2025 NYJC Paper 1 - Mark Scheme

NYJC H2 Prelim Paper 1 Question 1 Suggested Answer (a) With reference to Figure 1 and Extract 1, (i) Explain what can be concluded about the change in the world price of cotton in 2023. [2] ● [Evidence] In 2023, cotton production rose to 116 mil bales while cotton consumption fell to 113 mil bales. [1] ● [Analysis] The arising surplus would lead to a downward pressure on price leading to a fall world price. [1] (ii) Explain one demand and one supply factor that could impact world cotton prices. [4] Demand factor: ● [Evidence] o “..shoppers have increasingly opted for alternative fibres, which are cheaper and quicker to produce” (Extract 1) [1]. ● [Analysis] o Cotton and polyester are fibres which can be used to make fashion apparel. ▪ They are inputs in substitute demand (factor market) – because they serve the same purpose (to make fashion apparel) o The lower price of polyester leads to a rise in quantity demanded of polyester. o Since they are substitutes, the decreases the demand for cotton will fall as producers switch to buy the cheaper input (polyester). o Hence the demand for cotton falls leading to a fall in cotton prices. [1]. OR o The demand for cotton can be said to be derived from the demand of the final product (apparel cotton fibres are made into) – the 2 items are related via derived demand.

o Hence, the demand for cotton fell because the demand for the final product (cotton apparel) demand fell. [1] Supply factor: ● [Evidence] o “Low prices for corn have pushed farmers to plant cotton instead” resulting in a sharp rise in cotton production.” (Extract 1) [1]. ● [Analysis] ● Low prices for corn reduces the revenue ( PED<1) and profitability of producing corn. ● Profit-maximising producers will switch using their land from producing corn to producing cotton (Land is a scarce resource that can be used to produce alternative agriculture goods). ● Since cotton and corn are in competitive supply , the producer must reduce the supply of corn in order to increase the production of more cotton. ● This increases the world supply of cotton leading to a decrease in world cotton prices [1]. [Note: The analysis should focus on the agents in the factor market as the focus in on the cotton as an input to fast fashion NOT to fast fashion apparel buyers (final product)]. (b) ‘Some governments thus implement programs such as minimum support price to support farmers.’ (Extract 2) Explain how the a