2025 H2 Economics Paper 1 Case Study 2: Suggested Answers
The case study examines international tourism in ASEAN countries after the COVID-19 pandemic, the slow recovery in arrivals, information failure and negative externalities in air travel, the tourism multiplier, and whether tourist taxes can control visitor numbers.
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A two mark question asking, with reference to Table 3, for the relative fall in international tourist arrivals across the countries between 2019 and 2022 and identification of the largest relative fall.
The relative fall is the change in arrivals over the 2019 level for each country:
- Indonesia: (16.11 minus 5.89) over 16.11 = 63.4 per cent decrease.
- Malaysia: (26.10 minus 10.07) over 26.10 = 61.4 per cent decrease.
- Singapore: (19.11 minus 6.31) over 19.11 = 67.0 per cent decrease.
- Vietnam: (18.01 minus 3.66) over 18.01 = 79.7 per cent decrease.
Vietnam has the largest relative fall.
Compute each relative fall against the 2019 base and identify the largest.
A two mark question asking, using Extract 5, to explain one demand or supply factor behind the slower recovery in international tourist arrivals in ASEAN economies compared with Western Europe and North America in 2022.
Price of a related good (air travel). Air travel is a complementary good to tourism. Long haul flights from major tourist markets such as Europe or the US to Southeast Asia are significantly more expensive than short haul flights within Europe or North America. Higher flight costs reduce the affordability of travel to ASEAN countries, leading to weaker demand relative to destinations closer to tourists' home regions, which slowed the recovery in arrivals.
Accepted alternatives include the later reopening of Asian borders, which kept the pool of potential visitors smaller, and changing tastes and preferences as environmentally conscious travellers avoided high emission long haul trips. Students should develop any one factor.
One demand or supply factor from the extract, correctly classified and linked to slower recovery in ASEAN arrivals.
A six mark question asking, using Extract 6, to explain how television programmes might be used to reduce the market failure that arises from international air travel.
- Establish the type of market failure that air travel emissions create and the divergence it produces between private and social outcomes.
- State the free market outcome relative to the socially efficient outcome and name the welfare consequence.
- Explain the behavioural channel through which the intervention in the extract acts on consumers.
- Link that channel to a movement in the relevant curve and a move toward the efficient outcome.
This part is gated. The full model answer with the worked negative externality diagram and the welfare analysis, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
Tests: Externalities, Allocative efficiency
A two mark question asking, according to Extract 7, for one possible reason why the tourism multiplier for an entire country is lower than the multiplier for a specific tourist dependent village.
The size of the multiplier is k = 1 over MPW, where the marginal propensity to withdraw is the sum of the marginal propensities to save, tax and import.
In a village based project the marginal propensity to import is likely to be lower than that of the country as a whole, because villagers source goods, labour and materials locally rather than relying on imported inputs. With a smaller marginal propensity to import, the marginal propensity to withdraw is lower, so the multiplier is larger. Each dollar of tourist spending in the village therefore creates a greater multiplied impact on local income than the national average, as more of the spending circulates locally rather than leaking abroad.
Identify a lower marginal propensity to withdraw, most naturally a lower marginal propensity to import locally, and link it to a larger multiplier.
An eight mark discussion of whether taxing international visitors is the best way of controlling the flow of international tourists into ASEAN countries.
- Frame over tourism as a negative externality problem and state the objective a tourist tax is meant to serve.
- Explain the mechanism by which the tax could move activity toward the socially optimal level.
- Build the limitations of the tax, distinguishing where it is and is not well matched to the harm.
- Weigh against the wider effects of suppressing tourism on the host economy.
- Introduce an alternative intervention and compare it on how well it targets the harm.
- Reach a judgment on whether the tax is the best instrument and on what that depends.
This part is gated. The full model answer with the worked negative externality diagram and the policy evaluation, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
A ten mark discussion of the factors a government of a low income ASEAN country might consider in deciding whether a plan to attract more international tourists would be beneficial.
- Set up the decision as weighing net benefits against costs, constraints and unintended consequences for a low income economy.
- Develop the benefits side through the growth, employment and diversification channels.
- Develop the costs side, including the opportunity cost of public spending and exposure to external shocks.
- Bring in the resource and institutional constraints specific to a low income country.
- Add the externalities and leakage that can erode the local benefit.
- Conclude on what determines whether the plan is beneficial overall.
This part is gated. The full model answer with the worked cost benefit analysis and the evaluative judgment, with the diagrams and the full evaluation, is in the ETG TYS Answers book from SAP and is worked live in the TYS Crashcourse. ETG students also get the AI TYS coach that guides them through this exact question. Message the team to find out more.
Questions students ask
Where can I get the full worked answers to the 2025 H2 Economics paper 1 case study 2?
The full model answers, with the diagrams and the higher mark evaluation, are in the ETG TYS Answers book published by SAP and sold at Popular, and are worked live in the TYS Crashcourse. Every ETG student also gets the AI TYS coach on our learning management system, which guides you through how to tackle every essay and every case study question from the last ten years.
Are these the official 2025 A Level Economics answers?
No. SEAB sets and marks the A Level paper. These are suggested answers by Mr Eugene Toh, author of the H1 and H2 A Level Economics TYS answer keys, published by SAP and sold at Popular.
How are these case study suggested answers structured?
The lower mark parts are answered in full. The higher mark parts are outlined here, with the full worked answers reserved for the ETG TYS Answers book and the TYS Crashcourse.
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