Question 23M.2.SL.TZ0.1e
| Date | May 2023 | Marks available | [Maximum mark: 4] | Reference code | 23M.2.SL.TZ0.1e |
| Level | SL | Paper | 2 | Time zone | TZ0 |
| Command term | Explain | Question number | e | Adapted from | N/A |
Using an appropriate diagram, explain how the MERCOSUR-EU free trade agreement may lead to higher structural unemployment in Uruguay (Text B, paragraph 3).
[4]
Candidates may draw a labour market diagram that assumes the wage rate is fixed (sticky) and state that the difference between the number of workers demanded and supplied illustrates the structurally unemployed. This approach, if properly explained, may be awarded full level 2.
NB Candidates may provide an alternative explanation, which should be fully rewarded. They may draw a supply and demand (or international trade) diagram showing a decrease in the demand (or domestic production) for machinery (or any other good imported from the EU) and state that the decrease in the demand for machinery would lead to a decrease in the workers who are employed in the industry and whose skills may not be transferable to other industries.
Candidates who label diagrams incorrectly can be awarded a maximum of [3].
The vertical axis may be labelled real wage, real wage rate, wage or price of labour and the horizontal axis labelled quantity of labour or number of workers or just labour.
The intention of the question was to assess candidates' ability to illustrate structural unemployment using a diagram "showing a fall in the demand for labour for a particular market or geographical area" (as stated in the subject guide). However, a range of diagrams (labour market, good market, or tariff diagrams) were accepted as long as candidates could explain how participation in the free trade agreement could lead to structural unemployment, with reference to their chosen diagram. The use of an AD/AS diagram was not permitted since it does not cover a specific good/market (and consequently, specific skills), but rather indicates cyclical unemployment. Similarly, to earn full marks in the explanation, it was insufficient to simply state that unemployment might increase. Candidates needed to provide an explanation as to why this unemployment is structural, such as skills becoming irrelevant or geographical immobility.
