PJC_H1 Econs_H1 Prelim paper 2008

Candidate Name: __________________________ CT Group: ______ Index no. : ______ PIONEER JUNIOR COLLEGE JC 2 PRELIMINARY EXAMINATIONS 2008 ECONOMICS 8816/01 Higher 1 Thursday 11 SEP 2008 3 hours Additional materials: Answer paper INSTRUCTIONS TO CANDIDATES Do not open this booklet until you are told to do so. Write your name, CT group and index number in the spaces provided on the cover page and all the answer papers provided. Begin each section on a fresh sheet of paper. At the end of the examination, you will be required to hand in your answers to the different sections separately. Section A Answer all questions. Section B Answer one question. The number of marks is given in brackets [ ] at the end of each question or part question. You are reminded of the need for good English and clear presentation in your answers. You are reminded to spend no more than 2 hr 15 min on Section A and 45 min on Section B. 1 This question paper consists of 8 printed pages (inclusive of this page)

Answer all questions Question 1: Energy Markets Extract 1: European energy markets The European commission yesterday warned the 25-EU countries of the impact of rising prices in the energy market. Some of the challenges raised include climate change and shortage of oil supplies on its energy market. It said Europe, along with the rest of the world, faced "serious consequences" from global warming as energy consumption and carbon dioxide (CO 2) emissions continued to rise. The Commission has implemented policies like energy taxes. In addition, the commission is placing greater emphasis on greenhouse gas emissions trading in an attempt to meet the targets set in the Kyoto Treaty. According to EU Commissioner for Energy, emi ssions trading will do the job. Without the market incentives implied in trading, companies would rather pay the hefty tax than reduce emissions. Going through carbon taxes can create funds, but there is not much private sector involvement. “Levels of greenhouse gases would be much higher without current efforts to cut emissions. However, several countries within the EU-15 are not doing enough and could jeopardise the collective effort of the entire EU,” said Executive Director of the European Environment Agency. The rising concern about the oil shortage has also sparked off an intense debate over its impact on Europe's economy. On the one hand is a longstanding project led by the European Commission designed to liberalise the market and enable producers and distributors to compete freely within and across national borders. On the other is a camp that argues with growing confidence that long-term security and stable prices can best be preserved in managed national markets that are dominated by strong monopolistic companies. It may be no coincidence that many of continen