HCI 2023 Econs Suggested Case Study Answers updated (students)

Suggested Answers to A Level 2023 H2 Economics (CASE STUDIES) by Hwa Chong Institution Economics Unit 2023 A-Level Case Study Question 1 (a) With reference to Figure 1, compare the potential benefits for a graduate in the US with a Bachelor’s degree to a school leaver who has a High School Diploma. [2] The average weekly earnings for a graduate in the US with a Bachelor’s degree is higher than a school leaver with a High School Diploma. [1] The rate of unemployment for the former is lower than the latter. [1] Note: Two differences are provided since there is no similarity. (b) With reference to Extract 1 and using a supply and demand diagram, explain one possible reason for the higher average earnings of graduates with a Professional degree compared to those with a Bachelor’s degree. [3] Assume that the supply of graduates with Professional degree is the same as supply of labour with a Bachelor’s degree. Since rate of unemployment for graduates with a Professional degree (3.1%) is lower than graduates with a Bachelor’s degree(5.5%), this suggests that the demand (DD2) for graduates with a Professional degree is higher than graduates with a Bachelor’s degree (DD1). [1] The higher demand for graduates with a Professional degree compared to graduates with a Bachelor’s degree could be due to the higher level of productivity of the former compared to the latter. [1] As shown in the diagram below, the average earnings of graduates with a Professional degree is higher (W2) than graduates with a Bachelor’s degree (W1). Wage(average earnings) SS W2 W1 0 L1 L2 Labour DD1 DD2

Suggested Answers to A Level 2023 H2 Economics (CASE STUDIES) by Hwa Chong Institution Economics Unit Explanation of diagram [1] Note: The question stated ‘a supply and demand diagram’ hence only one diagram is used (although 2 DD- SS diagrams should be shown). Alternative answer: The marginal private cost for higher education is higher as suggested in Extract 1 where in para 2, these cost includes explicit costs like tuition fees and also implicit cost of wages forgone. The higher private cost will cause supply of workers with a Professional degree to be lower than the supply of workers with a Bachelor’s degree. Hence, wages for workers with Professional degree will be higher compared to that of a Bachelor’s degree, assuming same demand. (c) ‘Opportunity costs may make even free schooling unaffordable for some families.’ (Extract 4) Explain one example of an opportunity cost that might make free schooling unaffordable. [3] Opportunity costs measure the cost of making a choice, in terms of the next best alternative foregone. [1] For children from poor families, they have the choice of either attending school or work. If they choose to attend school, they would forgo the next best alternative, which is the number of work hours forgone. [1] Although schooling cou