2025 ACJC H2 Prelims Paper 1 CSQ1 Suggested Answers FINAL

Suggested Answers H2 Prelim CSQ Q1 Question 1: The Cinema Scene in Singapore Figure 1: Cinema Attendance in Singapore (in millions of persons) Source: Singapore Film Commission, retrieved 10 July 2025 Figure 2: Cinema Operator Market Share^ in Singapore (2023) ^Based on number of movie screens Source: www.dollarsandsense.sg, 30 March 2025

Suggested Answers H2 Prelim CSQ Q1 Extract 1: Hollywood – A Cost Savings Heaven for Film Makers From the early years of the twentieth century, right down to the present, the United States has been the world’s major commercial producer of films and movies. Films and movies production in the United States as a whole, generated revenues of $26.7 billion in 2023, with Hollywood (located in Los Angeles) alone being responsible for almost 85% while other states in the United States account for the remaining 15%. Hollywood offers film makers access to a dense network of specialized suppliers, such as computer generated imagery (CGI) studios and costume designers, which streamlines production. The availability of a large pool of skilled labour such as editors, stunt coordinators, and cinematographers makes hiring of professionals faster for film production. T he clustering of film activity also enables shared use of advanced infrastructure like Universal Studios and post - production facilities such as Technicolor and Deluxe Entertainment, which provide services like colour grading, visual effects, and sound mixi ng. All these enables film makers to achieve cost savings when they locate their productions in Hollywood. Adapted: Yale Global Online, accessed 9 July 2025 Extract 2: Impact of a rise in GST on the entertainment industry Singapore will raise its goods and services tax, otherwise known as the GST, from 7% to 8% in 2023. It’s the first of two scheduled hikes of the GST, with the second slated to take place in January 2024, when the GST will be raised from 8% to 9%. Euston Quah, Head of Economics at the Nanyang Technological University (NTU) said “Some business sectors may be more affected than others. Businesses such as theatre plays will be more affected by the hike than businesses that sell basic necessities, such as supermarkets.” “The difficulty of persuading people to spend money on non -essential entertainment is not new, though it is becoming more and more challenging”, said Sing’theatre artistic director Nathalie Ribette: “We cannot raise the ticket prices more.” Source: Adapted from CNBC, 28 December 2022 Table 1: Singapore Cathay Cineplex Movie Ticket Pricing Adult Student Senior Citizen (Aged 55 and above) Weekdays $11 $7 (before 6pm) $5 (before 6pm)

Suggested Answers H2 Prelim CSQ Q1 Source: www.cathaycineplexes.com.sg, accessed 10 July 2025 Extract 3: Cathay Cineplex at Parkway Parade to cease operations Entertainment company mm2 Asia, which operates the Cathay brand of cinemas in Singapore, will be shutting yet another cinema comple x – its third closure in just over a year. The announcement of the latest cinema closure comes after mm2 Asia reported a loss of $22.7 million for the financial year 2022. Retail experts said changing consumer habits have impacted ticket sales, as more s treaming options become readily available. Ms Karen Chia , assistant director at Nanyang Polytechnic’s School of Business Management, said: “The cinema landscape in Singapore is facing a triple threat: the meteoric rise of streaming giants like Disney+ and Netflix, higher operating costs due to tight labour market and rising rental cost, and dwindling ticket sales post-Covid-19 restrictions. It’s a tough time, causing major cinema operators to throw in the towel.” Source: The Straits Times, 21 August 2023 Extract 4: Cinemas can bounce back with some novel ideas Shaw Theatres, which runs eight cineplexes across the island, said it aimed to keep ticket prices as affordable as possible by leveraging on technology to counter rising labour cost. The operator also has two cinemas in Balestier and Changi Airport’s Jewel mall dedicated to families with young children, complete with bean bags, ball pits and toys. Shaw Theatres said that it has observed a growing demand for its premium experiences and that these off erings really took off after the Covid-19 pandemic. The operator has also enhanced the cinema experience through luxurious offerings like their Premiere and Lumiere halls, featuring amenities such as plush, reclining seats, individual USB charging ports, a nd in-hall dining options. Shaw Premiere also provides a premium experience with lounge access, deluxe leather seats, and dine -in services. And Cathay Cineplex, despite its recent closures, began operations at Century Square Mall in Tampines last year and presented its own attempt at a novel cinema. All its six halls feature neon signs and reclined lounges in the form of wave-shaped seats, aim at providing extra comfort and luxury to its customers. Source: Channel NewsAsia, 29 September 2024

Suggested Answers H2 Prelim CSQ Q1 Questions (a) With the aid of a diagram, explain one cost advantage for film makers when they locate their productions in Hollywood. [3] (b) With reference to Extract 2, explain the impact of rising GST on consumers expenditure on non-essential entertainment such as watching a movie. [3] (c) Using Figure 2, explain the type of market structure in which the cinema industry in Singapore is operating in. [2] (d) (i) Using appropriate examples, distinguish between fixed cost and variable cost in the cinema industry. [4] (ii) Using r elevant case material, assess whether revenue or cost factors are more significant in contributing to the shutting down of cinemas in Singapore. [8] (e) Discuss how far the concepts of price elasticity of demand and income elasticity of demand are useful to a firm like Shaw Theatres to raise its total revenue. [10] [Total:30]

Suggested Answers H2 Prelim CSQ Q1 (a) With the aid of a diagram, explain one cost advantage for film makers when they locate their productions in Hollywood. [3] External economies of scale occur due to the geographical concentration of firms in the industry. By locating at Hollywood, film makers can enjoy lowering of long run average cost from LRAC0 to LRAC1 as seen in Figure 1 due to the expansion of the industry. Evidence from Extract 1: “competitive advantages generated by its unr ivalled technical and organizational capacities and its unique pool of talent drawn from many different countries” Development of Industry Facilities The clustering of film -related activities in Hollywood has resulted in the