CJC 2025 A-level CSQ1 ANS

5Suggested answer to 2025 A Level H1 Paper 1 CSQ 1 (a) With reference to Figure 1, suggest a possible reason for the difference in the share of Singapore's agricultural imports from Malaysia and from the United States. [2] Difference in share of imports [1m]: With reference to Figure 1, Malaysia accounts for 21% of Singapore’s agricultural imports, while United States accounts for only 9%. Reason [1m]: The reason for a significantly higher share of imports from Malaysia as compared to that from United States is likely to be due to closer geographical proximity. (b) With reference to Extract 1, (i) use a diagram to explain how information failure affects the demand for local produce. [3] Identify the information failure [1m]: MPBperceived is less than MPBactual Explanation [1m] : Consumers may decide to buy local produce due to their freshness but they have difficulty in identifying the information they need to determine whether the produce in stores is locally grown or imported. Consequently their MPBperceived for locally produced goods may be lower than their MPBactual. This causes the demand for loca l produce to be lower than it would be if consumers had full information, leading to an underconsumption of local produce at Qf compared to the socially efficient quantity of local produce, Qs. Diagram [1m] Fig. 1 MSC = MPC 0 Price, Costs, Benefits MPBperceived A B C Qs Qf Quantity of local produce MPBactual Ps Pf

(ii) explain how the above would affect two functions of price in allocating resources in the local produce market. [4] Information failure, firstly, distorts the signalling function [1]. Prices signal information to producers and consumers. Due to information failure, the demand for local produce would be lower than it should be. The lower demand results in a lower equilibrium price which signals to local farmers that local produce is not highly valued by consumers, thereby reducing the resources allocated to local produce market. [1] Secondly, information failure also affects the incentive function [1]. The lower price resulting from the lack of information reduces the potential profit margins for local farmers and that would disincentivise local farmers from allocating more factors of production in the local produce market. [1] (c) Given the price elasticity of demand for coffee expressed in Extract 4, explain the likely impact on the revenue of the coffee retailer that has increased the price of its coffee subscription service. [2] The demand for coffee is said to be price inelastic (Extract 4). When the coffee retailer increases the price of its coffee subscription service, the quantity demanded for coffee falls less than proportionately [1] The gain in revenue due to the higher price outweighs the loss in revenue from the fall in the number of subscribers, thus the revenue of the coffee retailer is likely to increase. [1] (d) With reference to Extract 4, explain why Scotland is considering a charge on single-use disposable cups. [5] The free market originally produces at Q f where MPC=MPB. A tax equal to the marginal external cost at Q s (PsP per unit) is imposed by the government. The tax makes the private firm internalise the negative externality in their decision making. [1] Firms’ cost of production rises because of the tax. The increase in cost of production is typically passed on to the consumer. As a result of the tax, there will be in increase in price of single-use disposable cups. This causes the consumers’ MPC to shift up to MPC1. [1] With higher costs, consumers are no longer maximising their net benefits at Qf as MPC1 > MPB. Rational consumers will lower consumption until Qs where

MPC1=MPB, to maximise their net benefit . As such, overconsumption is removed, and the market produces at the socially optimal level. [1] This eliminates the deadweight loss and allocative efficiency is achieved in the market. [1] Thus, a charge on disposable cups can be effective in reducing co nsumption of single-use disposable cups and “encouraging consumers to switch from single-use to reusable cups” (Extract 4) Diagram [1] Fig 1 (e) Extract 3 makes predictions regarding changes in the global supply and demand for coffee beans. Using a supply and demand diagram, explain and comment on the likely impact of these changes on the global market for coffee beans. [6] Explain the changes in the global supply and demand for coffee beans [4] Given that arabica coffee accounts for 70% of coffee beans traded globally and global temperatures increase will cause the decline in its yield (Extract 3). This suggests that there is a fall in global supply of coffee beans due to unfavourable weather conditions, supply curve shifts left from So to S1. On the other hand, global demand for coffee beans has been increasing at a rate of 2% per year (Extract 3), thus increase in global demand for coffee shifts the demand curve to the right from Do to D1. (Fig 1) [Price Adjustment Process] At Po, the quantity demanded for coffee beans is greater than quantity supplied of coffee beans, thus there is a shortage which leads to an upward pressure on price of the coffee beans. As price of coffee beans increases, quantity demanded falls and quant ity supplied increases until the shortage clears at

the new equilibrium where both equilibrium price and equilibrium quantity of coffee beans increase. its production is unable to meet demand, it and the stocks of arabica coffee beans are falling, Comment [2] Given that storage costs of arabica coffee beans are high, PES of arabica beans is likely to be less than one which is likely to bring out a sharp increase in the price of arabica coffee beans when the demand for coffee beans increases. However, this could be mitigated by the cultivation of liberica (another coffee species) which is more climate resilient (Extract 3) to meet the rising global demand for coffee beans. Fig 1 (f) Discuss whether the intended consequence of Singapore's '30 by 30' initiative (Extract 1) for the agricultural products market would likely outweigh the potential unintended consequences. [8] Question Interpretation Command Discuss whether… intended consequence.. likely outweigh potential unintended consequences – explore these two perspectives and come to a reasoned conclusion

Content To identify and explain at least one intended and one unintended consequence of Singapore’s ‘30 by 30’ initiative. R1: R2: Context 30 by 30 initiative Approach Intro: Key definitions of concepts. 1 liner overview. R1: Reduced reliance on imported food R2: Possible negative impact on low-income households E1: Extent of impact on SG E2: Extent of impact on SG Conclusion: Stand, Substantiation, Something Special Introduction: The '30 by 30' initiative aims to enhance Singapore's food security and stabilize prices by sourcing 30% of nutritional needs locally by 2030. However, shifting away from international markets to rely on domestic production may trigger unforeseen economic consequences as this answer will attempt to elaborate on. R1: CD4/5: Well drawn and well referenced diagram Start Point: Reduced reliance on imported food Tool of Analysis: Effective DD/SS End Point:intended consequences Start Point: Possible negative impact on low-income households Tool of Analysis: Effective DD/SS End Point: unintended consequences Price 0 S1 S2 D Qty Q1 Q2 P1 P2

The '30 by 30' initiative enhances Singapore's food security by expanding local urban farming, which reduces the nation's high vulnerability to external supply disruptions like climate change or geopolitical tensions. In the long