IJC 2008 H1Econ Prelim2 Paper 1

8816/01/IJC/Sep 08 INNOVA JUNIOR COLLEGE JC 2 PRELIMINARY EXAMINATIONS 2 in preparation for General Certificate of Education Advanced Level Higher 1 ECONOMICS Paper 1 Additional Materials: Writing Paper 8816/01 15 September 2008 3 hours

READ THESE INSTRUCTIONS FIRST Write your name and class on all the work you hand in. Write in dark 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, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. You are advised to spend several minutes reading through the data before you begin writing your answers. You are reminded of the need for good English and clear presentation in your answers. This document consists of 6 printed pages. Innova Junior College [Turn over

8816/01/IJC/Sep 08 2 Section A Answer all questions in this section Question 1 Tourism and global warming Figure 1: International tourist arrivals from 2000 to 2007 Source: The Economist, 15 May 2008 Extract 1: Ready for take-off The rise of emerging economies marks the third revolution the travel industry has undergone in the past 50 years. The first came in the 1960s, in the shape of cheap air travel and package tours. Rising incomes enabled people of modest means to travel more, to farther-flung parts of the globe, and to take advantage of “all-in” offers that may have included sightseeing trips, scuba diving or camel rides. The second was the advent of the internet, which has allowed millions to book flights, hotels, hire cars and package tours without going near a travel agent. Now fast-growing emerging economies are changing the world of travel once again, either as destinations or as sources of newly affluent travellers. The World Travel & Tourism Council (WTTC), the industry's main lobby group, claims that travel and tourism is the world's biggest industry in terms of its contribution to global GDP and employment. They forecast that global travel and tourism will account for US$5.9 trillion of economic activity in 2008, or about 10% of global GDP, employing 238m people. It expects employment to rise to 296m in the next decade. When all travel and tourism is lumped together, so that everything from airlines to cafés counts, it is no surprise. It accounts for a large part of many countries' foreign-exchange earnings. For many developing countries, it offers an important route out of poverty. The Chinese government for example is racing to build roads, railways and airports to speed up the development of tourism and other industries. In January it said that it planned to add 97 airports by 2020 to the 142 China had at the end of 2006.

8816/01/IJC/Sep 08 3 According to the state media, investment in infrastructure will see double-digit growth every year for the rest of the decade. Between 2006 and 2010, US$200 billion is expected to have been invested in railways alone, four times more than in the previous five years. In June the world's longest sea-crossing bridge, a 36km six-lane highway across Hangzhou Bay, is due to open. This will halve the travel time between Ningbo and Shanghai, two of China's busiest ports, to about two hours. Adapted from: The Economist, 15 May 2008 Extract 2: A dollar won't stretch that far For the next year or two, the travel industry is likely to find its long-standing customers in rich Western countries a less than reliable source of growth. As American families plan their holidays, many will be worrying about the frailty of their country's economy; the rising cost of petrol which has left them less money to spend on other goods and for those venturing outside the United States – the weakness of the dollar. The Europeans are also likely to feel the slowdown of the economy and the impact of the high price of oil. British Airways recently upped its fuel surcharge, which now stands at US$312 for a return long-haul flight to Britain. On May 7th easyJet, a low- cost airline, unveiled a US$113.5m loss for the six months to the end of March. The trouble was the rising cost of fuel, which now accounts for 28% of easyJet's cost per seat. Fuel costs comprise a major portion of operating expenses in the airline industry. For most airlines, it is the second largest expense category behind labour. For faster growth, the industry will have to look to emerging economies. These are becoming increasingly well established as places to visit. Now they are starting to provide more visitors too. Consumers' spending power in emerging economies is estimated to rise from US$4 trillion in 2006 to more than US$9 trillion – nearly the spending power of western Europe today. Some of that extra purchasing power will go on travel. Western companies are flocking into the developing world to prepare for these new tourists. “The Middle East, India and China are the next big thing,” predicts Bill Marriott, the Chairman and Chief Executive of Marriott – an American hotel chain which has planned to build 65 hotels in the Middle East by 2011. Adapted from: The Economist, 15 May 2008 Extract 3: Clouds on the horizon What might stop tourism's latest revolution? One possible obstacle is the growing concern, especially in Western countries, with the environment. During the 1960s and 1970s, when tourism was growing explosively in American and Europe, few gave much thought to the consequences for the planet. That has now changed. The industry, which contributes 5-6% of all carbon emissions, seems worried. Green strategies are multiplying. Hotels are keen to show that they conserve water (do you really need a clean towel every day?), recycle rubbish, and save electricity by using low-energy light bulbs. Airlines order less thirsty planes. Eco-spas powered by wind

8816/01/IJC/Sep 08 4 turbines and solar panels, and safaris based on conservation are vying for the customer with a green conscience. Adapted from: The Economist, 15 May 2008 Extract 4: Concern grows over pollution from jets With the projected explosion in worldwide travel, air pollution from aviation is a growing concern. Air traffic controllers are expected to handle 95 million flights by all types of aircraft in 2025, compared with 63 million last year. Worldwide, a growing middle class with the means to travel is spawning new airlines and big orders for new planes. Jet engines emit many pollutants into the atmosphere, including nitrogen oxides, carbon dioxide, and even water vapor. Carbon dioxide and water vapor are called greenhouse gases, because they trap heat and contribute to global warming. Scientists say planes' engines emit up to 3% of all carbon dioxide that contributes to global warming and the figure appears to be on the rise. Scientists studying global warming are most concerned about pollutants emitted when a plane is airborne. Jets are the major source of emissions deposited into the upper atmosphere, where some pollutants have a greater warming effect than when they are released in the same amount from the ground. So do climate concerns require limits on the growth in aviation? There's great economic value in aviation. Society has to decide where to cut emissions and how to retain the lifestyle we enjoy. Adapted from: USA TODAY, 19 Dec 2006 Questions (a) (i) Using Figure 1, compare the trend for international tourist arrivals from 2000 to 2007. [2] (ii) Explain possible reasons for