BOTSWANA EXAMINATIONS COUNCIL

BOTSWANA SENIOR SECONDARY EDUCATION

ECONOMIC STUDIES 1443/02

Paper 2 Specimen October/November 20XX
2 Hours
Additional Materials: Scientific Calculator

READ THESE INSTRUCTIONS FIRST

• Write your Centre number, candidate number and name in the spaces provided at the top of
this page.
• You are given 15 minutes to study the question paper before you can start attempting the
questions.
• This is a practical examination paper.
• Attempt all the questions using the spaces provided in this question paper.
• Do not use staples, paper clips, highlighters, glue or correction fluid.
• The number of marks is given in brackets [ ] at the end of each question or part question.

This document consists of 7 printed pages 1 blank pages.

[Turn over
© BEC 20XX
 2

SECTION A [20 marks]

Read the source material carefully before answering Question 1.

Source material: Air pollution in India

Table 1

India fact file 2016 2017

Real GDP $8750.0 billion $9362.5 billion
Current account deficit as % of GDP – 0.7 –1.2
Car production 3.7 million 4.0 million

As India increases its output, it creates more pollution. Its government encourages
economic growth by promoting investment and free trade. It is considering cutting taxes,
spending more on education, lowering import tariffs and removing some import quotas.
The Indian government intervenes in its economy for a number of reasons, including to
reduce pollution. The causes of pollution include vehicles and private and public sector
factories which emit harmful gases. With reductions in the cost of producing cars and rising
incomes, more cars are being produced and purchased in India.

To reduce pollution, the Indian government subsidizes bus travel. It also requires buses to
run on natural gas rather than on more polluting diesel and petrol. Reduced pollution can
attract more foreign tourists. Foreign tourism and changes in the foreign exchange rate
affect the current account of a country’s balance of payments. It has been predicted that
India’s foreign exchange rate is likely to rise in the future.
1 a) (i) Explain economic growth.

……………………………………………………………………………………………………….

……………………………………………………………………………………………………..[2]

(ii) Explain two reasons why India is a mixed economy.

……………………………………………………………………………………………………….

………………………………………………………………………………………………………..

….................................................................................................................................... .[4]

(b) (i) Explain two methods of trade protection used by the Indian government.

……………………………………………………………………………………………………..…

……………………………………………………………………………………………………..…

……………………………………………………………………………………………………..…

……………………………………………………………………………………………………..…

……………………………………………………………………………………………………..…

…………………………………………………………………………………………………….….

…………………………………………………………………………………………………….. [4]

(ii) Explain two reasons why India is likely to experience a deficit on the current account of its balance
of payments in the future.

……………………………………………………………………………………………………..…

……………………………………………………………………………………………………..…

…………………………………………………………………………………………………….….

…………………………………………………………………………………………………….. [4]
 c) Discuss two reasons whether or not increasing subsidies given to bus travel would reduce pollution in
India.

…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………
………………………………………………………………………………………………………….[6]

Section B [60 marks]

2. a) Explain any three determinants of price elasticity of demand.

…………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………...................[6]

b) A farmer produces cabbages and potatoes for sale.

Figure 1: Production Possibility Curve for the Farmer

Potatoes

Cabbage
Figure. 1

i) Interpret points G and F in Figure 1

G…………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
F…………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………[4]

© BEC 20XX 1443/02/O/N/XX

ii) Figure 2. shows the demand schedule for cabbages sold by the farmer.

Demand Schedule for Cabbages

Price (P) Quantity Demanded

30 100
25 200
20 300
15 400
10 500

Use the information in Figure 2 to draw a diagram illustrating the law of demand.

[4]

c) Suggest how a free market economic system addresses the economic problem of:

i) What to produce?
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………….[3]
 ii) For whom to produce?

……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………[3]

3. a) i) State two characteristics of large businesses in Botswana.

……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………..[2]

ii) Explain two ways of measuring the size of a business.

……………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………
………………………………………………………………………………………………………………[4]
b) XYZ (Pty) Ltd is a producer of ice pops in Botswana. Table 1 shows the cost of ice pops produced by
XYZ(Pty) Ltd in 2020.

Table 1: Cost of Producing ice pops

Number of boxes of ice Fixed Costs(P) Variable (Costs) Total Costs(P)

pops
100 1000 500 1500
200 1000 1000 2000
300 1000 1500 2500
400 1000 2000 3000

© BEC 20XX 1443/02/O/N/XX

 i) Use the figures in table 1 to draw and label;

-Total Fixed cost curve,

- Total Variable costs curve and
- Total costs curves.

[5]
 ii) Assuming that XYZ (Pty) Ltd produces 200 boxes of ice pops and sells each box at P20.00.
Calculate the amount of profit XYZ(Pty) Ltd will make after selling 200 boxes of ice pops. Show your
working.

……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………….[3]

c) The government of Botswana recently announced that they will increase government spending.

Discuss two ways XYZ (Pty) Ltd would be affected by increasing government spending.

……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………….[6]
4.Botswana imports some of the goods from South Africa. However, Botswana and South Africa belong to
the same trading blocs. Trading blocs promote free trade between countries.

a) Explain three benefits of free trade to producers.

……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………..
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………[6]
© BEC 20XX 1443/02/O/N/XX
b) Vincent buys a box of masks in South Africa for R50.00. Exchange rate from Botswana Pula to South
African Rand is P1:1.40.

i) How much Pula’s does Vincent need to pay for one box of masks in South Africa? Show your working.

………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………[2]

Assuming, Botswana currency (Pula) depreciates against the South African Rand to P1: R1.3 and the price of
a box of masks remains the same.
ii) Calculate the number of Pula’s he will need to buy 4 boxes of masks from South Africa.
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………..[2]
iii) Explain two ways Vincent is likely to be affected by the depreciation of the Pula against the South
African Rand.
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
……………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………...[4]
Botswana is said to be experiencing balance of payment problems.
c) Suggest two strategies Botswana could adopt to address the balance of payment problems.
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
………………………………………………………………………………………………………………………………
…………………………………………………………………………………………………………………………...[6]
 BLANK PAGE

© BEC 20XX 1443/02/O/N/XX