2013 YJC H1 Econs QP

YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE  YISHUN  JUNIOR  COLLEGE   YISHUN JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATION 2013    H1 ECONOMICS 8819/01 PAPER 1 23 August 2013 TIME: 3 hours Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name, CTG and SG 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 highlighters or correction fluid. Section A Answer all questions. Section B Answer one questions. At the end of the examinations, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This paper consists of 9 printed pages

2   Section A Answer all questions in this section. Question 1 Rising Prevalence of Obesity Extract 1: The Economics of Obesity Obesity rates are continuing their relentless climb in developed and developing countries. It is more common among the poor and the less educated. A group of economists believes that the problem can be solved by making healthy eating a low-cost option. There is a lot of evidence that economics plays a large part in the epidemic. Obesity rates among the poor, who are more likely to depend on high-fat, high-sugar foods for their meals, are substantially higher than the rates seen in higher income groups. Healthy diets are more expensive. There is a huge difference in cost per calorie between high-sugar, high-fat foods and fresh fruits and vegetables. To improve the diets of people on low income, fruits and vegetables should be subsidised. Source: The Lancet 18 December 2004 Figure 1: Obesity rate and Health costs Figure 2: Prevalence of obesity in adults (aged 16 & over) by social class by occupations, 2005 – 2009 Source: National Obesity Observatory September 2012 Note: the percentage given in Figure 2 is an average figure over 2005-2009. 20.1%   23.7%   23.5%   27.3%   24.1%   23.9%   18.2%   21.0%   25.1%   29.4%   29.2%   35.2%   Men   Women

3  Figure 3: The Cost of Healthy Eating  Note: Lines show change in price of items since 1978, relative to overall inflation as measured by the Consumer Price Index. Source : Bureau of Labour Statistics Extract 2: Britain's obesity death rate More people are dying in Britain due to being overweight or obese than anywhere else in Europe, a study revealed yesterday. Experts also warned that the number of fatalities due to obesity may soon, for the first time, exceed those caused by smoking. In around 70 per cent of overweight-linked cases, the final cause of death was heart disease and in 20 per cent, it was cancer. Overall, around 12 per cent of heart disease deaths in Britain were due to being overweight, and 5.7 per cent of total deaths from cancer were also directly caused by being overweight or obese. Obesity costs £2.6billion a year in NHS bills and indirect losses to the economy. The consequences of obesity are not just for the individuals concerned but also for world food supplies, productivity and government finances. This demands action. Source: www.dailymail.co.uk, accessed on Aug 8 2013

4   Extract 3: Containing Obesity For those who believe that the state should generally keep its nose out of people’s private affairs, obesity presents a quandary. If people get great pleasure from eating more than is good for them, should they not be allowed to indulge themselves? After all, individuals bear the bulk of the costs of obesity, quite literally. They suffer at work, too. Obese colleagues are perceived to ‘lack self-discipline, be lazy, less conscientious, less competent, sloppy and emotionally unstable.’ The existence of hiring prejudices, lower wages, and few promotional prospects relative to non-obese employees may be the result of these perceptions. Yet in most countries the state covers some or most of the costs of health care, so fat people raise costs for everyone. In America, for instance, a recent paper estimated that obesity was responsible for a fifth of the total health-care bill, of which nearly half is paid by the federal government. And there are broader social costs. The Pentagon says that obesity is shrinking its pool of soldiers. Obesity lowers labour productivity. Hence, state intervention is justified. But how? Drugs and surgery can help in the most extreme cases. They do not, however, offer a solution to the wider problem. Economists, faced with behaviour they don’t like, tend to favour imposing “sin” taxes. But eating fatty and sugary foods is not a “sin”, even in the fiscal sense, for unlike cigarettes, fatty foods are not uniformly unhealthy. Moreover, since poor people spend a higher proportion of their income on food than rich people do, such a tax would be regressive. It would also be an administrative nightmare, as the fat content of each item of food would have to be measured. In the absence of a single big solution to obesity, the state must try many small measures. Governments should ensure that schools should serve nutritious lunches, teach children how to eat healthily and give them time to run around. Urban planners should make streets and pavements friendlier to cyclists and pedestrians. Much will depend on whether food companies will continue to push junk food or speed up the shift to healthier products. They have no incentive to stop making junk foods until consumers stop