JPJC H1 Prelim 2024 Solutions

2024JPJCJC2PrelimH1P1SuggestedAnswer Question1: RiceandFoodSecurity (a) (i) WithreferencetoFigure1,describethechangesintheworldfoodpricefortheperiodfromJanuary2020toJanuary2023. [2] Suggestedanswer:Overall,worldfoodpricehasrisenfortheperiodfromJanuary2020toJanuary2023.However,thedatashowsareversaloftrendafterMarch2021(foodpricefallsafterMarch2022). (a) (ii) Withtheaidofadiagram,accountfortheextentofthechangeinworldpricefoodinMarch2022. [5] Suggestedanswer:Version1:Theextentoftheriseinworldfoodpricesin2022isattributedto(i)afallinsupply(ii)ariseindemandand(iii)demandforfoodispriceinelastic. Supplyfactor:RussiaandUkrainearekeyexportersofwheat,corn,barley,andsunfloweroil,whicharecrucialfoodcommoditiesglobally.Theinvasiondisruptedtheproductionandexport of thesegoods, especiallythroughtheBlackSea,amajorrouteforglobaltrade.ThestallingofUkrainianexportssignificantlyreducedtheglobal supplyof theseessential fooditems riseincost of production

reducesprofitsoffoodproducers fallinmarketsupply. Demandfactor:AstheconflictbetweenRussiaandUkraineheightenedfearsofsustainedsupplydisruptions,expectationsofrisingpricesmayhavetriggeredanincreaseindemandforthesecommodities,drivenbypanicbuyingandstockpilingbehaviour. Afall inmarket supplywithariseinmarketdemand ashortageattheinitial marketequilibriumprice upwardpressureinmarketprice.Thus,theextentoftheriseinworldfoodpricein2022isduetoreinforcingeffectofafallinsupplyandriseindemandforfoodasseeninFigure1. Figure1 Version2:Theextentoftheriseinworldfoodpricesin2022isattributedto(i)afallinsupplyand(iii)demandforfoodispriceinelastic. Supplyfactor:RussiaandUkrainearekeyexportersofwheat,corn,barley,andsunfloweroil,whicharecrucialfoodcommoditiesglobally.Theinvasiondisrupted 1

theproductionandexport of thesegoods, especiallythroughtheBlackSea,amajorrouteforglobaltrade.ThestallingofUkrainianexportssignificantlyreducedtheglobal supplyof theseessential fooditems riseincost of production

reducesprofitsoffoodproducers fallinmarketsupply. Attheoriginalmarketequilibriumprice,therewillbeashortagearisingfromthefallinmarket supply upwardpressureonmarketprice.Demandforfoodispriceinelastic due to (i) it is a necessity (ii) a broadly defined goodwhichlackssubstitutes.Duetoafallinmarketsupply,coupledwithapriceinelasticdemandforfood,marketpricewillrisebyalargeextentasshowninFigure1a. Figure1a (b) UsingtheconceptofProductionPossibilityCurve(PPC),explainthelikelyimpactof‘severeflooding’(Extract4)onthePakistaneconomy. [4] Suggestedanswer:ProductionPossibilityCurve(PPC)showsthemaximumcombinationoftwogoodsorserviceswhichtheeconomycanproducewithagivenquantityandqualityofresources,assuming all resources are fully and efficiently utilised, and a particular state oftechnology. TheseverefloodinginPakistanhasdestroyedricefields,landandinfrastructure,affectingmostpartsofthecountry.Thiscausesafallinquantityoflandandcapital,resultinginafallinproductivecapacityandaninwardshift of thePPCfromPPC1 toPPC2 asshowninFigure2. AsPakistanrepresents7.6%ofglobalricet