NYJC_H2_ECONS_Micro_CSQ_Suggested_Answers

1 Question 1 Milk Market on the Milky Way Extract 1: Rising formula milk price Formula milk manufacturers have been spending more on research and development as well as marketing, pushing the wholesale prices of their products up, and in turn resulting in the higher prices seen at retail stores, the Competitio n Commission of Singapore (CCS) has found. A standard can of 900 grams of infant formul a purchased from a regular supermarket costs about S$56 on average, compared to $25 in 2007 The CCS report found that manufacturers spend heavily on research and development as well as marketing campaigns that contain “premiumisation” messages in order to build consumer loyalty and make their products appear to be higher quality. Manufacturers introduce new ingredients that contribute to attributes desired by parents and make promises like improving overall mental function, promoting a healthy intest inal tract and aiding brain and eye development. A premium image is important to these brands because they compete against other brands and their products based on brand name , nutrition and safety. Such strategies appear to have worked, with premium and specialty formula milk making up an estimated 95 per cent of total sales in 2015. Source: Adapted from Channel NewsAsia, accessed 12 May 2017 Table 1: Price of staples over 10 years Goods 2007 2017 Fresh Milk (1 litre pack) $2.63 $2.81 Infant Formula Milk Powder (900gram tin) $25.42 $56 .06 Cheese (pack of 12 slices) 3.89 $4.56 Hen eggs (10) 1.69 $2.17 Ordinary white bread (400gram) $1.21 $1.62 Thai Fragrant Rice (5 kg) $7.87 $13.13 Source: Singapore Department of Statistics, accessed 27 May 2017 Figure 1: Changes in median income and price of infant milk powder in Singapore Source: Various

2 Extract 2: Children over one do not need formula milk While parents may rely on health claims to choose a formula milk brand for their children, experts say such claims meant for children above on e are a “marketing ploy” because the same nutrients can be found in everyday food. Referring to nutrients like docosahexaenoic acid (D HA), taurine and choline which are prominently promoted on milk tins, paediatric dieti tian Meave Graham from Child Nutrition Singapore said: “These nutrients are found in breas t milk and in normal balanced diets. Children do not need special supplements of these n utrients.” These nutrients have been promoted by milk manufacturers as giving health ben efits like brain and eye development, healthy immune system and helping fat digestion. Source: Channel NewsAsia, accessed 30 May 2017 Source: Channel NewsAsia, accessed 27 May 2017 Extract 3: Government shares concerns about rising prices of formula milk The Singapore government shares the concerns of par ents about the rising prices of infant formula milk and will take steps to ensure that opt ions are available for their children, s