MJC_2008 Prelim_H1 Qn Paper

Additional materials: Answer Booklet/Paper READ THESE INSTRUCTIONS FIRST Do not open this booklet until you are told to do so. Write your name, class and register number on all the work you hand in. Write in dark blue or black pen. 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, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. [Turn Over] JC 2 PRELIMINARY EXAM 2008 8816/01 ECONOMICS HIGHER 1 12 September 2008 3 hours This document consists of 10 printed pages

Section A Answer all questions in this section. Question 1 The Price of Growth Extract 1: Tackling the pollution problem According to the World Bank, China has 16 of the world's 20 most polluted cities. Estimates suggest that 300,000 people a year die prematurely from respiratory diseases. The main reason is that around 70% of China's mushrooming energy needs are supplied by coal-fired power stations, compared with 50% in America. In 2002, the State Environmental Protection Administration (SEPA) found that the air quality in almost two-thirds of 300 cities it tested failed World Health Organisation standards – yet emissions from rocketing car ownership are only just becoming an issue. Hopes that China will “leapfrog” the West with super-green cars are naive, since dirty fuel messes up clean engines and the high cost of new cars keeps old ones on the road. Adding it all up, the World Bank concludes that pollution is costing China an annual 8-12% of its $1.4 trillion GDP in direct damage, such as the impact on crops of acid rain, medical bills, lost work from illness, money spent on disaster relief following floods and the implied costs of resource depletion. In 2001, the 10th Five-year Plan for Environmental Protection by SEPA set ambitious emission-reduction targets and boosted environmental spending to 700 billion yuan ($85 billion) for 2001-05 – equivalent to 1.3% of GDP, up from 0.8% in the early 1990s. A legal framework has been created. Beijing's good intentions, however, have so far had only limited impact, thanks to the vast, decentralised bureaucracy through which it is forced to govern such a huge country. Around the country, SEPA's branches, known as Environmental Protection Bureaus, are supposed to monitor pollution, enforce standards and collect fines. But they are more