TJC 2024 Prelim H1 Econ QP

© TJC 2024 TEMASEK JUNIOR COLLEGE 2024 JC2 PRELIMINARY EXAMINATIONS Higher 1 ECONOMICS 8843/01 Paper 1 22 August 2024 3 hours 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 textile industry Figure 1: Percentage change in price index of selected 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: Is government intervention required in the clothing industry? The clothing industry 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 har mful 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 lev els of plastic. These microfibers can easily enter our water systems and seriously threaten aquatic environment. Australia’s Environment Minister Tanya Plibersek 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 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: Business Review at Berkeley, 11 November 2023 and ABC News, 20 February 2024 Extract 3: Bangladesh, a hotspot for investments in the textile industry Bangladesh has been turning into a hotspot for foreign direct investment (FDI) in the textile and garment sector as the competing countries are losing the appetite in this trade. The investors of many other countries are investing in textile and garment in the countries like Bangladesh, Vietnam, India, Indonesia, Thailand and Cambodia. Bangladesh has been becoming an attractive destination because of wage benefit s and for its lower cost of production compared with other countries. Also because of higher production capacity of textile and garment in Bangladesh, the international clothing investors are preferring this country for their valuable investment decision. As of September 2023, the stock of FDI in textile and garment reached at $3870.03 million, according to government data. This FDI inflow in textile and garment is higher than the other sectors as the opportunity in Bangladesh has been growing. Th is FDI can also transfer the knowhow for the local entrepreneurs on which they can flourish the sector. Source: The University of Sydney, 21 June 2022 Extract 4: Harms of the textile industry A study reveals high levels of toxic PFAS chemicals in surface and tap water samples collected near industrial areas that are centers of the textiles industry throughout and around Dhaka, Bangladesh. PFAS, or per- and polyfluoroalkyl substances, are a class of chemicals often called “forever chemicals” because of their accumulation and persistence in the environment. They are a threat to human health — having been associated with negative impacts on fertility, fetal development, and thyroid hormone function . Certain PFAS have been linked to weakened immunity, liver damage, and cancer.

4 Besides the environmental impact, there are also concerns on the role the textile industry plays in perpetuating inequality. The textile industry contributed the greatest share of Bangladesh's foreign earnings, about 84.6%, in Fiscal Year 2022 to 23. There are over 4.2 million employees overall in this industry, and more than 80% of them are Bangladeshi women who live in rural regions. Unfortunately, there are violations of labour laws and social norms in this industry, making it difficult for women to work comfortably. This results in a worse -off situation for the females. Therefore, even having a larger share in the industry, most women get stuck with the lower grades and lower pay structures. There is enough evidence to support this statement. Based on a survey conducted in 2020, only 4.3% of women were found to be receiving a salary of more than 128 USD compared to men, for whom the rate was 15.1%. Source: Adapted from IPEN, 28 May 2024 and Dhaka Tribune, 2023

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. [3] (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 and given the relationship that exists between PED and total revenue, explain why “retailers can’t expect the price increases to translate into higher profits” (Extract 1). [4] (c) A public good has the characteristics of non-rivalry and non-excludability. Comment on the extent to which a clean aquatic environment (Extract 2) fulfils these characteristics. [6] (d) (i) With reference to Extract 2, explain the negative externalities from th