SAJC 2023 JC2 H2 Econs Prelims P2 QP MS-XC

This document consists of 3 printed pages. © SAJC 2023 ST ANDREWS JUNIOR COLLEGE Economics Department [Turn Over 9570/02/Sept/23 ECONOMICS 9570/02 Paper 2 12 September 2023 2 hours 30 minutes READ THESE INSTRUCTIONS FIRST Write your name on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams or graphs. Do not use staples, paper clips, highlighters, glue or correction fluid. DO NOT WRITE IN ANY OF THE MARGINS. An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper, ask the invigilator for a continuation booklet. Answer three questions in total, of which one must be from Section A, one from Section B and one from either Section A or B. The number of marks is given in brackets [ ] at the end of each question or part question. St Andrew’s Junior College JC2 Preliminary Examinations for General Certificate of Education Advanced Level Higher 2

2 © SAJC 2023 9570/02/Sept/23 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 Ticket scalpers – who snap up tickets, often in bulk, then resell them for profit on the secondary market – are back in business since large events and international acts resumed after the pandemic. Fans of Blackpink and Coldplay to, most recently, Taylor Swift, have been forced to buy tickets from scalpers as tickets for their concerts were sold out quickly. These are usually sold at a very high markup, with these resellers often citing the "hassle" and "stress of queuing up" as reasons for the price increase. (a) Explain the role of the price mechanism in ensuring an efficient allocation of resources. [10] (b) Discuss possible strategies that concert organisers could use to improve the market outcome for this type of concert for producers and consumers. [15] 2 Netflix announced price cuts in its subscription plans in some countries as the video streaming giant looks to maintain subscriber growth amid stiff competition and strained consumer spending. Source: Adapted from www.channelnewsasia.com 24 Feb 2023 (a) Explain two alternative objectives that a firm may pursue other than profit maximisation. [10] (b) Discuss whether the use of pricing strategy is the best way for a firm like Netflix to increase their profits. [15] 3 Singapore's national healthcare expenditure is expected to be about S$22 billion a year. However, this is expected to nearly triple to S$60 billion in 2030. To slow down the rate of increase in healthcare spending, the Government launched the Healthier SG programme where eligible Singaporeans would be able to receive fully subsidised nationally recommended health screenings and vaccinations. Source: Adapted from www.channelnewsasia.com 04 Oct 2022 (a) Explain two sources of market failure in the market for preventive healthcare. [10] (b) Discuss whether fully subsidising preventive healthcare is the most appropriate way to ensure that the market for preventive healthcare operates efficiently. [15] [Turn Over

3 © SAJC 2023 9570/02/Sept/23 Section B One or two of your three chosen questions must be from this section. 4 There has been concern for many years over the large and growing trade imbalances of various countries in the world economy. This has led to calls for “global rebalancing” in which countries with persistent balance of trade deficits, such as the United States, would seek to reduce imports. (a) Explain two possible causes of balance of trade deficit faced by countries. [10] (b) Assess the view that government policies to deal with a persistent balance of trade deficit can be potentially detrimental. [15] 5 As global disruptions to food production and supply chains persist, the Monetary Authority of Singapore's (MAS) surprise move to tighten its policy in October 2022 attests to the seriousness of upward price pressures. (a) Explain the consequences of failing to achieve a low and stable inflation rate for an economy like Singapore. [10] (b) Discuss the extent to which the nature of an economy affects a government's choice of macroeconomic policies in achieving price stability. [15] 6 (a) Explain possible reasons why an economy's comparative advantage might change over time. [10] (b) Discuss whether, on balance, the use of protectionist policies can ever be justified. [15]

2 © SAJC 2023 9570/02/Sept/23 1 Ticket scalpers – who snap up tickets, often in bulk, then resell them for profit on the secondary market – are back in business since large events and international acts resumed after the pandemic. Fans of Blackpink and Coldplay to, most recently, Taylor Swift, have been forced to buy tickets from scalpers as tickets for their concerts were sold out quickly. These are usually sold at a very high markup, with these resellers often citing the "hassle" and "stress of queuing up" as reasons for the price increase. (a) Explain the role of the price mechanism in ensuring an efficient allocation of resources. [10] (b) D iscuss possible strategies that concert organisers could use to improve the market outcome for this type of concert for producers and consumers. [15] Suggested Answers (a) Q uestion Analysis: C ommand Explain Content Functions of Price Mechanism Context Open I ntroduction: Due to central problem of economics of scarcity, resources need to be allocated towards competing uses. In the free market, the price mechanism helps to decide what resources and how much resources are used for what purposes. This is done through the three functions of the price mechanism which are signaling function, incentive function and a rationing function. Body: Signaling function The changes in prices act as a signal to producers regarding consumers preferences. When there is an increase in price for a product or service, both consumers and producers react to the change in price accordingly. Consumers react by either cutting back on their use or consumption of the product or they simply choose to not consume the product at all. Producers on the other hand treat the increase in price as a signal to increase their production of that product as consumers are now willing to pay more and producers can potentially earn more by producing and selling more. Prices help to ensure that there is an efficient allocation of resources as an increase in price would imply that there was a shortage and producers would need to channel more resources to produce that product. Conversely, a surplus in the market will be cleared by falling prices. For example, when there is an increase in demand for food due to a rise in population, this increase in demand would lead to a shortage observed at the original equilibrium price. With the short