TMJC 2023 A Level H2 CSQ1 AP Answers

2023 A Level H2 Economics (9570) Suggested Answers to Paper 1 CSQ1 © TAMPINES MERIDIAN JUNIOR COLLEGE Question 1: Costs and Benefits of Education (a) With reference to Figure 1, compare the potential benefits for a graduate in the US with a Bachelor’s degree to a school leaver who has a High School Diploma. [2] A graduate in the US with a Bachelor’s degree is likely to earn more than a school leaver with a High school diploma. [1] A graduate in the US with a Bachelor’s degree is also less likely to be unemployed compared to a school leaver with a High school diploma. [1] (b) With reference to Extract 1, and using a supply and demand diagram, explain one possible reason for the higher average earnings of graduates with a Professional degree compared to those with a Bachelor’s degree. [3] From Extract 1, it is indicated that the marginal private cost of HE is relatively high including the opportunity cost of wages forgone. In view of that, the supply of graduates with a Professional degree is likely to be lesser than those with a Bachelor’s degree considering the high cost incurred to pursue a professional degree. [1] This can be illustrated in Figure 1 below where S1 represents the supply curve of graduates with a Professional degree and the average earning is W1 which is higher than the average earning, W2 of those with a Bachelor’s degree with a supply curve indicated by S2. [2m with a correctly drawn diagram] Figure 1: Note: Also acceptable to explain the higher average earnings of graduates with a Professional degree is likely due to its higher demand compared to those with a Bachelor’s degree.

2023 A Level H2 Economics (9570) Suggested Answers to Paper 1 CSQ1 © TAMPINES MERIDIAN JUNIOR COLLEGE (c) ‘Opportunity costs may make even free schooling unaffordable for some families.’ (Extract 4) Explain one example of opportunity cost that might make free schooling unaffordable. [3] Opportunity cost is the value of the next best alternative forgone when a choice is made. [1] When a student pursues education, a student forgoes possible earnings that he/she could have earned if he/she was working instead of schooling. [1] These wages could be essential for the family to survive during the duration of their schooling. The loss of such wages may result in poorer families finding free schooling unaffordable. [1] (d) Explain how asymmetric information may lead to wrong choices in the market for education. [4] Asymmetric information occurs when one party to a transaction, in this case education, has more or better information than the other party. [1] As seen in Extract 4, unlike the government , consumers (parents) may not have enough information to assess the private return on an investment in their children education accurately, or they might not even be aware of the opportunities available , this is especially true when the parents themselves are poorly educated . Also, many of these returns occurs in the future, the likelihood of parents under -estimating these returns will be very high. [2] Hence due to the consumers (parents) having lower perceived benefits of education compared to the government, they will consume education at a lower output than at the socially optimal level. [1] Alternative response: Students can also give the example of parents not aware of the quality of education available at a school as compared to the knowledge of school principal to explain how asymmetric information may lead to wrong choices in the education market.

2023 A Level H2 Economics (9570) Suggested Answers to Paper 1 CSQ1 © TAMPINES MERIDIAN JUNIOR COLLEGE (e) The government of a low -income country wishes to increase spending on education. With reference to Table 1, discuss whether the government should concentrate this increase on primary education. [8] We assume the aim of the government is to maximise societal welfare. Therefore, in deciding whether to increase spending on education, the government will consider both the social benefits and social costs of spending on education. Social benefits is the sum of private benefits and external benefits while social costs is the sum of private costs and external costs. Reasons why the government of a low -income country should increase spending on primary education: It is shown in Table 1, that the social return from primary education i.e. the external benefits to society on the investment made in education is the highest for primary education at 22.1% compared to that of secondary and higher education. The government by increasing its spending on primary education can bring about benefits to the economy such as higher economic growth as more of its population acquire basic numeracy and literacy skills enabling them to be employed and be more efficient at work. In addition, the social returns from secondary and higher education are lower due to the limited availability of quality jobs in low -income countries as investments are lacking. Reasons why government of a low -income country should not increase spending on primary education: However, the increase in government spending on primary education would mean the government has less money to spend on secondary and higher education. That is, the government needs to consider the opportunity cost of increasing its spending on primary education. In this case, the government’s inability to spend the money on secondary and higher education would mean that the government cannot further raise the literacy rates of its population to attract higher value-added foreign investments which require a better skilled workforce. The lack of such investments can hinder the future economic growth and development of the country. Furthermore, it is stated in Extract 1 that more tax revenue can be collected from graduates than non -graduates for example in UK . Hence by investing in higher education, the government in a low -income country not only able to attract foreign investment to create better paying jobs but it can also collect more tax revenue in the future. The additional tax revenue can be used to further develop the country. Conclusion: The availability of budget and literacy rates are considerations that could affect the government’s decision. If the government of a low-income country faces a tight budget

2023 A Level H2 Economics (9570) Suggested Answers to Paper 1 CSQ1 © TAMPINES MERIDIAN JUNIOR COLLEGE and majority of the population lacks basic education, then the government should invest more in primary instead of secondary and higher education. This could raise the income of majority of its population and their basic living standards. As the country progresses, the government including the individuals could have more financial means to spend on secondary and higher education in the future. Mark Scheme: Level Descriptors Marks L2 Well-developed and balanced discussion on whether government should increase spending on primary education. 4-6 L1 For an underdeveloped answer that is one-sided OR lacks in-depth explanation on whether government should increase spending on primary education. 1-3 Evaluation Well-explained judgement on whether government should increase spending on primary education. 1-2 (f) Discuss whether equity issues are more important than market failures as a reason for the government to intervene in the market for education. [10] Introduction Objective of the government: To maximise social welfare (efficiency) and ensure equity. Therefore, the government should aim to address both equity issues as well as market failures in the market for education. Development 1 The government should int ervene in the market for education due to equity issues. Equ