RI_Y5 H2 2023 CT_Examiner's Report

ECONOMICS Higher 2 Syllabus 9570 Examiner’s Report Year 5 Common Test 2023 R a f f l e sI n s t i t u t i o n N u r t u r i n g t h e T h i n k e r , L e a d e r & P i o n e e r TEL: 65 6419 9888 ● FAX: 65 6419 9898 http://www.ri.edu.sg ● One Raffles Institution Lane, SINGAPORE 575954

Y5/9570/CT/2023 2 © RI 2023 [Turn Over ECONOMICS Y5 H2 Common Test 2023 Paper 9570/01 Paper 1 Case Study (a) With reference to extract 1, explain one fixed and one variable cost that a hawker food vendor faces. [4m] - Fixed cost is cost that does not vary with output, where output can be defined as the number of meals produced. For instance, Rental cost, the hawker food stall vendor would still have to incur rental payment even though no meals are produced as the stall may close and shut down operations. [2m] - Variable cost is cost that varies with output (being the number of meals produced). For instance, the cost of ingredients used in cooking. As more meals are produced, more of such ingredient costs will be incurred to prepare them. [2m] Examiners’ Comments • Most candidates were able to correctly explain fixed and variable costs in relation to output and give relevant examples. AFIs (Area for Improvements) • However, some did not link fixed and variable costs explicitly to output. • Several candidates wrongly cited staff salaries as a variable cost. In the given context, staff salaries were clearly stated as an overhead cost which is a fixed cost. • A few candidates were confused about the difference between output and demand. The demand for a good can increase or decrease, but reference must be made to the effect on output that is produced eventually. (b) Explain which market structure a hawker food stall is likely to operate in. [2m] State the likely market structure: MPC [1m] Explain: Extract 1 suggests that with the “highly fragmented” nature of the hawker food industries with “many small…hawker food vendors”, the industry is characterised by many small -scale producers suggesting a lack of market dominance and sell slightly differentiated products in terms of the different cuisines or different cooking style of the dishes. [1m] Examiners’ Comments AFI: Candidates need to realise that for this question, the mere justification that there are many small firms is not sufficient to distinguish Monopolistically Competitive (MPC) market structure from a Perfectly Competitive market structure. Candidates are required to further substanti ate with another distinctive characteristic like slightly differentiated products or low barriers to entry. Commented [ETH1]: Pls move away from explaining why a particular cost is a variable cost because it is not incurred if there is no production or if the firm choose to shutdown. Look at the definition, you should be justifying it with “whether it varies with o/p!” Commented [ETH2]: Top-tier answers contectualises the o.p to