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This document consists of 8 printed pages. [Turn over 1 ECONOMICS 9732/01 Paper 1 Case Study 16 September 2014 2 hours 15 minutes Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your index number and name 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. Answer all questions. Start each case study on a new sheet of paper. At the end of the examination, fasten your work securely together. Your answers for each case study are to be handed in separately. The cover sheet provided is to be place on top of your answers for Question 2. The number of marks is given in brackets [ ] at the end of each question or part question. RIVER VALLEY HIGH SCHOOL YEAR 6 Preliminary Examination 2 in preparation for General Certificate of Education Advanced Level Higher 2

2 Answer all questions. Question 1 Distortions in the energy markets Extract 1: Wind farm subsidies to top £1billion this year According to an analysis of official figures by the think -tank Renewable Energy Foundation (REF), the total annual subsidy for onshore and offshore wind farms in the UK has topped £1bn. The disclosure comes ahead of a long-awaited government announcement to cut the size of the subsidy which has benefited the big energy companies but is added on to household electricity bills as a levy. The subsidies were introduced by the Labour government to encourage green energy projects, including wind farms. However, it is now generally accepted that the subsidies are too generous due to advances in technologies. REF estimates that on current renewable energy targets, and with only modest cuts, the energy companies will have rec eived £100 billion in subsidies by 2030. REF said it expects 10 companies, between them, to pocket £800million through subsidies over the next 12 months. Out of the top 10, only two of the companies are British -owned. The remaining energy companies that m ake money out of British wind farms and British consumers are based in Germany, Norway, Spain and Italy. Source: The Telegraph, 14 Jul 2012 Extract 2: Wind power still gets lower public subsidies than fossil fuel Public subsidies for the development of wind power in the UK are far less than the tax breaks given to fossil fuels . Financial support for fledgling renewable energy industries has increasingly come under attack in rec ent months, but the new data shows that the older industries benefit to a far greater extent. The UK's greater subsidies for fossil fuels mirrors the global situation, with the International Energy Agency (IEA) recently showing that in the 37 countries it analysed, oil, gas and coal received $409bn (£261bn) in 2