ASRJC J1 2024 H1 WA 2 QP

[Turn over ECONOMICS 8843 Term 3 Week 7 Additional Materials: Writing Papers 50 minutes READ THESE INSTRUCTIONS FIRST Write your name, class and index number in the spaces provided on all the work you hand in. Write in dark blue or black ink. You may use a soft pencil for any 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. Question Number Marks Awarded Name: ________________________________( ) 1 /20 Class: 25 / _____ This document consists of 3 printed pages and 1 blank page. ANDERSON SERANGOON JUNIOR COLLEGE JC1 WEIGHTED ASSESSMENT (2) 2024 Higher 1

2 © ASRJC 8843 /JC1 WA 2 / 2024 [Turn over Answer all questions. Question 1 Navigating the challenges of the COVID-19 pandemic Figure 1: Average wholesale price (AWP) of brand-name drugs in the US Extract 1: COVID-19 pandemic put drugmakers’ revenues at risk Drug prices have been increasing over the years due to higher incomes, steadily rising economic growth and rising cost of raw materials. However, drugmakers are reeling from effects of the COVID-19 pandemic. The pandemic has reduced doctor visits and short -term demand for some drugs. Therefore, drugmakers including Pfizer Inc, Sanofi SA, and GlaxoSmithKline Plc plan to raise US prices on more than 300 drugs in the United States on January 1. Drug price hikes could help make up for lost revenue as doctor visits and new prescriptions plummeted during the global lockdown. Pfizer plans to raise prices on more than 60 drugs. Those include roughly 5% increases on some of its top sellers like rheumatoid arthritis treatment Xeljanz and cancer drugs Ibrance and Inlyta. These drugs have worked well for many patients and are seen as “life -savers”, but there are patients who developed side-effects and had switched to other brands. Source: Adapted from Reuters, 1 January 2021 Extract 2: COVID-19 vaccine makers are unhappy with price cap in private hospitals COVID-19 vaccine makers showed displeasure at the capping of vaccine prices at 250 rupees in private hospitals. Of the 250 rupees, private hospitals earn 100 rupees as service charge, while 150 rupees goes to the vaccine maker. Vaccine companies feel betrayed by the low -price cap which is "too low to sustain," said a source in one of the vaccine manufacturing companies. Source: Adapted from The New Indian Express, 28 February 2021 100 107 115 126 141 155 169 181 192 204 6.5 8.2 9.7 11.4 10.3 8.9 7.2 5.8 6.3 5.5 0 2 4 6 8 10 12 0 50 100 150 200 250 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Price Index Year Price Index % Increase % Increase

3 © ASRJC 8843 /JC1 WA 2 / 2024 [Turn over Extract 3: Here’s why taking the vaccine is necessary even if it’s optional Singapore received its first shipment of COVID-19 vaccines on Monday (Dec 21, 2020) evening, making it the first country in Asia to take in the vaccine developed by Pfizer and BioNTech. Vaccinations in Singapore will be voluntary and free for all Singapore ans as well as long -term residents in Singapore. Vaccination, if it prevents infection, provides three forms of protection. First, it protects the individual who has been vaccinated. The trials show that in the short term, getting vaccinated prevents one from getting COVID-19. Even if infection is not prevented, it can protect people from becoming severely ill with the disease. However, not everyone is aware of the full benefits of getting the vaccine. Second, it protects the people whom the person being vaccinated comes into contact with. This is particularly salient as some people can’t get vaccinated yet. The trials don’t include children, or pregnant women, for instance, and so neither of these group s can get vaccinated for now. Both groups can, however, be partially sheltered by their families or partners being vaccinated. Third, it protects society. Once enough people have been vaccinated, those who have not been vaccinated are sheltered by those who have. At that point, although infection can be introduced by a traveller or through someone who hasn’t been vaccinated, susta ined transmission is no longer possible. Source: CNA, 23 December 2020 Questions (a) (i) With reference to Figure 1, describe the trend in a verage wholesale price (AWP) of brand-name drugs in the US from 2014 to 2023. [2] (ii) With reference to Extract 1, explain one demand and one supply reason for the general trend identified above. [4] (b) “Drug price hikes could help make up for lost revenue as doctor visits and new prescriptions plummeted during the global lockdown.” Using the concept of PED, explain why Pfizer plans to raise prices to make up for lost revenue and comment on the effectiveness of such a plan. [6] (c) Using a diagram, explain the effects of a “price cap” on the market for vaccine. [3] (d) Explain how the presence of positive externalities lead s to failure in the market for COVID-19 vaccination. [5] Total: 20 marks

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