2023 ACJC H2 Prelims P2 _ALL Ans

©ACJC 2023 Preliminary Exam 9570/02 1 Question 1 1 Prices of chicken in Malaysia increased drastical ly in 2022. To stabilise prices, Malaysia implemented a temporary export ban of fresh chicken to Singapore. Fresh chicken prices in Singapore are expected to rise since 34% of the fresh chicken in Singapore is imported from Malaysia. Source: The Strait Times, 24 May 2022 (a) Explain how an export ban on chickens from Malaysia will impact the revenue of chicken rice stall owners and other meat sellers in Singapore. [10] (b) In view of Malaysia’s export ban, discuss the measu res that the Singapore government may adopt to stabilise the price of fresh chicken in Singapore. [15] Question 1(a) Introduction  When Malaysia implemented an export ban on chicken to SG, it will reduce SS of chicken into Singapore.  Indirectly the revenue of chicken rice stall owner s while increasing the revenue of other meat sellers in Singapore. Require 1: impact on the revenue of chicken rice stall owner. [Topic sentence] An export ban on chicken from Malaysia will reduce the TR of chicken rice stall owners.  When Malaysia implemented an export ban on chicken to SG, it will reduce SS of chicken into Singapore. This is especially so when 34% of SG’s chicken comes from Malaysia.  A significant fall in SS of chicken  shortage of chicken at original price  upward pressure on P of chicken  price of chicken in SG.  Fresh chicken is a factor of production for chicken rice. Given that price of fresh chicke n increase  chicken rice stall owners will see an increase in their average COP  the chicken rice stall owners will be less willing and able to supply the same amount of chicken rice at every price  decreasing the SS of chicken rice from S0 to S1, with reference to the diagram below.  At the original price , P0, there is a shortage of chicken rice from Q0 to Qs  upward pressure on price of chicken rice  price of chicken rice will increase from P0 to P1.  As prices increase , Qdd will fall from Q0 to Q1 while Qss will increase from Qs to Q1 according to the Law of DD and Law of SS respectively.  This is because as prices of chicken rice increase , consumers will be less willing and able to consume chicken rice. On the other hand, produce rs will be more willing and able to produce chicken rice as prices increase.  Qdd will continue to fall while Qss will continue to increase until Qss=Qdd at the new output Q1.  But for general population, the DD for chicken ric e is price elastic . This is because there are other local dishes to substitute chicken rice.

©ACJC 2023 Preliminary Exam 9570/02 2 Note: students can also identify the DD for chicken rice as price inelastic given that chicken rice is an iconic dish in SG where there is little substitute for this dish. Even other local dishes such as Fried Kway Teow and Hokkien Prawn Mee are not c