CJC H1 Prelim 2024 Solutions

CSQ1SuggestedAnswers (a) (i) Using Figure 1, compare the prices of the selected primary productsfrom2017to2022. [3] Anythreeofthefollowing:Similarity:Pricesofallprimaryproductsgenerallyincreasedfrom2017to2022.[1]Difference:Priceofwheatincreaseatafasterraterelativetotherest.[1]Difference:PriceofriceisconsistentlyhigherthanCorn,Oatsandwheat.[1]Difference: Thepriceof oatswasconsistentlyincreasing, whereasrice,wheat and corn prices experienced a fall in 2021, 2019 and 2020respectively.[1] (ii) Using Figures 1 and 2, explain the relationship between the price offertilizerandthepricesofwheatfrom2017to2022. [2] Thereisadirect/positiverelationshipbetweenfertiliserpricesandwheatpricesfrom2017to2022.[1]Fertilisersareusedasfactorinputstoproducewheat, whenthepriceoffertilisersgoesup, thecost of productionof wheat increases, [1]andthesupplyofprimaryproductdecreasesandshiftstotheleft.Thisincreasestheequilibriumpriceofwheatprices.Alternativeanswer: Higherdemandforwheat higherpriceandoutput forwheat deriveddemandforfertilizersincreases,leadingtoahigherpriceoffertilizers.Note:Priceadjustmentprocessisnotrequired. (b) Explain one unintended consequence on the US producers due to itssanctionsonRussia. [2] AsaresultofthesanctionsonRussia,fromExtraact1,“Russia’sresponsetointernationalsactionshasbeentohaltexportsofmorethan200products”,Thisislikelytoreducetheglobal supplyof crudeoil,asRussiaisoneofthe largest exporters of crude oil fromExtract 1. [1] Thisreductioninsupplycancauseoilpricestoriseduetothedecreasedavailabilityofoilintheglobalmarket.

This results in an increase in the cost of production of goods andservices.Ceterisparibus(holdingtotalrevenueconstant),totalprofitsfalls.[1]Alternativeanswer:WiththesanctionsonRussiaexports,thereisafallintheexportrevenueofRussia, leading to a fall in ADand RNY of Russia. With the fall indisposableincomeof theaverageRussian,USproducerswillexperiencea fall in the demand for their goods and services (assume normalgoods)asUS’sexportstoRussiadecreasefallinequilibriumpriceandquantityandhencefallintotalrevenueandthusprofitsofUSproducers. (c) Using a diagram, explain howfertiliser subsidies given to farmers bytheIndiangovernmentislikelytoaffectconsumerexpenditureonrice. [5] Fertiliser subsidiesgivenbytheIndiagovernment lower the cost ofproductionof riceincreasesupplyandsupplyofriceshifttotherightfromSotoS1.[1] Increase in supply of rice increase Q and decrease in P TEindeterminateanddependsonPED. Attheoriginalprice,thereisasurplusandadownwardpressureinprices.[1] Demandforriceislikelytobe price inelasticduetothelackofavailablesubstitutes/highdegreeofnecessity.[1] ThedecreaseinpricefromP0toP1LTPincreaseinQdfromQ0toQ1.AsTE=PxQ, thiswill leadtoa decrease in TEfromArea0P0AQ0to0P1BQ1.[1] Well-labelledandreferenceddiagram[1] ©CatholicJuniorCollege 8843/01JC2PRELIMINARYEXAMINATION/2024

(d) Identify and explain two main characteristics of public goods andcomment on whether they are likely to be possessed by the watermonitoringsystem. [6] Def