JJC_H1 Prelims P1 Qus

JURONG JUNIOR COLLEGE PRELIMINARY EXAMINATION 2008 ECONOMICS 8816/01 Higher 1 13 August 2008 Paper 1 3 hours Additional Material : Writing Paper / Cover Page READ THESE INSTRUCTIONS FIRST Write your name and class 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 or glue. Section A Answer all questions Section B Answer one question. At the end of the test, place the cover page on top of your answer scripts and fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. JJ Economics This document consists of 8 printed pages. [Turn over

Section A Answer all questions in this section. Question 1 Extract 1: Behind food crisis, a fertiliser shortage Recently, with world economic growth at a brisk 5% a year, hundreds of millions of people began earning money to buy more meat from animals fattened with grains. That occurred at the same time that rising production of biofue ls, like corn-based ethanol, put new pressure on grain supplies. These factors translated into rising demand and higher prices for fertiliser. Prices at Florida, for one fertiliser, diammonium phosphate, jumped to $1,102 a ton from $393 a ton in the past year, according to JP Morgan Securities, which tracks the prices. Manufacturers are scrambling to increase the supply. At least 50 new plants to make nitrogen fertiliser are under construction, a nd phosphorous and potassium mines are being expanded. But these projects are expensive a nd time-consuming, and supplies are expected to remain tight for years. Fertiliser is virtually important in Iowa, w hose farmers grow more corn than any other state, and depend on fertiliser to greatly increas e their yields. In many countries, these cost increases have so far been offset by record hi gh prices for crops. But fertiliser inflation has created a crisis in countries that subsidise fertiliser use for farmers. In India, for instance, the government’s subsidy bill could be as hi gh as $22 billion in the coming year, compared with about $4 billion three years ago, and has prompted calls to change the program that India depends on to maintain its food supply. Once new supplies become available, the rising use of fertiliser will still pose difficulties. Environmental groups fear increa sed use, particularly of nitr ogen fertiliser made using fossil fuels. Because plants do not absorb all the nitrogen; much of it leaches into streams and undergrounds. Source: Adapted from Business Asia, 2 May 2008 Extra