2025 VJC Paper 1 - Mark Scheme

Victoria Junior College Economics Department1 2025 H2 Economics Preliminary Examination Paper 1 – Suggested Responses & Mark Scheme Question 1: Plastic and its waste (a ) Using a production possibility curve, explain how improper disposal of plastic affects a country’s productive capacity. [2] - Improper disposal of plastic causes a part of a country’s natural resources to become unusable or reduces the country’s quantity of resources (e.g. destruction of marine life, which is a natural resource) resulting in a reduction in the country’s productive capacity. [1] Or - Improper disposal of plastic causes microplastic to filter into waterways / the food chain (Extract 1) harming the health of a country’s residents thereby leading to decreases in labour productivity and hence a reduction in the country’s productive capacity. [1] - With the reduction in productive capacity, the country’s PPC shifts inwards from PPC1 to PPC2. [1] (b ) With reference to Extract 1, Figure 1 and Figure 2: (i) Using a diagram, account for the change in price of plastic bags from 2020 to 2022. [4] - From 2020 to 2022, the price of crude oil and price of plastic bags both increased. - Because crude oil is needed to produce plastic bags (Extract 1), the rise in price of crude oil seen in Fig 1 would have caused the marginal cost (MC) of producing plastic bags to rise, which leads to a fall in supply of plastic bags, causing the SS curve to shift left from S1 to S2. [1m] Capital goods (units) Consumer goods (units) 0 PPC1 PPC2

Victoria Junior College Economics Department2 - The resumption of economic activity in 2021 (Ext 1. Para 2) would have led to a rise in income of household, increasing their ability to pay for plastic bags, leading to a rise in demand for plastic bags, causing the DD curve to shift to the right from D1 to D2. [1m] Or - The resumption of economic activity in 2021 (Ext 1 Para 2) meant that firms increased production and this would have caused firms to increase their derived demand for plastic bags as inputs, causing the DD curve to shift to the right from D1 to D2. [1m] - The resulting shortage at the initial price level leads to an upward pressure on price [1m], where price rises to the new equilibrium level of P2. - Diagram [1m] (ii ) Explain the change in price of plastic bags from 2022 to 2023 despite the change in price of crude oil in Figure 2. [3] - The price of crude oil fell from 2022 to 2023. [1m] - Ceteris paribus, this would have led t