1 RIO DE JANEIRO WINS THE VOTE TO HOST THE 2016 OLYMPIC GAMES The Brazilian city of Rio de Janeiro has been chosen to host the Olympic Games in 2016. Winning the vote would seem to have been the easy bit. Holding the games will require effort and expense on a massive scale. Apart from new stadiums and other sports facilities, the city will need infrastructure such as new bridges and roads, and also double the number of hotel rooms. The metro railway line will need to be extended by almost 10 miles (approximately 16 kilometres). The city government has allocated US$14.4 billion to pay for the improvements in the infrastructure, although it is widely thought that the actual figure will be much higher than this. The decaying port area will be redeveloped and the nearby bay will be cleaned as this is currently affected by sewage and industrial pollution. It is hoped that the construction and redevelopment work will lead to an increase in the demand for labour, thereby reducing the city's high unemployment rate. There are some people, however, who think that government revenue should be used for other purposes. A spokesperson from the Institute for Studies on Labour and Society suggested that the money should be spent on getting rid of the city's worst slum areas, reducing the high crime rate and doing something about the poverty in a city where one in six residents is poor. a) Name two sources of government revenue. (2 Marks) b) Explain why government spending on getting the city ready for the Olympic Games is an example of opportunity cost. (4 Marks) c) Explain, using a demand and supply diagram, how the change in the demand for labour is likely to affect the wages paid to construction workers. (6 Marks) d) Discuss the economic advantages and economic disadvantages to Rio de Janeiro of hosting the Olympic Games in 2016. (8 Marks) QUESTION 2 PRIVATE HOME OWNERSHIP IN CHINA Private home ownership is increasing in China. For years the urban Chinese relied on overcrowded housing rented from the state and often waited a long time to have their own apartment. Now, with the increase in the market economy, the government is encouraging city-dwellers to buy their own homes by giving cheap loans and tax-relief. Home buying will help China's economy. New home-owners need to spend money on furniture, appliances and decorating. GDP grew by 8% in 1999, of which the housing industry contributed about a fifth. The housing changes will affect social and political issues as well as the economy. In the old system people had to live close to their work, and it was difficult to change jobs because no other housing was available. Single people had no hope of being allocated an apartment. Now anyone with money can buy a home and choose where they wish to live. (a) Explain what is meant by the market economy. (4 marks) (b) Explain the meaning of complements and substitutes, giving an example of each from the passage. (4 marks) (c) Identify four factors that might influence a worker's choice of occupation. (4 marks) (d) How far do you think the change in the provision of housing is likely to affect a worker's choice of occupation? (3 marks) (e) Discuss whether the change in the provision of housing is likely to benefit everybody