2021 RI H1 Econs Prelims (QP)

1 [Turn over RAFFLES INSTITUTION 2021 YEAR 6 PRELIMINARY EXAMINATIONS Higher 1 ECONOMICS 8823/01 Paper 1 Case Study 31 August 2021 3 hours Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name, index number and civics class on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for diagrams, graphs or rough working. Do not use paper clips, highlighters, glue or correction fluid. Answer all questions. The number of marks is given in brackets [ ] at the end of each question or part question. Use the cover sheets and tie your answer to the questions separately. This document consists of 10 printed pages. H

2 9757/01/Prelim/Y6/20 [Turn over Answer all questions Question 1: Transportation in the 21st Century Figure 1: Bicycles and e-bikes (in millions) sold in Germany, 2013-2020 Source: https://www.statista.com/ Extract 1: Bike prices will go up again The pandemic has rearranged so many parts of the US economy it is hard to keep up. But we can add one more: bikes. There is a national — international, even — bike shortage. It’s been going on for months and will continue to go on for months. Alain Guillerme, the owner of Al’s Cycle Solutions. “I don’t have any more bikes — period,” he said. “You can see all my racks are empty. [The] problem is I don’t have enough supply to make money right now.” The shortage is international and started in January, when the coronavirus shut down factories in East Asia, the center of the bike industry’s supply chain. “When those countries shut down and those factories shut down, there were just no bikes being made industrywide,” Source: BBC, Quartz Extract 2: The Challenges facing the Global Bike Industry Bikes are built from numerous parts that can be made at different factories before they’re brought together in one location and assembled. Under normal circumstances, it takes about four months from the time a bike maker places its order with a factory in Asia for the finished products to arrive in the US. By last May, bike shops were already starting to sell out, and the timeline for getting new bikes had already grown longer. Factories were straining to supply the orders. Lead times grew to six months, then eight. Companies have increased production, but there’s not enough capacity to fill all the orders. Trek, a large US bike manufacturer, has nearly doubled its manufacturing capacity in the last 3.39 3.62 3.82 3.45 3.13 3.2 2.95 3.1 0.41 0.48 0.54 0.61 0.72 0.98 1.36 2 0 1 2 3 4 5 6 2013 2014 2015 2016 2017 2018 2019 2020 SALES IN MILLIONS Bicycles E-bikes 4.1 4.06 3.8 4.36 3.85 4.18 4.31 5.1

3 8823/01/Prelim/Y6/21 [Turn over nine months but demand has almost tripled. In short, while there are lots and lots of bikes flowing into bike shops every day, they are sell