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 selling even faster. Many shops are also running out of inventory. In the meantime, prices for pretty much everything — assembled bikes, components, replacement parts — are rising. But will red -hot demand continue post -COVID? Industry marketing consultant Rick Vosper said some in the business are bullish, but he’s not. “We think that post-COVID Americans are going to revert to their pre -COVID behavior,” Vosper said. “And that means t here’s a huge amount of inventory in the pipeline that we don’t have customers for.” He said some suppliers in Asia have the same fear, so they’re not investing in new factories. Source: Various sources Extract 3: Shimano invests millions to expand production To meet the rapidly growing demand for e -bike and bicycle components driven by the pandemic, Shimano will invest a further JPY13 billion (€99 million) to expand production at the company’s two Japanese factories located in Sakai City in Osaka Prefecture, and Shimonoseki in Yamaguchi Prefecture. To improve efficiency at both factories, the investment will be used for “cutting -edge manufacturing e quipment and software”. With the production increase at both domestic factories, Shimano says it intends to “increase this year’s total production by 1.5 times compared to 2019.” Source: Bike Europe Extract 4: Electric Bikes to Replace Polluting Cars - France Introduces Innovative Scrappage Scheme Lawmakers in the French National Assembly have voted in favour of introducing a new measure that involves electric bicycles in a national car scrappage scheme. The details of the scheme remain to be specified, but it is likely that a purchase premium of up to €2,500 for electric bicycles will be granted to car owners when a polluting vehicle is scrapped. Olivier Schneider, President of FUB, said that “for the first time, it is recognised that the solution is not to make cars greener, but simply to reduce their number”. Often the purpose of bonuses is to get rid of your old car and buy a new one”, he said, suggesting that the acknowledgement of a solution for households to have one less car is a turning point for the French transport sector. Source: European Cyclists’ Federation Extract 5: More rebates for cleaner vehicles, higher surcharges for more pollutive models from 2021 Buyers of cleaner cars and taxis can get bigger rebates from next year, while those who purchase vehicles that produce more emissions can expect to pay higher surcharges, said the National Environment Agency (NEA) and the Land Transport Authority (LTA) in a joint media release. The scheme was introduced in 2018 to encourage drivers to choose vehicles with lower emissions across five pollutants, including carbon dioxide, hydrocarbons and carbon monoxide. Source: Channel News Asia

4 8823/01/Prelim/Y6/21 [Turn over Extract 6: Green transport set to overtake cars in major cities by 2030 From public transport to cycling, sustainable transport is on course to overtake driving in the world's biggest cities within a decade, according to a study released on Monday (Feb 10). Private car trips will drop by 10 per cent on average by 2030 to make up less than half of all city journeys, while public transport, walking and bicycle will all increase in popularity, the Mobility Futures study found. In Singapore, the Urban Redevelopment Agency (URA) said the latest target is to have 1,320km of cycling paths and park connectors by 2030 - nearly treble the network length today. Source: The Straits Times Extract 7: Climate crisis could Overwhelm Underground Railways Systems, say Experts Terrified passengers trapped in flooded subway cars in Zhengzhou, China. Water cascading down stairways into the London Underground. A woman wading through murky, waist -deep water to reach a New York City subway platform. Subways, the equivalent of underground railway systems around the world are struggling to adapt to extreme weather brought on by climate change. Their designs, many based on the expectations of another era, are being overwhelmed, and investment in upgrades could be squeezed by a drop in ridership brought on by the Covid-19 pandemic. Public transportation plays a critical role in reducing travel by car in big cities, reining in emissions that contribute to global warming. If commuters become spooked by images of flooded stations and start shunning subways for private cars, transportation experts say it could have major implications for urban air pollution and greenhouse gas emissions. Protecting subways against flooding caused by extreme weather is "an enormous undertaking", said Mr Robert Puentes, chief executive of the Eno Centre for Transportation, a non-profit think-tank with a focus on improving transportation policy. "But when you compare it to the cost of doing nothing, it starts to make much more sense," he said. "The cost of doing nothing is much more expensive." Subways and rail syst