CJC_H1_ECONS_P1

CATHOLIC JUNIOR COLLEGE JC2 Preliminary Examinations Higher 1 ECONOMICS 8823/01 Paper 1 20 Aug 2018 Additional Materials: Writing Paper 3 hours READ THESE INSTRUCTIONS FIRST Write your name, class and question number 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 highlighters, glue or correction fluid. Begin each case study question on a new sheet of paper. Answer ALL questions. At the end of the examination, fasten your work securely together. Submit each case study question separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 1 blank page

2 Answer all questions Question 1 Sugar – The Sweet Factor Extract 1: Global sugar production goes into deficit for first time in five years Sugar is one of the few bright sparks on the global commodity stage at the moment as demand outstrips supply for the first time in five years. Globally, the crop is forecast to fall into deficit, down by 5.2 million tonnes of sugar on last season to 177.5 million tonnes, a deficit of 4.1 million tonnes. It is expected to deliver more sustainable profits to growers. Analysts are predicting a deficit over the next two seasons which will boost values, just months after the raw sugar price fell to about 10 cents a pound for the first time in almost a decade, a value below the cost of production. Tom McNeill from Green Pool Commodities said weather conditions and poor investment in major growing regions were bringing down the global crop. "We saw far too much rain in Brazil and that slowed the harvest and also reduced the sugar content." Brazil is the world’s largest sugar producer and exporter. Now, the global deficit was expected to push sugar prices to sustainable levels for farmers and millers. Analysts are also predicting a jump in sugar consumption, predominantly from the rising middle class in emerging economies, but Mr. McNeil assured the sugar shortfall would not lead to a shortage for shoppers. Source: Adapted from Australian Broadcasting Corporation, 1 February 2016 Table 1: Sugar Historical Quarterly Price Index (Base year = Jan 2015) Mar-15 85.29 Mar-16 100.00 Jun-15 79.41 Jun-16 126.47 Sep-15 76.47 Sep-16 138.24 Dec-15 94.12 Dec-16 120.59 Source: International Sugar Agreement (ISA), accessed 10 July 2018 Extract 2: Global sugar deficit to squeeze Brazil ethanol output Brazil’s ethanol production should fall in the next three years if projections for growing global sugar deficits are confirmed, said analysts. Analysts estimate ethanol production will fall to as low as 23.1 billion litres in the 2019/20 crop year, while sugar output would climb to 43.5 million tonnes, as more farmers switch their production from ethanol t