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UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS General Certificate of Education Advanced Subsidiary Level and Advanced Level

ECONOMICS Paper 4 Data Response and Essays (Supplement) Additional Materials: Answer Booklet/Paper

October/November 2009 2 hours 15 minutes


READ THESE INSTRUCTIONS FIRST If you have been given an Answer Booklet, follow the instructionson the front cover of the Booklet. Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Section A Answer Question 1. Section B Answer any two questions. You may answer with reference to your owneconomy or other economies that you have studied where relevant to the question. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question.

This document consists of 3 printed pages and 1 blank page.
IB09 11_9708_42/2RP © UCLES 2009

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2 Section A Answer this question. 1Resources wasted on bottled water In developed countries drinking bottled water has become fashionable; the practice of carrying a small bottle of water is very common. However, it costs much more than water from a tap but often cannot be distinguished from such tap water. Some brands contain the same chemicals as tap water which people think they have paid to avoid. There is now a campaign to stopselling bottled water in restaurants and supply only tap water. A spokesman said ‘in the UK, in 2006, 3 billion litres of bottled water were sold. They were advertised as ‘pure as a mountain stream’ or ‘cleansed for 2 million years beneath a Siberian glacier’. Buying such water is a vanity. It is flown around the world to the UK from Norway, France, Japan and Fiji. It is bottled in glass that is mostlythrown away and is very heavy to transport, or in plastic that never decomposes. From a restaurant’s point of view selling water is almost free money. The profit mark-up is higher than on wine. The New York Ritz-Carlton hotel even has a water list alongside the wine list. A UK government minister said ‘it is morally unacceptable to spend millions of pounds on imported bottled water when we havepure cheap drinking water and when one of the crises facing other countries is the supply of water’. By contrast, in developing countries there is often no tap water. 40% of the world’s population lack basic sanitation and 1 billion people do not have safe drinking water. It would, therefore, be better for everyone and a better use of resources if the developed world stopped spending money onbottled water, drank the safe tap water instead and used the money to improve water supplies in developing countries. Environmentalists believe that the packaging, transportation and disposal of bottled water products creates unnecessary carbon dioxide emissions. It has been proposed that the government should introduce taxes to pay for the damage to the environment, either directly on the sale of eachbottle of water or on the disposal of the plastic bottle. A spokesperson for the bottled water industry said that critics were forgetting that the industry generated income and that an estimated 20 000 jobs depended on the sales of bottled water. In 2007, annual sales in the UK were worth £2 billion. (a) (i) Briefly explain how a rational consumer’s equilibrium may be achieved using marginalutility theory. [4] (ii) Use the article to consider whether consumers who purchase bottled water are acting rationally and maximising their satisfaction. [4] (b) Analyse the effects that restricting the sales of bottled water might have on the UK economy. [5] (c) Discuss whether the information provided is sufficiently factual and complete to justify government regulation of the bottled water...