2023 ASRJC JC1 H1 Promo Ans

© ASRJC 8843/JC1 Promotional Examination/2023 1 2023 JC1 H1 Economics Promotional Examination Suggested answers and Markers’ comments CSQ Question 1 Suggested Answers (a) With reference to Extract 1 and a diagram, explain two possible impacts of increased digitalisation on Singapore’s production possibility curve. Suggested response Impact 1 • Increased digitalisation leads to a rise in e-commerce and e-commerce firms need to hire more workers with software development skills to develop and manage their online platforms and mobile application. The creating of more jobs and hiring of more workers with technology-related skills lead to greater employment of resources since labour is also a factor of production. • Assuming that the economy is originally producing at a point within the production possibility curve (PPC) with unemployment of resources, the greater employment of labour could be shown as a movement from a point under the PPC (point C) to a point on the PPC (point D) as previously unemployed resources are now fully employed. Refer to diagram 1 below. Impact 2 • With digitalisation, such as the rise of e -commerce and online platforms for sales of goods and services, could include the use of online ordering systems and accounting systems to keep track of orders and payment. This is a form of technological enhancement which would increase the productivity in the economy. This enhances the economy’s productive capacity. • This means that the country can produce more capital and consumer goods. The PPC would shift outwards from PPC0 to PPC1 assuming that the higher quality labour is equally suited for the production of both food and machines. Refer to diagram 1 below. Diagram 1: Production possibility curve Consumer goods 0 Capital goods PPC0 PPC1 C D

© ASRJC 8843/JC1 Promotional Examination/2023 2 Marker’s Comments • General comments: Most students did well for this question, getting 3 marks and above. Q A - Some students explained the impact of increased digitalisation on either (1) an outward shift of the PPC or (2) a movement from a point within the PPC to another point nearer to the PPC or on the PPC. The question requires an answer that considers both act ual (illustrated by 2) and potential growth (illustrated by 1). C K - In general, students are better able to explain the impact of increased digitalisation on the PPC due to potential growth as compared to actual growth. The stronger responses explicitly explain how digitalisation resulted in an improvement in quality of resources or quantity of resources or improvement in technology which lead to potential growth. A R - Some students did not provide a fully labelled diagram. These students omitted the labelling of the PPC curve/s or axes. - Some students labelled the axes incorrectly, often providing price and quantity on the 2 axes. Students are reminded that they are supposed to provide 2 different goods/services on the 2 axes since the assumption is that an economy only produces 2 goods/services as represented by a PPC. Please review this definition of the PPC: The production possibility curve shows all the possible combinations of two goods that a country can produce within a specified time period, with all its resources fully and efficien tly employed and at a given state of technology. - Many students were not able to provide a well-explained answer on how digitalisation brings about actual growth. These students did not explain how digitalisation creates more technology-related jobs and in turn reduces unemployment of labour. AP - Some students explained that digitalisation will cause a pivoted shift, specifically favouring the production of capital goods rather than consumer goods with no explanation. This could be because students relate the idea of digitalisation to only increase in the productive capacity of capital goods such as machines and not consumers goods which are the final goods and services. However, digitalisation which is about developing processes and changing workflows to improve manual systems are relevant for many different types of goods and services, regardless of whether they are capital or consumer goods. (b) With reference to Extract 2 and using the marginalist principle, explain how a rational consumer decides whether to pursue adult education. [4] Suggested response

© ASRJC 8843/JC1 Promotional Examination/2023 3 • Rational consumer considers the marginal private benefit of pursuing adult education such as having the required skills/ refreshed skills to fit into a new role or a new job in a field (Extract 2) after attending the adult education programmes. This could enable consumer to obtain a better job with higher pay. • Rational consumer also considers the marginal private cost of pursuing adult education such as the opportunity cost measured in terms of the forgone income (Extract 2) if they were to take time away from work to attend adult education courses. OR Rationa l consumer also considers the explicit marginal private cost of pursuing adult education such as the course fees for training (Extract 2), and transport costs. • The rational consumer aims to maximise satisfaction/utility/net benefit. • The rational consumer will pursue adult education if the MPB exceeds the MPC. Note: We will also provide the same credit to responses which use the terms marginal benefits and marginal cost. Marker’s Comments • General comments: Majority understood the question requirements as that related to marginal benefits and costs. The difference is in terms of quality of the explanation. The sharper answers interpreted the information from the extract while the weaker answers simply copied wholesale from the extract resulting in lengthy answers without much quality nor reflecting any thinking skills. Students must avoid doing this. QA A small number of students misinterpreted the question as the entire decision-making process. They could have avoided this mistake by first defining what is the marginalist principle which sets out the 2 main components required for the question. Likewise, some mistook this as a market failure question with diagrams drawn to show deadweight loss. A few also explained using a demand and supply diagram which is not required as this is not a question about whether to consume an additional unit of adult education but whether to enrol for the adult education i.e to consume or not to consume a good. CK Answers showed a lack of knowledge of cost concepts. Some mistook explicit costs to be implicit costs. Even when the definition of opportunity cost is correctly given, answers failed to reflect what is the alternative forgone. AR Descriptive answers were most common. Students described at length without using economic terms. Majority of students who wrote about marginal benefits lifted entire materials from the extract without any interpretation. There are some who also did that for marginal costs. It ended up with the markers reading exactly what is in the extract. Students m ust take note that their answers should reflect that they processed the information and value add to their answer. AP Most have difficulties with the concept of marginal costs. Although they recognised that there are both explicit and implicit costs or opportunity costs, most cannot or did not give an example of explicit costs or even if they did, they got it wrong. This is most surprising.

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