Answers (a) Compare the volume and value of Kenyan tea exports from 2020 to 2024. [2] • Similarity: The volume and of value of Kenyan tea exports have both risen from 2020 to 2024. [1] • Difference: The value of Kenyan tea exports rose consistently throughout, but the volume of tea exports experienced a fall in 2022. [1] OR The value of Kenya tea exports increased more rapidly/at a faster rate compared to the volume of Kenyan tea exports during the same time period. [1] (b) Using the concept of price elasticity of demand, explain how Figure 1 and 2 can explain the rise in Kenyan tea export revenue from 2022 to 2023. [5] • Export revenue is determined by the product of the price of exports and the quantity of exports sold. [1] An increase in export revenue from 2022 to 2023 could be due to a rise in price and/or quantity (volume) of Kenyan tea sold. • Figure 1 shows an increase in the volume of Kenyan tea, but Figure 2 shows a fall in the price of Kenyan tea. [1] • The demand for Kenyan tea is likely to be price elastic due to the availability of close substitutes like Chinese tea. [1] • Therefore. the fall in price leads to a more than proportionate increase in the quantity demanded for Kenyan tea. [1] • The rise in revenue due to the rise in quantity outweighs the fall in revenue from the fall in price. Overall, export revenue for Kenyan tea rises. [1] (c) With reference to Extract 1, explain the possible value of the cross price elasticity of demand between Kenyan tea and Chinese tea. [2] • Kenyan tea and Chinese tea are substitutes with positive cross price elasticity of demand. As the price of Kenyan tea rises, the demand for Chinese tea will increase. [1] • They are likely weak substitutes because even though China is one of the largest producer of tea, it has increased its import of Kenya tea over the years (Extract 1). Hence the likely value is a small positive number less than 1. [1] (d) On a production possibilities diagram, explain how ‘eutrophication’ (Extract 2) would affect the amount of tea and seafood produced. [3] • Eutrophication arises because of the extensive use of fertilisers in the cultivation of Kenyan tea. With eutrophication, fish populations will be adversely affected, leading to less seafood being produced. • As there is less fish stock in the oceans, this will shift the production possibilities curve inwards from PPC1 to PPC2 as seen in Figure 1 below. [1] • There is less seafood that can be produced, but no change in the amount of tea produced. [1]

2025 TJC H2 Economics Prelim Paper 1 Suggested Answers 2 [1] for fully labelled and accurately drawn diagram. Figure 1: Production Possibilities Curve (e) Discuss whether greater efficiency would be achieved with the merger of Lipton and Browns. [8] Question Interpretation Co