2012 NYJC_JC2 H1 Economics Prelim Paper 1 (QP)

J2 H1 Economics (8819) 1 PAPER 1 Thursday 13 September 20 12 08 :00 – 11 :00 TIME : 3 hours 00 mins INSTRUCTIONS TO CANDIDATES Do not open this paper until you are told to do so. Write your name, class and name of economics tutor in the space provided on the writing paper. Answer all questions in Section A and one question in Section B. The number of marks is given in the brackets at the end of each question. Write your answers on the writing papers provided. If you use more than one sheet of paper, fasten the sheets together. You are advised to spend several minutes per question reading through the data and questions before you begin writing your answers. There are _10_ printed pages including this cover page PRELIMINARY EXAM 2012 Economics JC2 H1 (8819) NYJC

J2 H1 Economics (8819) 2 Section A Answer all questions in this section Question 1 The Mobile Network Industry Table 1: Real GDP Growth Rate and Mobile Phone Penetration Rate for Singapore Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Real GDP growth rate (%) 9.0 -1.2 4.2 4.6 9.2 7.4 8.8 8.9 11.7 -1.0 14.8 4.9 Mobile Phone Penetration Rate (%) 74.8 69.2 77.8 84.5 92.7 99.8 105.4 122.5 131.0 137.4 143.6 149.6 Figure 1: Global ICT developments, 2000-2010*

J2 H1 Economics (8819) 3 Extract 1: ‘Cut-throat’ competition among telcos likely to hurt margins Intense competition within the local telecommunication industry is driving the service providers to adopt strategies to increase their share of the market. While competition is healthy for the industry, the ongoing price war among the telcos may hurt profit margins. An analyst points out that competition now is a different game. The price war is confined to the growing prepaid* segment. The prepaid market segment has a high churn rate or low brand loyalty. To increase the stickiness or loyalty of subscribers, mobile service providers will have to offer very competitive tariffs for same network calls. The mobile operators are increasingly tying subscribers to long-term contracts and subsidies for handsets, especially for the popular range of smartphones. * prepaid: A prepaid mobile phone is a mobile phone for which credit is purchased in advance of service use. Users are able to top up their credit at any time using a variety of payment mechanisms. Source: The Star, 7 July 2012 Extract 2: The hidden dangers of electromagnetic radiation The cellular phone industry was born in the early 1980s, when communications technology that had been developed for the Department of Defense was put into commerce by companies focusing on profits. This group, with big ideas but limited resources, pressured government regulatory agencies—particularly the Food and Drug Administration (FDA)—to allow cell phones to be