TMJC 2024 JC2 H2 MYE Suggested Answers & Markers Report

JC2 H2 Economics 9570 2024 MYE Suggested Answers & Markers Report 1 TMJC Economics Unit 2024 JC2 H2 Economics 9570 Suggested Answers & Markers’ Report for Mid-Year Exam INSTRUCTIONS As you review your script using the suggested answers, analyse how you can improve on your answer. Consult your tutors to clarify your doubts. Section Pages 1. Section A: Case Study Question 1 2 – 23 2. My Reflection/Learning Points from Section A 24 3. Section B: Essay Question 2 25 - 36 4. Section B: Essay Question 3 37 - 49 5. My Reflection/Learning Points from Section B 50 6. Section C: Essay Question 4 51 – 61 7. Section C: Essay Question 5 62 – 73 8. My Reflection/Learning Points from Section C 74

JC2 H2 Economics 9570 2024 MYE Suggested Answers & Markers Report 2 Case Study Question 1: Economic issues on China and Singapore (a) Using a diagram, explain the impact of a possible steel production quota in China’s steel market. [3] A quota is the maximum legally permissible quantity that can be exchanged in the market where a government caps the amount of goods that can be transacted in the market below equilibrium quantity. The Chinese government is placing limits on steel production. The steel production is fixed at 0Q units. [1m- Fully labelled diagram] With the amount of steel fixed at Q, the price is determined by demand at P1. Markers’ Report Skills Strengths (+): What are the required skills that were well- demonstrated? Areas for improvement (-): What are the skills that were lacking/ not well-demonstrated? Aha moment! (+) Many who knew what a quota was, could give succinct answers of appropriate length for a 3m question. (+) Many made reference to the diagram they had drawn. Content Strengths (+): What are some concepts that were well- explained with clear linkages made? Areas for improvement (-): What are some concept gaps / conceptual errors? Aha moment! (+)/ (-) Those who knew what a quota was could draw a well-labelled diagram and address the change in quantity. However, some drew inaccurate diagrams

JC2 H2 Economics 9570 2024 MYE Suggested Answers & Markers Report 3 with incorrect labelling of the curves and axis. A handful also confused quotas with price controls. (-) Many students did not include the impact on price of steel as a result of quota even though question asked for “impact on the market”. (-) Many who explained quota only had a brief idea that it was about controlling quantity. However, they were unable to provide a clear explanation as to why price would rise while quantity remained the same. (b) With reference to Extract 1, explain the rationale behind the government’s action to curb steel production in China. [4] The government curbs steel production in China due to the market failure due to steel production caused by negative externalities. • Private output (MPB=MPC): The private benefit of producing steel includes revenue earned from the sale of steel, while the private cost includes the cost of production like wages, factory rental costs etc. Steel producers do not consider the external costs and they will produce at private output Q, where MPB = MPC. This is where private welfare is maximized. • Divergence between MSC and MPC: Explain MEC in context Explain the negative externalities in production • From Extract 1, the production of steel produces carbon emission and emit toxic air pollution which is cancerous. • This affects third parties such as people residing near the steel factories, who incurred higher costs for medical treatments, which are not compensated for. • [State the divergence]: In the presence of such a negative externality in the production of steel, MSC > MPC. There is no divergence in the benefit curve as there are no positive externalities present.

JC2 H2 Economics 9570 2024 MYE Suggested Answers & Markers Report 4 • Socially Optimal Output (MSB=MSC): Society’s welfare is maximised at MSB = MSC, where the socially optimal output level occurs at Q*. • Allocative inefficiency: At Q, MSC (distance AQ) >MSB (distance BQ) and this means that an additional unit of output creates more costs to society than benefits. Hence there is an over -allocation of resources in the form of an overproduction by Q*Q units. • Deadweight loss to society: Thus, this creates a deadweight loss to society by the amount ABC as total social cost (area CAQQ*) arising from producing Q*Q is greater than the total social benefit (area CBQQ*. Markers’ Report Skills Strengths (+): What are the required skills that were well- demonstrated? Areas for improvement (-): What are the skills that were lacking/ not well-demonstrated? Aha moment! (-) Some students misinterpreted the question, focusing on how government intervention works instead of explaining why steel production should be curbed. (-) Some students misinterpreted the question, focusing on decision-making framework instead. (-) A handful of students did not link their responses back to the question's intent regarding why steel production should be curbed in China. (-) Some students failed to recognise that this was a 4 - mark question and cited a fall in non -material standard of living (a macroeconomic goal) as a

JC2 H2 Economics 9570 2024 MYE Suggested Answers & Markers Report 5 reason why the government should curb steel production. This approach would limit students' ability to achieve full marks. The question suggested that government intervention was due to a microeconomic goal rather than an unachieved macroeconomic goal. Content Strengths (+): What are some concepts that were well- explained with clear linkages made? Areas for improvement (-): What are some concept gaps / conceptual errors? Aha moment! (+) Majority of the students were able to accurately draw the diagram showing negative externalities. (+/-) While most students explained negative externalities well (i.e., identified third parties, monetised the costs, and noted no compensation), there was a group of students who missed out on these details when explaining negative externalities. (-) Some students were overly descriptive in their responses. For example, they did not use precise terms such as "marginal external costs" when referring to negative externalities but instead provided numerous examples of negative impacts from steel production without linking them to the economic rationale for why steel production needs to be curbed. (-) Students tended to struggle when explaining the meaning of allocative inefficiency and deadweight loss in context. (c) Using any two indicators in Table 1, explain whether they are reliable to measure the changes in China’s standard of living over time. [5] Command word/phrase Explain how To make clear the explanation on usefulness of the reliability of the two indicators in Table 1 in measuring China’s living standards over time.

JC2 H2 Economics 9570 2024 MYE Suggested Answers & Markers Report 6 Content Any two indicators … measure the changes in China’s standard of living over time Standard of living (SOL) comprises both material and non-material aspects. To measure material SOL over time, information on real GDP per capita is needed. To measure changes in non-material SOL, indicators such as the number of working hours, air quality level (pollution index), life expectancy (mortality) rates and literacy rates would be useful. Context Table 1 Choice of indicators must only be from Table 1. This question requires students to select 2 appropriate indicators of SOL (material and non -material) from Table 1 and to consider their usefulness and reliability as measurements of SOL. A judgment has