MI_H1 PU2 Econ Promo Exam 2008 Qs

Class Adm No Candidate Name:_____________________________ Promotional Exam 2008 Pre-university 2 H1 ECONOMICS 8816 PAPER 1 8816/01 Tuesday 9 September 2008 3 hours Additional materials: Answer paper READ THESE INSTRUCTIONS FIRST Write your name, class and admission number in the spaces at the top of this page and on any separate answer paper used. 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. Section A Answer all questions. Section B Answer one question At the end of the examination, answers to Case Study Questions 1, 2 and the essay question will be collected separately. The number of marks is given in brackets [ ] at the end of each question or part question. _____________________________________________________________________ This question paper consists of 8 printed pages. Section A

Answer all questions. Question 1 Energy Conservation Figure 1: Energy efficiency Extract 1: The elusive negawatt Whereas the burning of fossil fuels releases greenhouse gases, which contribute to global warming, and nuclear plants generate life-threatening waste, the only by-product of energy efficiency is wealth, in the form of lower fuel bills and less spending on power stations, pipelines and so forth. No wonder that policy makers now tend to prefer “negawatts” to megawatts as the best method of slaking the world's growing thirst for energy. The Intergovernmental Panel on Climate C hange, a group of scientists advising the United Nations on global warming believes that profitable energy-efficiency investments would allow Pakistan to cut its emissions by almost a third, Greece by a quarter and Britain by more than a fifth. In other words, big investments in energy efficiency would more than pay for themselves, and fairly fast. Although a lot of money would have to be spent—$170 billion a year until 2020. Moreover, with ample prof its to be made, financing should be easy to attract. The problem, analysts explain, is a series of distortions and market failures that discourage investment in efficiency. Often, consumers are poorly informed about the savings on offer. Even when they can do the sums, the transaction costs are high: it is a time-consuming chore for someone to identify the best energy-saving equipment, buy it and get it installed. It does not help that the potential savings, although huge when added up across the world, usually amount to only a small share of the budgets of 2

individual firms and households. Despite recent price increases, spending on energy still accounts for a smaller share of the glo