2023 ACJC Central Economic Problem Tutorial

©Property of ACJC Economics Dept./H1H2 EC 2023/The Central Economic Problem Page 1 ANGLO-CHINESE JUNIOR COLLEGE JC1 Economics 2023 H1 H2 CENTRAL ECONOMIC PROBLEM Tutorial Worksheet Section A: Discussion Questions Question 1: Rational Decision Making (Adapted from 2021 H2 A Levels Question 1) (a) Explain how consumers act rationally to decide whether or not to buy a bicycle. (b) Explain how producers of bicycles act rationally to determine their level of output. Question 2: The China Economy Assume that China is only producing capital goods and consumer goods. Currently, the PPC of China is AA’, and China is producing at point X. Each question starts with curve AA’ as the initial PPC. (a) China’s production moves from point S to X, explain what happens to the resources in China and the amount of goods produced. (b) Explain one possible way for China to increase its production from point S to point Y. (c) For each of the scenario below, illustrate how China PPC and/or production point may change and explain the change. i. Massive new sources of oil and land are discovered. ii. There is a major technological breakthrough in the consumer goods industry iii. There has been a rise in unemployment rate over the pandemic years in China.

©Property of ACJC Economics Dept./H1H2 EC 2023/The Central Economic Problem Page 2 (d) Suppose the China’s government is deciding to invest $1 billion into either consumer or capital goods. Explain how the investment into the different types of goods would affect China’s current and future standard of living. Section B: Mini Case Study Questions Question 3 (Adapted from 2019 H1 A Levels Case Study 1) Egypt experienced a political revolution in early 2011, a popularly -backed military coup in 2013 and then a series of high-profile airline disasters. The results has been disastrous for the country’s tourist industry. Tourist numbers recovered considerably after the shocks of 2011 and 2013, but by 2016 were 60% below their peak 2008 level. The impact on the whole economy, including in particular employment, has been devastating, and the government’s promises to take effective action to repair the economic the economic damage have been ineffective. Source: The Guardian, 21 October 2016 Assess whether or not the statement that the Egyptian ‘government’s promises to take effective action to repair the economic damange have been ineffective’ is a normative one. [4] Question 4 (Adapted from 2013 H2 A Levels Case Study 1) Extract: UK real household disposale incomes fall for the first time in 30 years Real take-home pay in the UK fell for the first time in three decades after prices rose faser than incomes in 2010, dealing a further blow to the prospect of an economic recovery. Less than a week after George Osborne, the Chancellor of the Exchequer, downgraded the UK’s growth forecasts for 2011 in his budget presentation, figures revea