2023 JPJC J2 H2 EC Prelim P2 QP [Final]

Answer three questions in total. Section A One of your three chosen questions must be from this section. 1 Rising income and influence of media resulted in r ising consumption of cigarettes. To reduce the rising consumption, Singapore imposes in direct tax on cigarettes while Philippines introduces minimum price for cigarettes. (a) Explain how each of the above policy affects consu mers’ expenditure on cigarettes. [10] (b) Using demand and supply analysis, discuss whether indirect tax or minimum price is more effective in reducing quantity of cigarette s sold with rising income and influence of media. [15] 2 In an era marked by escalating threats of competition, some businesses are confronted with the need to maximise revenue or maximise profit, often using pricing and non-pricing strategies. (a) Explain the likely effects on a firm’s pricing dec ision when its objective changes from profit maximisation to revenue maximisation. [10] (b) Discuss the alternative strategies that a profit maximising firm could adopt in view of increasing competition in the market. [15] 3 Education serves many key private and social object ives. The benefits of education accrue not only to individuals, in the form of greater employability and higher wages; but also to society at large. (a) Explain how the pursuit of self-interest by ration al consumers may not lead to an efficient outcome in the education market. [10] (b) Discuss the view that government intervention in the education market will always lead to efficient and equitable outcomes. [15]

2 Section B One of your three chosen questions must be from this section. 4 Governments have aims in relation to economic growth, employment, and inflation. (a) Explain the consequences of failing to achieve these aims. [10] (b) Discuss whether conflicts in government macroeconomic aims limit the scope for the use of fiscal policy in an economy . [15] 5 In the sphere of economic governance, when governments encounter a more imminent macroeconomic challenge, they often display a proac tive inclination to revise their established economic priorities. (a) Explain two ways a government can achieve inclusive growth . [10] (b) Discuss the view that inclusive growth should always be the economic priority of a government. [15] 6 The United States (US) trade deficit rose 17.7 per cent in 2020 to US$679 billion, highest since 2008. The US government sought to narrow the gap by imposing taxes on imported goods on a scale unseen since the trade wars of the 1930s. (a) Explain the possible causes of a trade deficit in a country. [10] (b) Assess whether protectionism aimed to reduce the large and persistent balance of trade deficit might cause more problems than it solves for the United States. [15]