AJC_H2 Econ_Essay

ANDERSON JUNIOR COLLEGE JC2 Preliminary Examination Hi gher 2 READ THESE INSTRUCTIONS FIRST Write your name, PDG and index number in the spaces provided on all the work you hand in. Write in dark blue or black ink. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer three questions in total, of which one must be from Section A, one from Section B and one from either Section A or Section B. Start a new question on a fresh sheet of paper . At the end of the examination, fasten your work separately according to questions so that you have 3 sets of answer scripts. Attach this cover page in front of the first question attempted. Indicate in the table below the question numbers of the three questions you have attempted. The number of marks is given in brackets [ ] at the end of each question or part question. Question Number Marks Awarded Name: ________________________________ ( ) PDG: _________________________________ Total Marks /75 ECONOMICS 9732/02 Paper 2 28 August 2008 2 hours 15 minutes Additional Materials : Answer Paper This document consists of 2 printed pages, including this cover page. [Turn over

2 Answer three questions in total. Section A One or two of your three chosen questions must be from this section. 1 “Rising incomes in China have caused retailers of domestically produced luxury goods and services to struggle to win a share of consumer’s wallets, resulting in rash proposals for expansions through the opening of new outlets.” Adapted from Economist, Aug 3rd 2006 Discuss the relevance of price elasticity of demand, income elasticity of demand, cross elasticity of demand and price elasticity of supply in explaining the effects of the above-mentioned situation in the market for China-made luxury goods and services. [25] 2 US confectionery Mars receives the all clear from the European Commission to buy Number One chewing gum maker Wrigley in a deal worth €15 billion. Their competitors are concerned whether this would give Wrigley an unfair advantage over them. (a) Explain clearly the price and output decisions of confectionery producers in Europe. [10] (b) Discuss the likely economic effects of this merger on society. [15] 3 (a) (b) Why must public goods be provided by the government? Is it justifiable for the government to pr ovide goods that are not classified as public goods? [8] [17] Section B One or two of your three chosen questions must be from this section. 4 (a) Explain what is meant by the equilibrium level of national income. [8] (b) Reductions in the top tier personal income tax rate from 21% to 20% and in the