NYJC H1 ECONS P1 8823 QP

8823/01 H1 Economics Paper 1 1 NANYANG JUNIOR COLLEGE 2018 JC2 Preliminary Exam H1 ECONOMICS Paper No: 8823/01 10 th September 2018 Time : 1400 – 1700 hrs Monday Duration : 3 hours READ THESE INSTRUCTIONS FIRST Do not flip the pages of this paper until you are told to do so. Write your name, class and name of your economics tuto r in the space provided on the writing paper. Answer all questions. The number of marks is gi ven in the brackets at the end of each question. Write your answers on th e writing paper provided. If you use more than one sheet of paper, fasten the sheets together. You are advised to spend several minutes reading through the data and questions before you begin writing your answers. There are _8_ printed pages including this cover page

8823/01 H1 Economics Paper 1 2 Answer all questions Question 1: The Sugar Battle Table 1: Sugar in Selected Economies (1,000 Metric Tons) Countries Production Consumption 2016/17 2017/18 2016/17 2017/18 China 9,300 10,250 15,600 15,700 India 22,200 32,445 25,500 26,500 European Union 18,313 21,150 18,700 18,800 Pakistan 6,825 7,425 5,100 5,400 United States 8,136 8,393 10,979 11,181 World total 173,980 191,813 170,773 174,125 Source: United States Department of Agriculture Extract 1: Tax on sugary drinks will only be partly effective, claims study Three economists at the Institute for Fiscal Studies have raised questions about the efficacy of the government’s soft drinks industry levy. Drinks makers who do not cut sugar levels will have to pay 18p a litre on drinks that have more than 5g of sugar per 100ml and 24p a litre on those that have 8g or more of sugar per 100ml. According to the economists’ modelling, young consumers would lower their sugar consum ption by more than older individuals in response to a soda tax. The tax, therefore, succeeds in achieving relatively large reductions in sugar among one group,” the study notes. However, its impact of sugar tax on population remains to be seen. The findings have implications for Britain and beyond. A growing number of cities and countries have adopted taxes on sugary drinks to help combat sugar consumption, which is blamed for rising obesity levels. Where do we draw the line for taxing undesirable dietary choices? For example, should a salt tax be implemented given that the overall concern is on long-term human health? To what extent do matters of dietary choices require government intervention? Some people might say that when it comes to food choices, they should have complete freedom in making those choices as they are solely responsible for the health cost that they would incur. However, the cost goes beyond personal choices. Source: Various Extract 2: UK sugar industry licks lips over end of EU quotas The European Union is abolishing its system of quotas for sugar from Sunday 1 October, in one of the biggest changes for British agriculture in recent years. The UK’s 3,500 growers of sugar beet – a sweet root vegetable that looks like a turnip – and the country’s sole refiner, British Sugar, expect the change to allow them to increase production by 50% annually. It’s an industry that supports nearly 10,000 jobs across the country, helping the UK to consume roughly two million tonnes of sugar a year. About 60% comes from home-grown beets, while another 15% comes from the EU and the remainder is from imported cane sugar. The sugar rush comes as the EU scraps limits on production for the first time since 1968. Britain had been limited to producing little more than one million tonnes a year, which has led to stockpiling following bumper harvests.

8823/01 H1 Economics Paper 1 3 British Sugar, a part of the Associated British Foods conglomerate, plans to immediately increase production to 1.4 million tonnes next year from 900,000 tonnes in 2017. But with the vote to leave the European Union, higher taxes on sugary drinks and a government push to wean consumers off unhealthy treats, the industry may face a sticky future. Producers will also be more exposed to the global sugar price as protections recede. Consumers could benefit from falling prices , although not immediately, according to Callum Macpherson at the City bank Investec. “If prices are passed through to consumers, where you might see a noticeable effect, at some stage, is on the cost of buying a bag of sugar in the supermarket,” he said. Across the EU, sugar production next year is now forecast at 20.1 million tonnes, about 20% more than this year’s crop. Imports are expec ted to fall to 1.5 million tonnes, while exports are forecast to double to 2.8 million tonnes. A government spokesperson said: “The removal of EU sugar beet quotas will enable British growers compete on a level playing field with other sugar producers around the world.” Source: The Guardian, 29 September 2017 Extract 3: Beating diabetes starts with small steps, says PM Lee Eat right, exercise more, get your health ch ecked regularly and think twice about picking up that can of soft drink. These are Prime Minister Lee Hsien Loong's words of advice to Singaporeans who want to beat diabetes. While diabetes is often a silent illness, its co mplications - which range from kidney failure to blindness and even impotency in men - can prove debilitating. Roughly 400,000 Singapore residents have diabetes. A significant proportion of them do not even know it. Furthermore, total economic costs per working-age patient were estimated to be US$5,646, of which 42% were excess direct medical costs and 58% indirect productivity-related losses in 2010. Total cost is projected to rise to US$7,791 in 2050, with the share of indirect costs rising to 65%. By current projections, diabetes in Singapore represents a growing economic burden. Among the working-age population, the impact of productivity loss will become increasingly significant. Prevention efforts to reduce overall prevalence should also engage stakeholders outside the health sector who ultimately bear the indirect burden of disease. The Government alone cannot solve this problem, Mr Lee said. It is a matter of personal responsibility. The first thing people should do is find out wher e they stand by going for regular medical check-ups. These do not have to be expensive. From next month, nearly two million Singaporeans can get a basic subsidised health screening for $5 or less under the enhanced Screen for Life programme. The chances are your doctor will advise you to eat healthy and exercise more as well, Mr Lee said. A final target of Mr Lee's speech was soft drinks and sugar. These drinks contain refined sugar, which is bad for a person and can increase the risk of diabetes. This problem is especially tricky because drinking such sugary beverages can become an ingrained habit from a young age, he said. "Our children are most at risk because soft drinks are part of their lifestyle." The Government plans to introduce measures to reduce the amount of sugar in all the soft drinks consumed in Singapore. "But ultimately, what to drink is a personal choice," Mr Lee said. "The best is to drink plain water." Source: Various

8823/01 H1 Economics Paper 1 4 Questions (a) (i) Why might the changes shown in Table 1 have led to a decrease in the world price of sugar? [2] (ii) Given the information contained in Table 1, identify the country that has had the greatest impact on world prices. Justify your answer. [3] (b) Using diagrams, explain what determines the extent of the change in the quantity of soft drinks consumed by the different types of consumers following the imposition of the sugar tax in UK. [4] (c) Extract 2 refers to the effec