TJC H2 Prelim 2024 P2 Suggested Answers

2024 TJC JC2 H2 Prelim Suggested Answer with Comments 1 Question 1 On the back of a weaker yen, the prices of hotel accommodation have surged as more tourists are visiting popular attractions such as islands and heritage sites in Japan. In response, local governments in Japan are considering implementing a tourist tax on these places to help deal with overtourism. (a) Explain two possible reasons for this surge in the prices of hotel accommodation in Japan. [10] (b) Assess the combined effects of the implementation of a tourist tax and a rise in incomes on consumer expenditure of different types of hotel accommodations. A [15] Part (a) Question interpretation Command word/ phrase Explain To account for, using economic reasoning and tools of analysis Content Two possible reasons… surge in the prices To explain the surge (very large increase in price), demand, supply and elasticity factors are relevant. Given that the weaker yen (from preamble) is a demand factor to explain the price increase, the relevant elasticity concept to explain the extent of the increase is PES. Context Hotel accommodation in Japan To apply to the hotel accommodation in a foreign country Japan by using information from the question stem (preamble). This question requires students to explain two reasons for the surge in price using weaker yen as a demand factor and the elasticity concept PES. The recognition that tourism and hotel accommodation are complementary goods is needed, and relevant diagram(s) should be included. Introduction [Outline approach] To explain the surge in the prices of the hotel accommodation, concepts of demand and supply, and elasticity factors are relevant. The weakening of the yen from the preamble is one possible demand factor that can explain the increase in the price of hotel accommodation in Japan, and the price inelastic supply of Japan’s hotel accommodation will explain the large increase in price. • Key Argument 1: One reason to explain the increase in the prices of the hotel accommodation in Japan is the rise in demand for hotels given the weaker yen. • Demand is the willingness and ability of consumers to purchase a good at a specific price per period of time. • With a weaker yen, foreigners will now find their currencies to have appreciated relative to Yen. As the prices of domestic price of goods and services are now cheaper in Japan compared to the rest of the world, tourists have higher purchasing power, and m ore tourists will visit Japan as it is cheaper to travel there.

2024 TJC JC2 H2 Prelim Suggested Answer with Comments 2 • Tourism and hotel accommodation a