SAJC 2025 Prelims P2 Essay Answer Key

This document consists of 3 printed pages and 1 blank page. © SAJC 2025 ST ANDREWS JUNIOR COLLEGE Economics Department [Turn Over 9570/02/Sep/25 ECONOMICS 9570/02 Paper 2 15 Sep 2025 2 hours 30 minutes No Additional Materials are required. READ THESE INSTRUCTIONS FIRST An answer booklet 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 three questions in total, of which one must be from Section A, one from Section B and one from either Section A or Section B. The number of marks is given in brackets [ ] at the end of each question or part question. St Andrew’s Junior College JC2 Preliminary Examinations for General Certificate of Education Advanced Level Higher 2

2 © SAJC 2025 9570/02/Sep/25 1 The US economy contracted by 0.3% in Q1 2025 . To revive the declining domestic textile manufacturing industry, the US has decided to impose tariffs (import taxes) on imported textiles. China remains competitive as she can manufacture both low-end as well as high- end textiles. Source: CNN (a) Explain how a production possibility curve (PPC) can be used to illustrate the concept of scarcity, choice and opportunity cost, and explain how the impact of US tariff s on Chinese imports can be shown on China’s PPC. [10] (b) Discuss the likely effects of a contraction of the US economy and the imposition of tariffs on consumer expenditure on different types of imported textiles into the United States. [15] Question Analysis (a) Command Explain Content PPC – scarcity, choice, opp cost Impact of tariff on PPC Context China Schematic Plan Requirement 1 Requirement 2 Explain how PPC can be used to illustrate the concepts of scarcity, choice and opportunity cost. Explain how US tariffs will lead to an inward movement in China’s PPC in SR and inward shift of PPC in LR. R1: Using PPC to show concept of scarcity, choice and opportunity cost The production possibility curve (PPC) shows all combinations of the maximum quantities of two goods that can be produced by an economy with a given amount of resources fully and efficiently employed at a given state of technology in a given time period. The diagram below assumes a simple economy only producing two goods: capital goods and consumer goods.

3 © SAJC 2025 9570/02/Sep/25 Scarcity arises because of limited resources but unlimited wan