2026 EJC Prelim P1 QP

[Turn over EUNOIA JUNIOR COLLEGE JC2 Preliminary Examination 2026 General Certificate of Education Advanced Level Higher 2 ECONOMICS Paper 1 9570/01 28 August 2026 2 hours 30 minutes Additional Materials: Answer Booklet 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 all questions. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 9 printed pages and 3 blank pages.

2 9570/01 [Turn over Question 1: The Economics of the Attention Economy Table 1: Global Social Media Advertising Revenue (2021–2026) Year Year-on-year growth in global social media advertising revenue (%) 2021 48 2022 20.7 2023 20.3 2024 13.2 2025 (forecast) 9.1 2026 (forecast) 8.1 Source: businesstats.com, 16 July 2026 Extract 1: The structural dynamics of the digital advertising boom Advertisers are aggressively shifting their marketing budgets from traditional media to social media platforms. This is driven by the explosive popularity of short-form vertical videos (such as TikTok and Instagram Reels), where personalised algorithms drive exceptionally high user engagement, making digital ad placements highly lucrative. The integration of generative AI tools allows businesses to instantly generate and target entire ad campaigns. By automating ad creation and distribution, platforms have drastically minimised the administrative costs of hosting and serving ad placements. Despite the market's high profitability, new startups struggle to enter because of powerful "network effects." A platform’s value to a user depends on how many other people are already on it. Users do not choose a social media platform because it has the best technology; they choose it because their friends and family are already using it. Leaving an established platform means losing instant connection to these social circles, creating a high switching cost. For advertisers who act as the direct consumers of ad vertising space in this market, a platform is only worth investing in if it already possesses a massive, active audience. Sources: Adapted from: Sweney M. The Guardian, June 2025 Chin-Rothmann C. Centre for Strategic and International Studies, July 2023

3 9570/01 [Turn over Extract 2: The double-edged sword of tech dominance In a series of landmark antitrust actions, the US Department of Justice (DOJ) and a coalition of states successfully proved in court that Google unlawfully maintained a monopoly over the digital advertising market. The DOJ’s findings showed how Google used its dominance to tilt market rules in its own favour, driving up placement fees for businesses well above competitive levels and reducing the pressure to minimise its own operational overheads. To restore competition and "pry open" the frozen market, a US District Court in April 2026 ordered landmark remedies. These remedies banned Google from entering exclusive distribution agreements and forced the tech giant to share its valuable user - interaction data with competitors to enable them to compete. Despite these issues, market dominance also yields substantial economic benefits. The immense supernormal profits generated by tech giants allow them to aggressively reinvest tens of billions of dollars annually into cutting -edge artificial intelligence (A I), custom microchips, and algorithmic research to continuously enhance the user experience. This is not without its complications too as seen from how Meta simultaneously pulled back investment elsewhere, cutting about 1,500 jobs and closing virtual reality projects to fund these astronomical AI investments. Sources: Adapted from: Murphy M. Financial Times, January 2026 United States Department of Justice, September 2025 Extract 3: The role of governments in the digital playground The use of social media has been linked to declining attention spans, emotional volatility, and compulsive behaviours among young people, reveals a new report by NTU Singapore and Singapore- based research agency Research Network, in collaboration with US-based AI platform ListenLabs.ai. It found that prolonged social media use is associated with teens reporting having difficulties in sustaining focus, increased emotional fatigue, and behaviours resembling addiction. These findings provide crucial evidence o f the real -world effects on young minds, revealing challenges - not just individual issues but societal concerns that warrant attention from everyone, including policymakers, educators and tech companies. To address this, countries like Finland have prioritised public education. I n Finland, the approach to digital literacy education aims to equip citizens with the skills to navigate the digital world effectively, integrating technology across all grade levels to prepare students for the digital age. Supported by lifelong learning initiatives in public libraries, Finland’s approach aims to create informed digital citizens rather than relying on state restrictions. However, critics point out the limitations of education as a standalone policy: despite high digital literacy, research by Save the Children Finland shows that young people often fail to translate safety knowledge into active online behavio ur when confronted with persuasive platform algorithms and peer pressure. Consequently, educational policies require long implementation timeframes and may prove insufficient against sophisticated corporate engagement models. In contrast, Australia enacted a nationwide minimum age for social media use, with platforms like Instagram, TikTok and YouTube forced to block users under 16. Proponents argue that such an

4 9570/01 [Turn over outright ban immediately eliminates exposure of young minds to harmful algorithms and relieves parents of the burden of individual enforcement. However, early evidence mounts that the ban has had little effect on teen use due to the ease of bypassing restrictions and the rise of alternative unmonitored platforms. To combat non-compliance, the government has been forced to incur substantial costs to strengthen the information -gathering powers of its internet regulator, the eSafety Commissioner. The internet regulator can compel social media companies to provide evidence of what they have done to stop under -16s from getting an account, while doubling the maximum financial penalty for non-compliant tech firms. Sources: Adapted from: NTU Singapore, 17 July 2025 Kaye B. Reuters, 9 December 2025 Grantham S & Hurem A. The Conversation, 20 November 2024

5 9570/01 [Turn over 1 (a) (i) Using Table 1, summarise the trend in global social media ad vertising revenue between 2022 and 2024. [1] (ii) Using a demand and supply diagram, account for the trend in ai). [5] (b) Explain how "network effects" functions as a barrier to entry in the market for social media platforms and how it affects long-run profitability. [4] (c) Discuss the effects of market dominance by tech giants , such as Google and Meta, on efficiency. [8] (d) (i) With the use of an example, explain how there may be imperfect information when youths consume social media. [2] (ii) Discuss the view that a total ban on social media for individuals under 16