Borneo is known worldwide for its rainforests, which create both private and external benefits. Even so, the economy depends heavily on oil, a finite resource. When oil reserves were discovered in other parts of the world, the world price of oil fell sharply. Oil producers in Borneo were affected by this.
(a)[2]
Define the term finite resource.
(b)[4]
Explain how private benefits differ from external benefits.
(c)[6]
Analyse, with the help of a demand and supply diagram, how the discovery of new reserves of oil affects the world price of oil.
(d)[8]
Discuss whether a fall in the price of a product is a disadvantage to an economy.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “A resource is an input that aids production” …