EJC H2 Economics Prelim Exam Paper 1 2024

[Turn over EUNOIA JUNIOR COLLEGE JC2 Preliminary Examination 2024 General Certificate of Education Advanced Level Higher 2 ECONOMICS Paper 1 9570/01 26 August 2024 2 hours 30 minutes Additional Materials: Answer Booklet READ THESE INSTRUCTIONS FIRST An answer booklet will be provided with this question paper. You should follow the instructions on the front cover of the answer booklet. If you need additional answer paper ask the invigilator for a continuation booklet. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Please note that Paper 1 takes up 40% of the total score. This document consists of 8 printed pages.

2 9570/01 [Turn over Question 1: Towards sustainable fashion Table 1: World cotton production and consumption (in million bales) Year Production Consumption 2021 115 118 2022 120 110 Source: USDA Foreign Agricultural Service, accessed 30 July 2024 Figure 1: Brazil cotton production and exports Source: Global Cotton Outlook 2022/23, Texas Tech University, accessed 30 July 2024 Extract 1: Brazil’s cotton exports surge Low prices for corn have pushed farmers in Brazil to plant cotton instead, resulting in a sharp rise in cotton production. In recent years, Brazil overtook the US as the world’s largest cotton exporter. The South American country exported 12.4 million bales in the 2023 harvest season compared with 11.8 million bales that came out of the US, according to estimates by the US Department of Agriculture. Brazil’s soaring output has more than offset the impact of consecutive years of drought in the US. Meanwhile, global demand for cotton has fallen. Over the past few years, shoppers have increasingly opted for alternative man-made fabrics like polyester and petroleum-based fabrics, which are cheaper and quicker to produce than cotton, but have a much larger environmental toll. Source: Financial Times, 16 July 2024 0 2000 4000 6000 8000 10000 12000 14000 16000 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Cotton Production (1000 bales) Cotton Exports (1000 bales)

3 9570/01 [Turn over Extract 2: Unfavourable plight of cotton farmers Farmers are at the end of a long and complex value chain, often receiving the lowest prices while bearing high production costs. They are generally at a disadvantage when it comes to price negotiations because they lack access to market information. In addition, many small -scale farmers do not belong to farmer organisations, which leaves them little bargaining power or influence on the prices offered. Cotton farmers receive a small share of the retail price of a garment, not exceeding 10%. Revenues for cotton farmers vary across countries and tend to increase with the size of the farms. Small cotton farmers earn the least compared to large and medium -sized farmers in many producing countries. Some governments thus implement programs such as minimum support price to support farmers. Source: 2023 Global Market Report, Cotton Prices and Sustainability, 10 July 2023 Extract 3: Fast fashion: How clothes are linked to climate change Producing clothes uses a lot of natural resources and creates greenhouse gas emissions which are responsible for climate change. Overall, the fashion industry is responsible for 8- 10% of global emissions, according to the UN - more than the aviation and shipping combined. Fast fashion clothing is produced rapidly to follow current trends in the industry . Low cost is also achievable as the firms have a massive scale of production. Fast fashion allows cost -conscious consumers to regularly update and expand their wardrobes with knockoff end vogue styles. However, the earth's environment is paying the hefty price. Most of fashion's environmental impact comes from the use of raw materials. Synthetic materials like polyester require an estimated 342 million barrels of oil every year. To deliver on low price points for fast changing styles, these ‘real time’ brands rely on fossil fuel -based synthetic materials that are cheaper, adaptable, and more widely available than natural materials. As a result, polyester has grown to become the number one synthetic fibre and now represents more than half of all global fibre production. It is derived from non-renewable resources, requires a great deal of energy for extraction and processing and releases significant byproducts. Government rule makers must price negative externalities. Synthetic materials like polyester, for example, should be taxed to reflect its true cost. This would discourage their use, lead to innovation and accelerate the adoption of renewable energy. A governmental committee in the UK has also recommended a tax on polyester. For the fashion industry, this would increase the price of synthetics making natural materials like cotton more attractive. Adapted from: BBC, 29 July 2022 Extract 4: Generation Z (Gen Z) is emerging as the sustainability generation Major global events like Covid-19 pandemic have a way of shaping the lifetime spending habits of the generations that come of age during them. For more than a year you could sense the collective sigh of the universe as factories shut down, the skies turned blue over Beijing for the first time in decades, and once-clogged highways were emptied as we adapted to working and learning from our homes. We’ve learned to do less, spend less, and waste less and no cohort has been as profoundly influenced as Generation Z (those born after 1997). The pandemic didn’t start the sustainability revolution, but it has put it into hyperdrive, and Gen Z is in the driver’s seat.

4 9570/01 [Turn over As the economy begins to recover, the consumer research on retail fashion brands makes it clear that the next normal is all about saving the planet. According to a recent study, Gen Z is the most likely to make purchase decisions based on values and principles (personal, social, and environmental). The vast majority of Gen Z shoppers prefer to buy sustainable brands, and they are most willing to spend 10 percent more on sustainable clothing than fast fashion. Sustainable clothing is more expensive as many sustainable brands opt for better, more durable fabrics, including natural fibres. But this is costly, take for example, cotton costs 25% more than polyester. Now virtually every company now proclaims its devotion to sustainability. Previously it would have seemed improbable that two leading sporting companies, Allbirds and Adidas, would be collaborating on creating a sport performance shoe with the lowest carbon footprint ever. Or that Walmart would be partnering with ThredUp, an online thrift store, to sell ‘pre-owned’ garments by name-brand fashion houses like Anne Klein and Tommy Hilfiger. Adapted from: Forbes, 30 April 2021 (a) With reference to Table 1, what can be concluded about the change in world price of cotton in 2022. [2] (b) With reference to Figure 1 and Extract 1, explain one demand and one supply factor that could impact world cotton prices. [4] (c) ‘Some governments thus implement programs such as minimum support price to support farmers.’ (Extract 2) Explain how the above price control supports farmers and one possible unintended consequence of the policy. [4] (d) (i) ‘Synthetic mat