Economics · 2002 · May · Paper 3 · HL · Markscheme

MARKSCHEME May 2002 ECONOMICS Higher Level Paper 3 15 pages M02/330/H(3)M INTERNATIONAL BACCALAUREATE BACCALAURÉAT INTERNATIONAL BACHILLERATO INTERNACIONALc SECTION A Question 1: Bananas – The Facts Maximum Mark 2 Partial Mark 1 1 (a) With reference to Item 1, briefly describe the main changes in the pattern of banana exports between 1988 and 1997. y for recognising the very large increase in world exports of bananas (approx 70%) y for noting that the bulk of this increase occurred in Latin America 2 1 1 1 (b) Use Item 2 to help you describe the market structure of the banana industry. y for stating that the industry is oligopolistic y for briefly illustrating this from the data y for noting dominance by Dole and Chiquita No points awarded if no mention of oligopoly. 4 2 2 2 (c) With reference to Item 3, explain why “more than 90 % of the price paid by consumers stays in the North and never reaches the producer”. y for an answer to the question which only describes the “banana split” y for a broader answer in terms of the power of MNCs to control production, distribution, price, etc. y for noting that most value added occurs after the production stage 4 1 2 3 (d) With reference to Item 4, (i) explain what is meant by th e sentence, “Ban anas from the plantations of Central and South America are ‘cheaper’ than anywhere else – largely because the costs are externalised”; y for simply paraphrasing the passage in a relevant manner y for explaining that social cost equals internal costs plus external costs y for relating the above to the “cheapness” of Latin American bananas (producers do not bear the full social cost) Reward a critical approach to the source and the question. 2 (ii) how might the costs of banana production be internalised? y for an accurate explanation of the meaning of internalisation of the costs of banana production – 3 – M02/330/H(3)M