RVHS_H1_ECONS_P1_CSQ_1_Soln

RVHS H1 Case Q1 Suggested answer (a) (i) Describe how Singapore government healthcare spendi ng has changed from 2006 to 2015. [2] It generally increases [1] at an increasing rate [ 1]. (ii) Explain the change in opportunity cost given this change in healthcare spending. [2] The opportunity cost increased [1] since increased number of projects in other sectors might have to be forgone or scale down give n more funds have to be diverted. [1] (students can also provide specific e.g of projects in other sectors. E.g. transportation projects such as increasing the numb er of buses on the roads and education projects such as upgrading the existing education facilities. (b) Extract 1 states that the number of elderly Singapo re will rise to 610,000 by 2020. (i) Using supply and demand analysis, explain how this estimation serves to impact the market for private healthcare services. [6] With ref to the diagram below, demand for healthcare increased [1] from D 0 to D1 as the population continues to aged with more suff ering from chronic age- related ailments [1]. On the other hand, this estimation will cause supply for healthcare to increase [1] from S 0 to S 1 as existing private healthcare providers expand and new players enter the market in view of the higher expected demand. [1]. 1 mark will be awarded for the accurate drawing of the diagram. Price Quantity Figure 1: Market for private healthcare O S0 S1 D0 D1 P1 P0 Q1 Q0

Given the increase in demand and increase in supply for healthcare, equilibrium quantity of healthcare will increase from Q 0 to Q 1 [0.5] while equilibrium price of healthcare is uncertain [0.5] depending on the relative magnitude of shift of demand and supply. OR While equilibrium price of healthcare is likely to increase from P 0 to P 1, the increase in demand is likely to outweigh the increa se in supply since the “number of elderly Singaporeans is growing faster t han ever” and/or that competition for land intensified in a small country like Singapore. [0.5] (ii) Comment on how the above analysis might affect Singapore government healthcare spending going forward. [2] Analysis based on an increase or a decrease in price is acceptable, and any 1 of the below comments is worth 2 marks. (analysis based on a decrease in price) The fall in price in private healthcare helps keep private healthcare affordable. (1) As such, there is no need for government to increase its spending further to ensure equity. (1) (analysis based on an increase in price) Possible comments Candidates may give the following combination to get a max of 2 marks. Pt