2024 SAJC JC1 H1 Microeconomic Objectives & Policies Tutorial

MICROECONOMIC OBJECTIVES & POLICIES 1 Section A: Case Study Question Question 1 [2021 HCI H1 Prelim (Adapted)] Extract 1: Markets associated with climate change A Driving Stockholm County’s population was expanding fast by 20,000 people annually. With more than half a million cars zooming in and out of the city, bottlenecks and delays were becoming ever present, with potential to get even worse, deteriorating air quality in built up city areas. Stockholm officials decided upon a road-charging system. The concept was simple enough: each Swedish- registered vehicle entering and leaving the city ce ntre between 6:30 a.m. and 6:30 p.m. on weekdays would pay a fee - the equivalent of US$3. Communications about the benefits were especially important, not just about less traffic a nd reduced CO2 levels, but also about how the funds gathered would be channelled back into Stockh olm infrastructure. However, a key hurdle faced by the Swedish government is the limited avai lability of accurate cross-sectional data to determine the effects of such a fee on congestion patterns. B Single-use plastics Plastic production is expanding worldwide. Plastic contributes to greenhouse gas emissions at every stage of its lifecycle, from its production t o its refining and the way it is managed as a waste product. Disposable cutlery, glasses, plates and plastic cotton buds are among a selection of single-use plastics that were outlawed in March following a vote in the European Parliament. To be fully implemented in 2021, the ban is based o n the European Union’s single-use plastics directive and aims to tackle marine litter coming f rom the single-use plastic products most often found on European beaches. Sources: Various With reference to Extracts 1A and 1B, (i) Explain negative externalities in consumption and production using examples. [4] (ii) Discuss why one government chooses to use tax while the other adopts ban to achieve efficient allocation of resource. [8] [Total: 12 marks] ST ANDREW’S JUNIOR COLLEGE 2024 JC1 H1 ECONOMICS MICROECONOMIC OBJECTIVES AND POLICIES

MICROECONOMIC OBJECTIVES & POLICIES 2 Question 2 [2021 JPJC H1 Prelim] Fighting Climate Change Extract 1: Climate change threatens the world’s food supply, United Nations warns The world’s land and water resources are being exploited at “unprecedented rates,” a new United Nations report warns, which combined with climate c hange is putting dire pressure on the ability of humanity to feed itself. The report, highlighted that half-billion people are already living in places turning into desert, and soil is being lost between 10 and 100 times faster than it is forming. Climate change will make those threats eve n worse, as floods, drought, storms and other types of extreme weather threaten to disrupt, and over time, shrink the global food supply. Global warming is exacerbating food insecurity by d estroying crop yields, decreasing livestock productivity and increasing pests and diseases on f armland. Food security, as defined by the United Nations, means that people, at all times, ha ve access to safe, affordable, sufficient and nutritious food for an active and healthy life. Adapted from www.nytimes.com , 8 August 2019, accessed 17 Aug 2021 Table 1: Consumer price index (CPI) of India (Annual % change) Source: www.rbi.org Extract 2: High food inflation in India is forcing families to choose between good meals and education In December 2019, consumer food price inflation hit 14.1% in India, the highest in six years. For working class consumers like Trupti Kamle, the rele ntless rise in food prices has meant constantly having to make tough decisions. For the past five months, Kamle has been torn between two difficult choices: either saving money for her son’s education or ensuring that he is fed well. In most parts of India, prices of vegetables and ma ny fruits were driven high because of crop damages caused by excessive and unseasonal rains, w hich hit supplies. Onions saw an almost 200% rise in prices in November and December 2019, sparked by a poor harvest last year and wheat and other cereals have also seen a price infl ation. Other factors contributing to rising food prices include rising urban population growth and income. Source: https://qz.com/india/1785157/, accessed 15 January 2020 Extract 3: Ammonia pollution damaging more than 60% of UK land Pressure on farmers to increase food yield is forci ng many to adopt intensive agricultural practices for crop production in many parts of the world. The use of animal waste and excessive fertilisers to increase food yield has led to severe ammonia and nitrogen pollution. Experts and activists are calling for urgent govern ment action to stem the rise of ammonia emissions as it combines with other pollutants in t he air to form fine particulates that pose a Year CPI (Food) CPI (All items) 2018 2.2 3.6 2019 0.7 3.4 2020 6.0 6.8

MICROECONOMIC OBJECTIVES & POLICIES 3 grave danger to human health. At least 3,000 deaths a year could be prevented by halving agricultural emissions of ammonia, according to a j oint investigation by the Guardian and the Bureau of Investigative Journalism. Civil society groups called for sweeping reforms to the way farms are monitored and regulated. Adhering to the regulations and proposed reforms ma y raise costs but unless urgent action is taken, the government is on track to miss legally b inding commitments to reduce ammonia by 2020 and 2030. “Relying on voluntary measures will not be enough. If binding rules to limit polluting farm practice aren’t put in place as soon as possible and farmers aren’t made to comply, we will have a major blind spot.” said Kate Nield a t Client Earth. A spokesperson for the Department for Environment, Food and Rural Affairs said, “Our clean air strategy sets out for the first time how we plan to tackle farm ammonia pollu tion by requiring and supporting farmers to invest in the infrastructure and equipment required to reduce emissions.” Adapted from The Guardian Online , 18 June 2019 Extract 4: Extreme water stress affects a quarter of the world's population A quarter of the world’s population across 17 count ries are living in regions of extremely high water stress, a measure of the level of competition over water resources, a new report reveals. “We’re currently facing a global water crisis. Our populations and economies are growing and demanding more water. But our supply is threatened by climate change, water waste and pollution.” said Betsy Otto, Global Director at Water Resources Institute. The level of water stress in India, a country of mo re than 1.3 billion people, was striking, experts noted. In July, taps in the southern city of Chenna i ran dry and satellite photographs showing an empty lake in the city went viral on social media. Although the US did not have high levels of water stress overall, a handful of states – includi ng New Mexico and California – were found to be facing significant strains on their water suppli es that will only intensify with global heating. Around the world, stress on water supplies can exac erbate conflict and migration, threaten food supplies and pose risks for water-dependent industries, including mining and manufacturing. Adapted from The Guardian , 6 August 2019 Extract 5: Protecting Singapore from rising sea levels could cost $100 billion Climate change is causing rising sea levels and flo ods in Singapore. Protecting Singapore against rising sea levels could cost S$100 billion or more over 100 years, Prime Minister Lee of Singapore said on Sunday, as the low-lying is