RJC Econs 2008 H2 Prelims P1 final

Raffles Junior College JC2 Preliminary Examinations 2008 ECONOMICS Higher 2 9732/01 Paper 1 Case Study 15 September 2008 2 hour 15 minutes Additional Materials: Answer Booklet/Paper READ THESE INSTRUCTIONS FIRST Write your name, index number and CT 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 diagrams, graphs or roug h working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer both questions. Start each question on a fresh sheet of paper. At the end of the examination, securely fasten your work to each question separately . The number of marks is given in brackets [ ] at the end of each question or part question. You are advised to spend several minutes per question reading through the data before you begin writing your answers. This document consists of 9 printed pages. JC2Prelims 9732_01 © RJC 2008 [Turn over R aff le s R aff le s R aff le s R aff le s Ju n io r Ju n io r Ju n io r Ju n io r Co lleg e Co lleg e Co lleg e Co lleg e Developing the Think er, Leader & Pioneer

9732/01/S/08 2 © RJC 2008 Answer all questions. Question 1 Land Transport in Singapore Figure 1 Table 2: Bus Fare Structures Distance Travelled (fare stages) Fare Per Ride (cent) Type of Passholder Price of Bus Pass Ez-link Card Cash Primary Student $22.50 4 or less 67 90 Secondary Student $27.50 4.5 – 7 89 110 Tertiary Student $52.00 7.5 – 10 109 130 Full-time NS man $61.00 10.5 – 13 119 140 Source: Land Transport Authority website Extract 1: 4 Months After Taxi Fare Hike In a bid to raise taxi drivers’ earnings, the six t axi companies increased their starting metered fare from $2.50 to $2.80, adjusted the mete r to tick faster (a 50% increase for every km) and revised peak-hour surcharge upwards by 35% in December last year. Three weeks after fares were raised, many taxi drivers claimed their earnings had fallen. Taxi driver Mr Richard Chew said business had been slow and he spent a longer time waiting for passengers. A check showed his net hourly takings had fallen by just 10%. Year S$ 2001 37749.49 2002 39017.53 2003 41083.33 2004 44459.84 2005 46784.78 2006 52941.06 Table 1 : Singapore Real GDP Per Capita Source: Singapore Department of Statistics [Turn over

9732/01/S/08 3 © RJC 2008 Another driver claimed his average net hour takings had fallen from $13 to $10 but yet another driver said his average takings of $80 a da y had remained largely unchanged. ‘The number of trips have dropped slightly, but the higher fares mean our income is more or less stable’, he added. It seems there has been a turnaround according to s urveys done. ComfortDelgro, the largest taxi operator here with about 15,000 of the country’s 24,000 taxis, saw a 16% increase in takings for a cabby’s full day of work. The average daily ridership for taxis in January an d February’s was about 900,000. Last year, the average daily ridership was 945,000. Disc retionary taxi-takers have been forced back to the train and bus by the costlier fa res. The issue of correct pricing to turn taxis into a boutique service, not supermarket-type socialised commuting, is what the Straits Times has been advocating. Source: Adapted from The Straits Times 25 April 2008 Extract 2: PTC Says Public Transport Fare Hikes Likely to be Under 1.8% Singapore's Public Transport Council (PTC) said bus and train commuters here are likely to face fare hikes of under 1.8% this year. The council uses a formula to calculate by how much prices can go up - by pegging the adjustments to the health of the economy. It also a llows for reductions if the economy plunges into a deep recession. Public transport fares had seen increases in both 2 006 and 2007. Back in 2006, operators blamed rises in manpower cost and energy prices for the need to raise fares. 'Energy costs rose by 20% or $20.3 million last yea r - having already increased by 41.2% in 2005,' a SBS Transit spokesman said. 'Manp ower costs have increased by about $12.1 million during the year.' The same reasons were cited in 2007. The Consumers Association of Singapore (Case) was t hen not entirely convinced and pointed out that transport companies were enjoying 'good returns'. SMRT achieved a 39% rise in net earnings to $37.94 million in the first quarter while SBS Transit’s turnover in 2007 increased by 6.6% from $612.6m to $653.3m. Source: Adapted from Channel News Asia , 14 July 2008 Extract 3: ERP Effective in Curbing Congestion Transport Minister Raymond Lim announced a substant ial expansion of the electronic road-pricing (ERP) coverage to keep Singapore’s roa ds moving smoothly. Commenting on the effectiveness of ERP, he said, "Some people will drive regardless of the ERP charges but not all. If this was so, all your ERP-priced roads today will be congested". [Turn over

9732/01/S/08 4 © RJC 2008 Mr Lim added that if the ERP system was a failure, other cities like London, Milan and New York would not be implementing it. "Let me stre ss that the purpose of ERP is not to stop everyone from driving. That is absolutely counter-productive." Since 1998, when ERP was introduced and vehicle pol icy began relying increasingly on usage charges, vehicle ownership taxes (Additional Registration Fee, excise duty and road taxes combined) have been cut significantly. E RP is something to make Singapore a liveable city so that even as the economy and pop ulation grow, "we ensure we are a city in a garden and not a city in a car park". To curb vehicle population growth, the minister als o announced that the 3% annual allowable growth rate will be halved to 1.5% from A pril 2009, which could potentially reduce the number of car COEs by 8%. He also said t hat $14 billion worth of new roads will be built over the next 12 years - compared wit h $3.4 billion in the last decade. The frequency of bus services along corridors affected by the ERP expansion will be increased. Bus services will also be allowed to dup licate sections of mature MRT lines. But he cautioned that increasing road capacity will not in itself guarantee smooth flowing roads. In fast growing economies like China, the car population grows at more than 20% a year and peak-hour traffic in mega-cities like Beijing a nd Shanghai crawls at 5km an hour. In the United States, motorists spent more than 4.2 billion hours stuck in jams, and used up enough extra fuel to fill 58 supertankers, he said. The 'congestion invoice' in the US stands at some $78 billion each year. Source: Adapted from The Business Times 7 March 2008 Extract 4: Bus System Changes Will Make Singapore More Competitive The Land Transport Authority (LTA) announced that m ore bus operators will be allowed to compete for the right to provide a package of bu s services designed by LTA rather than bus routes planned by operators based on commercial obligations. Transport analysts welcomed the prospect of more co mpetition in the bus services sector and said it may exert pressure on the profit margins of existing players. ComfortDelGro, which owns 75% of SBS Transit, will come up strong against potential bidders with its experience behind it. A transport analyst said: "The existing established players will already have established systems in pl ace, whether it's physical buses, people or logistical structures." Anlysts said what will be critical is the type of t ender that will be offered. In Sydney for example, operators are paid a fixed amount regardle ss of the amount of passengers they carry, so profit margins depend largely on keeping costs low. Source: Channel Ne