2022 SH2 H2 Econs Prelims P1 QP.docx

ECONOMICS 9757/01Paper 1 22 August 20222 hour 15 minutes No Additional Materials are required. READ THESE INSTRUCTIONS FIRST Ananswer booklet will beprovidedwiththisquestionpaper. Youshouldfollowtheinstructionsonthefrontcover of the answer booklet. If you need additional answer paper ask the invigilator for a continuationbooklet. Answerallquestions. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of7printed pages and1blankpage. NATIONAL JUNIOR COLLEGE Economics Department © NJC 2022 9757/01/Aug/22

2 Answerallquestions. Question 1: A winner in the pandemic – Amazon Table 1: Retail revenue of the top ten largest Public Retailers (2010 and 2020) US Retailer Retail Revenue in 2010(in US$ billion) Retail Revenue in 2020(in US$ billion)Amazon 50 1,400Walmart 179 339The Home Depot 47 267Costco 24 134Lowe’s 29 102Source: visualcapitalist.com, accessed 29 June 2020 Extract 1: Market strategy of Amazon Amazon is interesting not just because of its competitive scope, but also because of its marketstrategy. Michael Porter of Harvard Business School suggested in 1985 that companies need tochoose not only whether to have either a broad market/ product focus or a narrowone, but alsoeither adifferentiationor cost leadershipstrategy. Other strategistswouldcontendthatyoucanmixthe two as a hybrid. Adifferentiationstrategyiswheretheproduct or serviceiseither perceivedtobe, or is,ofsuperiorcustomer valueandhasadefinitepricepremium.Acostleadershipstrategyiswherethepricemaybe similar or usually lower than the competition, but costs are certainly lower. InAmazon’scase,thecorestrategyisclearlymoreacostleadershiponewhencomparedwithbrickand mortar retailers. Amazon has massive warehousing facilitiesandprocessingcapability, whichgive it physical economies of scale. That in turn gives it cost advantages. But in its service, it isdifferentiated – so it is something of a hybrid. Amazonisultra-keenoncustomer feedback, andJeff Bezos, founder andchiefexecutiveofficerofAmazon.com, Inc. has spread customer focus as a mantra throughout the organisation. Suchservice differentiation does not just bringloyaltybut alsoencouragescustomerstobuymorefromAmazon. Thecompanyisventuringintosomeperhapsunexpectednewareas, for example, byexploitingitsdistinctive capability in handling large amounts of data and for newtypes of customer, sendingashiver down the spines of many large information technology (IT) companies. Source: accaglobal.com, accessed 14 July 2022 Extract 2: Amazon charged with abusing EU competition rules TheEuropeanCommissionhaschargedAmazonwithabusingitsdominant positioninonlineretailto gain an unfair advantage over competitors. It saidAmazonhaduseddataonthird-partysellersthat use its marketplace to boost salesof itsown-label goods. Third-partysellersareindependentsellerswhooffer avarietyof new, used, andrefurbisheditemsonAmazon’splatform. Thestepsto © NJC 2022 9757/01/Aug/22

3 place an order with a third-party