Economics 0455 · IGCSE · Differences in economic development between countries
Differences in economic development between countries — practice question
Changes in tobacco output and use can produce both microeconomic and macroeconomic consequences. Tobacco is cultivated in at least 124 countries with different levels of development. A greater share of the poor than the rich use tobacco products. The cigarette market, which is made from tobacco, is also changing. In a number of countries, demand for cigarettes and some other demerit goods is falling.
(a)[2]
Define microeconomics in your own words.
(b)[4]
Explain two reasons why countries differ in economic development.
(c)[6]
Analyse how a reduction in the interest rate could lower poverty.
(d)[8]
Discuss whether government action will, or will not, fix the market failure caused by a demerit good.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “Study of separate markets and agents” …