2022 H2 Economics EOY P1 Suggested Ans.doc

Class Adm No Candidate Name: 2022 Preliminary ExamsPre-university 3 ECONOMICS 9757/01 Paper 1 14 September 20222 hours 15 minutesAdditional Materials: Answer Booklet 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, highlighters, glue or correction fluid. Answerallquestions. You are reminded of the need for clear presentation in your answers. Ananswer booklet will beprovidedwiththisquestionpaper. Youshouldfollowtheinstructionsonthefront cover of theanswer booklet. If youneedadditional paper, asktheinvigilator for acontinuation booklet. The number of marks is given in brackets [ ] at the end of each question or part question. Answerallquestions. This question paper consists ofXprinted pages andXblank page. [Turn over

2 CSQ1- Suggested answers: (a) (i) Using Figure 1 and 2, compare the trend for theworldwidechocolatemarket salesrevenue with that of India for the period 2016-2021. [2] Similarity:Rising trend for both India and Worldwide chocolate market sales revenue. [1]Difference:However, there is a sharp fall in market sales revenue from 2019 to 2020 forworldwide chocolate market while India continues to increase during the sameperiod. [1] 1m for similarity1m for difference (ii) Using demand and supply analysis andExtract 1, account for thechangesinsalesrevenue from 2019 to 2020 for the worldwide chocolate market. [4] There was a SHARP fall in sales from 2019 to 2020 for the worldwide chocolatemarket. The reasons are :Demand factor :(Any one DD factor)[1m]Theimpact of coronaviruslockdownscurbedimpulsebuyingofchocolate,aspeoplefocused instead on stocking up on essentials leading to a fall in demand.OrEconomicslowdownduetoCOVID19bringsabout lesseconomicactivitiesandlossof jobs and hence a fall in incomeAs a result, there is a fall in demand for chocolate which is a normal (luxury) good DD shifts left.[1m]Since chocolate is a luxury good,YED is positiveand greater than 1.Afall inincomeleadstoamorethanproportionatefall indemand/consumptionof“luxury” items such as chocolate.[1m]DDshiftsbyalarger extent comparedwithaYEDthatispositivebutlessthan1fora good that is a necessity.[1m]Hencethesharpfall insalesrevenuefor theworldwidechocolatemarket iscausedby alarge fallin demand for chocolates. Note: There is no change in SS as mentioned in Extract 1. 1m for DD factor1m for explanation of DD shifting left1m for explanation of YED sign and magnitude1m for explaining the larger extent of shift in DD (b) Define Price Elasticity of Demand (PED) andexplainthedifferenceinvaluesof thePED for cocoa butter presented in Table 1. [4] Price Elasticity of Demand measures the degree of responsiveness of quantitydemanded to a change of the price of the good itself, ceteris paribus.[1m] Price elasticity of demandShort term -0.06Long term -0.34 The sign of PEDisnegativeduetotheinverselawof dema