2013_JJC_H1_Econs_Answer booklet

JURONG JUNIOR COLLEGE 2013 JC2 ECONOMICS 8819 (H1) PRELIMINARY EXAMINATION ANSWER BOOKLET © Jurong Junior College 2013 (H1)

©Jurong Junior College 2013 (H1) 2 Suggested Answers for 2013 J2 H1 (8819) Economics Prelim Case Study Questions Question 1 (ai) Compare the change in government expenditure on education between primary schools/secondary schools/junior colleges and tertiary sector for the period 2006- 2011. [2] Government expenditure on education for primary schools/secondary schools/junior colleges consistently increased whereas government expenditure on education for tertiary sector generally increased with the exception of Year 2007. [1] Overall change in direction. [1] Refinement: Whether the change is consistent or not / Rate of change (faster increase on tertiary education of 66% compared to 40% on primary schools/secondary schools/junior colleges). (aii) Identify the educational sector that has the highest government recurrent expenditure on education per student in Year 2011. [1] Tertiary sector. [1] (b) Extract 1 refers to the increased emphasis placed on private tuition as Asian parents try to give their children the best start in life. Use demand and supply analysis to explain the impact of the increased emphasis placed on private tuition by Asian parents on the private tuition market. [5] Step 1: Explain the demand factor  As mentioned in Extract 1, there is an increas ed emphasis placed on private tuition by parents as they want to give their children a head start. This is reinforced by the lure of advertisements on the services of "star" tutors in mass media which entices consumers as seen in Extract 1. This has resulted in a change in taste and preferences towards private tuition resulting in an increase in demand for tuition services. Step 2: Explain the supply factor  There are also incentives to offer tuition servic es as it is a lucrative and profitable industry, resulting in an influx of players in the industry. The increase in the number of producers leads to an increase in the supply of tuition services. Step 3 & 4: Dominating factor/Draw and describe diagram  The above factors will result in an increase in demand for private tuition services as shown below by a rightward shift of the demand curve from D 0 to D1 and an increase in the supply of private tuition services as shown by a rightward shift of the supply curve from S0 to S1.  The increase in demand for private tuition servic es is more than the increase in supply because of the large change in taste and preferences towards private tuition services as seen by the increased willingness to spend on private tuition services by parents.  This leads to both an increase in the price of private tuition services from P 0 to P1 and quantity of private tuition services from Q0 to Q1.