2013_RI_H1_Econs_Prelims_Suggested_Answers_H1_CPDD

1 Year 6 Preliminary_8819 [Turn over] © RI 2013 ECONOMICS Higher 1 (Syllabus 8819) Suggested Answer Outlines Year 6 Preliminary Examinations 2013

2 Year 6 Preliminary_8819 [Turn over] © RI 2013 Case Study Question 1: Education (a) (i) With reference to Tables 1 and 2, compare the government expenditure on education between Singapore and USA. [2] Both the Singapore and USA’s government expenditure per student on education as a percentage of GDP per capita increased from 2008 to 2010. [1m] However, the Spore government’s expenditure per primary student is co nsistently lower than that of USA OR the Singapore government’s expenditure per tertiary student is higher than that of USA [1m] Note: Though the examiners have accepted some significant differences which did not point to the difference in the expenditur e of primary versus tertiary education between the 2 countries, those are considered as second tier answers. The question made specific references to the 2 tables with data only on primary and tertiary expenditure of the 2 countries and it is fair to expec t Economics trained candidates to point out the relevant difference. (a) (ii) Explain 2 possible reasons for the difference observed in (a)(i). [4] Possible reasons (any 2): 1. The US govt may place a larger value on the external benefits of primary school education than the Spore govt. It may be of the opinion that primary school education has a greater impact on society than tertiary education. The US government thus spends more for each primary school student. [2m] 2. The US govt may find it more equitable to provide greater subsidy (per student) on a larger cohort of primary students as compared to a relatively smaller cohort of university graduates. The graduates are the ones who are likely to be able to command a higher wage and it may not be equitable to provide larger subsidy (per student) for this smaller group. [2m] 3. (Secondary point which examiners accepted - The cost of providing primary school education may be higher in USA than in Spore. In USA, class sizes are smaller and the primary school teachers are mainly graduates as compared to Spore.) (b) Explain the possible relationships between monthly wages and work experience. [4] Fig 1 shows that monthly wages and work experience are positively related in the earlier years of work of a worker. (1m for identification of relationship). As work experience increases, learning on the job increases and this will increase labour productivity. With higher output per worker, the demand for such workers will rise, ceteris paribus, and thus t hey are likely to be rewarded with higher wages. (explanation of relationship 1m) Figure 1 also shows that the wages of workers with only primary school education decline after 30 year