H1 Paper 1_tmjcprelim2024_CSQ1_ans

JC2 H1 Economics 8843 2024 Prelim Suggested Answers & Markers Report 1 Tampines Meridian Junior College 2024 JC2 Prelim H1 Economics 8843 Paper 1 Question 1: Education in ASEAN and Switzerland Suggested Answers (a) Explain one positive externality that could arise from education in ASEAN. [2] Extract 1: “education leads to better health outcomes, higher social capital, peaceful and gender -equal societies, decent work opportunities and economic growth.” In the case of education in ASEAN, having a highly educated workforce would mean increasing productivity of the entire economy → attract FDI → generate higher EG → higher tax revenue (monetise external benefit) collected by the government (3rd party), without compensation. 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 merely focus on the positive outcomes for education without giving clear examples of external benefits. 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! (-) Some students were unable to point out clearly who are the 3rd parties. (-) Some students were unable to monetise the external benefits. (b) Extract 1 states ‘It was revealed that in 2022, only one in two young Southeast Asians perceives the need to improve their basic digital skills through education’.

JC2 H1 Economics 8843 2024 Prelim Suggested Answers & Markers Report 2 Tampines Meridian Junior College 2024 JC2 Prelim H1 Economics 8843 Paper 1 Explain why this might be a case of information failure and how this could lead to an inefficient outcome in the market for digital skills. [5] Explain why improving basic digital skills might be a case of information failure: [2] Consumers might not fully recognise the long-term private benefits of improving their digital skills which “would improve their ability to learn better and improve other skills” (Extract 1) leading to increased employability and higher wages they can earn in the future . As all these only happen in the future , they underestimate the true private benefits of improving their basic digital literacy. The imperfect information results in divergence between MPBactual and MPBperceived, where MPBactual > MPBperceived. Explain how this would lead to an inefficient outcome in the market for digital skills: [3] In the free market, consumers being rational and self -interested will seek to maximise their utility. They consider only their private costs and benefits. Marginal private benefits (MPB) of consumin