2022 SAJC H1 Prelim Suggested Answers

1 ST ANDREW’S JUNIOR COLLEGE PRELIMINARY EXAMINATIONS 2022 (JC2) General Certificate of Education Advanced Level Higher 1 ECONOMICS 8823/01 29 August 2022 3 hours Suggested Answers

2 Question 1: The Markets for Masks and Vaccines Questions (a) With reference to Extract 1, e xplain either one demand factor or one supply factor that has contributed to the global mask shortage. [2] Demand factor: [2] Rise in taste and preference for masks e.g panic buying and hoarding which led to rapid rise in demand . [1]At the original price, quantity demanded exceeded quantity supplied, resulting in shortage.[1] OR Supply factor: [2] Restriction in exports or limited supply of essential raw materials push up the price of these essential raw materials , leading to a rise in costs of production which led to fall in supply [1]. At the original price, quantity demanded exceeded quantity supplied, resulting in shortage [1]. (b) With reference to Extract 1: (i) Using the concept of price elasticity of supply, explain why the global vaccine shortage is likely to persist. [3] PES for vaccines is likely to be less than one as there is limited capacity in terms of facilities, ingredients and skilled labour. [1] Rise in price of vaccine results in less than proportionate rise in quantity supplied of vaccine ceteris paribus. [1] Thus, shortage is likely to persistent as it takes longer time for price adjustment process to clear the shortage. [1] (ii) Explain the possible impact of the global vaccine shortage on the global price of vaccines. [2] Global vaccine shortage at original equilibrium price will exert upward pressure [1] on price of vaccines leading to rise in price [1]. (iii) Explain how this change in global vaccine price identified in (ii) could affect the expenditure on vaccines by developed and developing countries differently and comment on the impact of this difference on global equity. [6] Explain: [4m] Developed countries: [2] PED <1 as low proportion of income is spent on vaccines. Rise in price results in less than proportionate fall in quantity demanded of vaccines leading to rise in expenditure on vaccines. Developing countries: [2] PED >1 as high proportion of income is spent on vaccines.

3 Rise in price results in more than proportionate fall in quantity demanded of vaccines leading to fall in expenditure on vaccines. Comment: [2m] Rise in price of vaccines will make vaccines which are essential less affordable and accessible to poorer developing nations compared to richer developed nations leading to less people being vaccinated in poorer developing countries. This worsens global equity. (c) With reference to Figure 1 and with the use of a product