IJC_H2_ECONS_P2_QP

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9732/02/IJC/September 2014 2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 The world economy experienced subdued grow th for a second year in 2013. In addition, a rising number of low cost airlines exited due to high fuel costs. These have impacts on both national carriers and low cost airlines. Explain how the above changes will affect the world market for air travel and assess the usefulness of elasticity conc epts in determining the likely impact on different types of airline carriers. [25] 2 As the growth of online shopping cont inue, shoppers are focused on purchasing electronics, books, music, apparel and sporting goods. On the other hand, the markets for food and beverages, supermarket s, luxury fashion and healthcare tend to be less affected by the shift toward s online retail and continue to perform well. (a) Explain how economies of scale determi ne the type of market structure in different industries. [10] (b) Discuss how far the market structure of the firms in different retail industries will affect their prof itability when faced with the growth in online shopping._________________________________________________ [15] 3 As more countries are facing economic difficulties and an ageing population, some governments