2013_ACJC_H1_Econs_P1

1 ©ACJC/2013PreliminaryExam/H1Economics8819/1 [Turn over ANGLO-CHINESE JUNIOR COLLEGE 2013 JC2 PRELIMINARY EXAMINATIONS ECONOMICS 8819/01 Higher 1 Paper 1 28 Aug 2013 3 hours Additional materials: Answer paper READ THESE INSTRUCTIONS FIRST Write your index number and name on all the work you hand in. Write in dark blue or black pen on both sides of the paper. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid / tape. Section A Answer both questions. Begin each Case Study Question on a fresh sheet of paper. Section B Answer one question. Begin Essay question on a fresh sheet of paper The number of marks is given in brackets [ ] at the end of each question or part question. At the end of the examination, arrange your answers in order. Fasten your answers for Section A and Section B separately using the cover sheets provided. This document consists of 8 printed pages. Please check that your question paper is complete.

2 ©ACJC2013PreliminaryExamH2EC8819/1 Answer all questions in this section. Question 1 Beyond the Oil Market Extract 1: Oil price may hit $150, warns International Energy Agency The world's leading energy thinktank, Paris-based International Energy Agency (IEA) has warned that oil prices could spiral above $150 (£93) a barrel from 2012 to 2015, if political unrest in Africa and the Middle East leads to inadequate investment over the coming years. The Middle East and North Africa produce more than one -third of the world's oil. Libya's turmoil shows that a revolution can quickly disrupt oil supply. Libya's oil output has halved, as foreign workers flee and the country fragments. The spread of unrest across the region threatens wider disruption. Despite a drop in the cost of crude on 9 November prompted by the deepening crisis in the eurozone, IEA said the high cost of crude posed a threat to the global economy and said there was a risk of prices exceeding the previous peak of $147 a barrel seen in 2008. The thinktank is expecting demand for energy to grow by a third between 2010 and 2035, with two thirds of the increase coming from the fast -growing emerging countries, and says enormous investment in exploration, drilling and refining will be needed for supply to keep pace. Fears that the outlook for global growth will be affected by Europe's sovereign debt problems prompted oil prices to fall by $2 a barrel as dealers anticipated weaker demand. Analysts said the fall would have been larger had it not been for the ratcheting up of international pressure against Iran over its nuclear programme. Source: The Guardian, 9 November 2011 Figure 1: 2012 Oil Prices (US$ / barrel) Source: US Energy Information Administration (EIA), 2012 Extract 2: Global economy learns to absorb oil price hike Despite the increase in oil