TJC H2 Prelim 2024 P1 QP

© TJC 2024 TEMASEK JUNIOR COLLEGE 2024 JC2 PRELIMINARY EXAMINATIONS Higher 2 ECONOMICS 9570/01 Paper 1 22 August 2024 2 hours 30 min Additional Materials: two 12-page answer booklets READ THESE INSTRUCTIONS FIRST Answer booklets 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. Indicate the question number clearly in your answers. Start Question 1 and Question 2 on separate answer booklets. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 9 printed pages and 3 blank page.

2 © TJC 2024 Question 1: The clothing and fast fashion industry Figure 1: Percentage change in p rice index of s elected consumption categories in Singapore Source: Singstat, 2024 Extract 1: Rising prices of clothing Dressing the kids to go back-to-school, not to mention yourself to get back-to-work, will cost more this year. Steve Lamar, president and CEO of the American Apparel and Footwear Association, sees a double- whammy in “the current shipping crisis on top of oppressive tariffs on apparel, footwear and fashion.” His association is calling on the Biden administration to remove tariffs and provide more oversight to the maritime industry to “help now and avert the next shipping crisis,” which is sure to come. The employment costs to move products around, get them on the shelves and rung up at the cash register are going up too. Fashion retailers also have to factor in the effect their price increases will have on consumers already facing escalating costs across the board. In the past year, the CPI for all items tracked by the Bureau of Labour Statistics went up by 5.4%. However, industry leaders have warned that retailers can’t expect the price increases to translate into higher profits as in normal times. “If the wallet is fixed and the price of clothing is going up, consumers’ income will be squeezed”. Adapted from: Forbes, 10 December 2021 -8 -6 -4 -2 0 2 4 6 2019 2020 2021 2022 Food Clothing

3 [Turn Over Extract 2: Fast Fashion and its impact on the environment Fast fashion is a business model that focuses on the production of garments in bulk, and as quickly as possible, in response to current trends. The term was first popularised in a New York Times article in 1989 to describe retail store Zara’s first opening in the United States — the retail brand’s goal, the Times said, was to have a design developed from concept to consumer in only 15 days. While the biggest brands today include large- scale brick-and-mortar retailers with an online presence, like Zara and H&M, fast fashion has increasingly allowed for online retailers and sellers to take charge — like Shein, an online retailer from Singapore. Because of their extremely quick production schedules — as little as three days from design to ready -to-buy for Shein — online retailers can push out hundreds (if not thousands) of designs in small batches and adjust the production rates according to consumer response. Fast fashion has many adverse effects on the environment, including the pollution of water, usage of toxic chemicals, and generation of excessive waste. Industrial waste is produced during the process of dyeing textiles, where chemicals, often harmful to humans, are released into the environment. Another danger to the environment is caused by the widespread use of polyester, a material often used in the production of cheap clothing. Polyester sheds microfibers that add to the already increasing levels of plastic. These microfibers can easily enter our water systems and seriously threaten aquatic life. Adapted from CNN, 24 November 2023 and Business Review at Berkeley, 11 November 2023 Extract 3: Government intervention in the fast fashion industry Australia’s Environment Minister Tanya Plibersek has warned the fashion industry that it must turn its back on fast fashion. The minister is currently considering whether to intervene in the sector through mandating fashion brands to contribute to a green fund for every piece of clothing they make or import and put to market. Alternatively, there has also been discussions about regulating the production process to minimise the harm to the environment. In response to fast fashion trends, a government-funded consortium led by the Australian Fashion Council in June last year launched Seamless. Under the scheme, members must pay a 4 -cent contribution to the Seamless program for every piece of clothing they make or import. Seamless funding would then go towards measures such as research projects to help coordinate the industry's green efforts. Adapted from ABC News, 20 February 2024 Extract 4: Shein’s environment sustainability model According to a report compiled by Money.co.uk, Shein has taken over giants like Nike and Adidas as the most -Googled clothing brand, and Zara and Macy’s in online sales. But several reports over the last year reveal the company’s shocking track record of human rights violations and an environmentally-unsustainable model — leaving many to wonder how its popularity continues to soar among consumers. But recent data found that sustainability is a top priority for Shein shoppers. They say they’re more environmentally conscious than the average consumer, according to a report by The New Consumer and Coefficient Capital, which surveyed more than 3000 US consumers. 52% of Shein shoppers said they considered caring for the environment to be a big part of their personal identity

4 and 67% of Shein shoppers said they were willing to pay more for environmentally sustainable goods. Shein has since announced plans to reduce greenhouse gases emissions across its entire value chain by 25% by 2030 . S ince then, it has saved 69.6 tonnes of single- use plastic waste, preventing the release of 142 tonnes of greenhouse gas emissions. Despite these initiatives, Shein has been accused of “greenwashing”, a form of advertising that use deceptive marketing to persuade the public that their products and processes are environmentally friendly, rather than making meaningful changes to their production process. Source: Various

5 [Turn Over Questions (a) With reference to Figure 1, compare the percentage change in price index of food to that of clothing from 2019 to 2022. [2] (b) With reference to Extract 1, (i) Explain why the value of price elasticity of demand (PED) of clothing will change. [2] (ii) Using a demand and supply diagram, explain why “retailers can’t expect the price increases to translate into higher profits” (Extract 1). [4] (c) (i) Explain why the market fails from the production of fast fashion. [4] (ii) Discuss whether mandating that fashion brands contribute to a green fund would be the most appropriate policy to address the market failure. [8] (d) Discuss whether there is incentive for an online retailer such as Shein to adopt a more environmentally sustainable model. [10] [Total: 30]

6 Question 2: Labour, skills and productivity – The stories of Serbia and Singapore Table 1: Serbia, selected economic indicators (2019 – 2022) 2019 2020 2021 2022 Nominal GDP per capita (USD) 7,417.21 7,733.80 9,232.96 9,537.68 Nominal GDP growth rate (%) 0.73