CJC H2 Prelim 2024 P2 QP

CATHOLICJUNIORCOLLEGEJC2PreliminaryExaminationHigher 2 ECONOMICS 9570/02 Paper 2 9September 2024 Additional Material: Answer Booklet 2hours30minutes READTHESEINSTRUCTIONSFIRSTAn answer booklet will be provided with this question paper. You should follow theinstructions on the front cover of the answer booklet. If you need additional answer paper,asktheinvigilator for acontinuationbooklet. Answer three questions in total, of which one must be fromSection A, one fromSection Bandonefromeither SectionAor SectionB. Start anewquestiononafreshpage. Thenumber of marksisgiveninbrackets[ ] at theendof eachquestionor part question. ©CatholicJuniorCollege 9570/02JC2PRELIMINARYEXAMINATION/2024

2Thisdocument consistsof 3printedpagesand1blankpage.Answer threequestionsintotal.SectionAOneor twoof your threechosenquestionsmust befromthissection.1. Severalmajorfirmsdominatetheelectricvehiclemarket,includingTesla,BuildYour Dreams,Nio, and GeneralMotors.Telsa’s financialsuccessandcontinuousinnovationmakeit challengingfor newentrantsto competeeffectively. (a) Explainhoweconomictheorysuggestsfirmswouldsetpricestomaximiseprofitsandwhyelectricvehiclefirmsmaychargedifferentpricesforthesame good in different markets.[10] (b) Discusswhetheranelectricvehiclefirm’s profitlevelisalwaysduetothepresence of high barriers to entry.[15] 2. HighelectricitypricesintheUnitedStateshaveencouragedsomehouseholdsto switchto solarenergy. Withadvancedproductioncapabilities,thesalesvolumeofresidential-usesolarpanelssoared.Tomeetitstargetofsolarenergytransition,thegovernmentis consideringprovidingdirectsubsidiesthroughcashgrantstohouseholds. Source:Energy.gov2023 (a) Explainthe reasonsfor the observedchangein salesvolumeofresidential-use solar panels.[10] (b) DiscussthefactorsthegovernmentofUnitedStatesshouldconsiderwhendecidingif directsubsidiesshouldbe usedto meetits solarenergytransitiontarget. [15] 3. The pharmaceutical industry is dominated by a few large companies such as Pfizer,Johnson & Johnson, and Merck. Consumersalsofaceimperfectinformation,particularlyin understandingthatbrandedandgenericdrugscanbesimilarinefficacyandsafety. ©CatholicJuniorCollege 9570/02JC2PRELIMINARYEXAMINATION/2024

3 (a) Explainhowmarketdominanceandinformationfailuremayleadtomarketfailure.[10] (b) Discusstheextentto whichgovernmentpolicymeasuresarelikelytoaddress the above sources of market failure.[15] SectionBOneor twoof your threechosenquestionsmust befromthissection.4. China’s economyis beingunderminedbya confluenceoffactors.A massivedownturnin thepropertymarketandongoingtradetensionshaveaffecteddemand.Furthermore,demographicshiftstowardanagingpopulationaswellastherapidadoptionofArtificialIntelligencefurtherdampeneconomicactivity. Source:TheEconomist,2023 (a) Explainwhygovernmentsseekto achievelowunemploymentandahealthy current account balance.[10] (b) DiscusstherelativeeffectivenessofpoliciestoaddressunemploymentinChina. [15] 5. SinceMarch2022,theUnitedStatesFederalReservehasraiseditsinterestrate11 times,from0.25%to 5.50%,to easehighinflationstemmingfromincreasesinhouseholddemandandsupply-chaindisruptions. Source:CNBC,2023 (a) Explainhowtheabove-mentionedfactorsmayhavecausedtherateofinflation to rise in the United States.[10] ©CatholicJuniorCollege 9570/02JC2PRELIMINARYEXAMINATION/2024

4 (b) Discusswhethertherisein theUnitedStatesinterestrateswillhavepositiveor negativeeffectsfor smallandopeneconomiessuchasSingapore.[15] 6. PresidentJoeBidenbelievesthatthegovernmentneedstofightforAmericanworkersandcompaniesinanincreasinglycompetitiveglobalenvironmentthathaserodedAmerica’scomparativeadvantage. Source:TheWashingtonPost,2023 (a) Explainwhya country’s comparativeadvantagemaychangeovertime.[10] (b) Discusswhetherprotectionistpoliciesarethebestwaytodealwiththeproblemsarisingfroma lossof comparativeadvantagein aneconomy.[15] ENDOFPAPER BLANKPAGE ©CatholicJuniorCollege 9570/02JC2PRELIMINARYEXAMINATION/2024