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This document consists of 8 printed pages. [Turn over 1 ECONOMICS 8819/01 Paper 1 15 September 2015 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. Section A Answer all questions. Start each case study on a new sheet of paper. Section B Answer one question. Start this question on a new sheet of paper. At the end of the examination, fasten all your work securely together. Your answers for each case study in Section A and the essay in Section B are to be handed in separately. The number of marks is given in brackets [ ] at the end of each question or part question. RIVER VALLEY HIGH SCHOOL YEAR 6 Preliminary Examination II in preparation for General Certificate of Education Advanced Level Higher 1

2 Section A (70%) Answer all questions in this section. Question 1 Issues on sugar, corn and ethanol Extract 1: Sugar protectionism is immune to even modest reforms The well -known measures that protect sugar producers have received the Senate’s approval. Again, the Senate voted not on ending sugar protectionism but on making it slightly less irrational. One of the well -known practices is the imposition of a tariff on imported sugar. These protections are part of a “temporary” commodity support program created during the Great Depression, which transfers wealth from 316 million Am erican consumers to a few thousand sugar producers. What begins as simple garden -variety grasping becomes an entitlement, the argument being that the longer the benefit has lived, the more its beneficiaries have built their lives around it, so ending it would be disruptive. These sugar protectionist measures cause manufacturers of candy and products with significant sugar content to move to countries where they can pay the much -lower world price for sugar. The big companies like Mars and Hershey can locate plants around the world. The hundreds of family -owned American candy companies cannot. In the last four years, the U.S. sugar price has averaged between 64 percent to 92 percent higher than the world price. The costs are dispersed to hundreds of millions. The benefits accrue primarily to 4,700 sugar beet and sugar cane farms. Source: The Washington Post, 7 June 2013 Extract 2: U.S. corn syrup makers slash prices to fend off cheap sugar Corn syrup producers are scrambling to defend their once -dominant s hare of the U.S. sweetener market, offering rare price cuts for high -fructose corn syrup customers as tumbling sugar prices erode the advantage of typically cheaper syrup. A switch to sugar would further erode corn'