SAJC_H1_ECONS_SAMS

ST. ANDREW’S JUNIOR COLLEGE PRELIMINARY EXAMINATIONS – 2017 (JC2) General Certificate of Education Advanced Level Higher 1 ECONOMICS 8819/01 28 August 2017 3 hours Suggested Answers with Examiners’ Comments READ THESE INSTRUCTIONS FIRST Write your name and class 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. Section B Answer one question. At the end of the examination, fasten your answers for each question separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 8 printed pages. © SAJC 2017 [Turn Over]

Suggested Answers for CSQ 1 (a) (i) Describe the trend in world food prices from 2011 to 2015. [2] Suggested Answer: World food prices generally fell from 2011 to 2015 [1], with the sharpest fall from 2014 to 2015 [1]. (ii) Using a diagram and Extract 1, explain one demand a nd one supply factor that could support the trend in world food prices from 2011 to 2015. [4] Suggested Answer: One demand factor that could support the fall in fo od prices would be the fall in demand for biofuels. Biofuels require food crops as a factor of production. As mentioned in extract 1, “Falling oil prices have also affected the demand for biofuels, made from crops like maize and potatoes,” hence, the derived demand for food falls. [1] One supply factor that could support the fall in food prices would be the fall in cost of production for food. From extract 1, “Ch eap oil contributed to abundant global supplies of food”. Oil is an important factor of production for food, as it is used to run tractors, transporta tion, etc. Cheaper oil will cause COP of food to fall, resulting in increase in supply of food. [1] Diagram [1] below shows a simultaneous fall in dema nd and increase in supply of food. Therefore, a simultaneous fall in demand and increa se in supply of food resulted in a fall in price of food. [1] (extent of shift not needed) 0 Quantity DD 1 DD 0 Price of food SS 1 SS 0 P0 P1

(b) From Extract 2, explain how the price elasticity of demand and price elasticity of supply of potatoes have changed over the years. [4] Suggested Answer: Price elasticity of demand (PED) for potatoes has increased over the years [1]. This is seen from extract 2, “potato has risen to become the third most important food crop” and the Chinese government’s “push for consumption of potatoes as a staple food”. This shows that the degree of necessity for pota