CJC H2 ECONS P1

CATHOLIC JUNIOR COLLEGE JC2 Preliminary Examinations Higher 2 ECONOMICS 9757/01 Paper 1 20 Aug 2018 Additional Materials: Writing Paper 2 hour 15 min READ THESE INSTRUCTIONS FIRST Write your name, class and question number on all the work you hand in. Write 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 highlighters, glue or correction fluid. Begin each section on a new sheet of paper. Answer ALL questions. At the end of the examination, fasten your work securely together. Submit each section separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages and 1 blank page

2 Answer all questions Question 1 The Market for Meat Products in India Figure 1: Prices of various meat products in India from 2010 to 2016 Source: Statista, accessed 26 th June 2018 Extract 1: Here's what is in store for the meat industry in India India’s per-capita consumption of meat products stands at 4.4 kg per person, which puts it at the second position on the list of countries with the least meat consumption per-person. However, this distinction can be attributed to its 2000-year-old tradition of vegetarianism. And like all old cultures, this one is changing as well. The demand for meat products is expected to grow faster in India with sustained economic growth, strengthening urbanisation trends and increasing awareness of the nutritive value of meat and meat products. By 2020, the demand for milk is estimated to reach 143 million tonnes and that of meat and eggs eight million tonnes. This increase in demand called for capitalisation on the part of producers. This primarily occurred in the form of increased development of technology which hastened the processing of livestock based products. The increase in production has however picked on rather dismally. Livestock rearing serves as a much better alternative for millions to earn a livelihood. Hence, the government has introduced subsidies and exemption on excise duty for meat products to further the cause of employment. Source: World Economic Forum , December 2017, accessed 1 st July 2018

3 Table 1: Income elasticities of demand for various type of meat products in India Beef 0.327 Mutton 2.265 Chicken 1.165 Source: National Center for Agricultural Economics and Policy Research, accessed 27th June 2018 Extract 2: PETA asks government to tax meat, other animal derived foods In India, the consumption of beef, chicken, eggs, dairy and other animal derived foods is on a rapid rise. While vegetarian and vegan eating is also increasing between 2004 and 2014, the amount of meat, eggs or dairy foods consumed per person in India is the highest it has been in history and it is projected to grow further. People for the Ethical Treatment of Animals (PETA), an Indian Animal Rights Organization, has asked the Indian government to levy a tax on meat and other animal derived foods for their damaging effects on environment and public health in a letter addressed to the Finance Minister. The animal rights body asserted that this extraordinary upsurge in the consumption and production of these foods in India adversely impacts animals, of course, but also the health of its citizens, water availability, air and water pollution, greenhouse gas emissions and climate change and food supply to the poor in colossal ways. In its letter, PETA also said that cattle trans fer almost 12 million tonn es of methane -which traps 25 times as much heat as carbon dioxide does - into the atmosphere via flatulence every year. It added that "taxing meat could discourage citizens from consuming these damaging products and could bring in revenue that could help support costs related to the damage to public health and the environment because of meat, eggs and dairy foods.” Source: The Economic Times, January 2018, accessed 27th June 2018 Extract 3: The future of jobs: Why India must embrace the new era of artificial intelligence, block chain and robots The fourth industrial revolution is being driven today by technologies that are transforming industrial production, for example, autonomous robots, simulation, additive manufacturing and artificial intelligence (AI). These technologies are impacting the entire production value chain from design to productivity, speed and quality of production. Traditional manufacturing and service oriented industries are being disrupted in a manner we have never seen before. One example would be Impossible Foods Inc., a fourth industrial revolution technology company that makes a plant based food that smells, tastes, looks like real meat. It threatens the future of the $90 billion meat industry. If only 20% of world population switches from eating real meat to alternative proteins it would free up 12% of total fresh water, free 400 million hectares of land and 960 megatons of CO 2 emission.

4 Studies have shown that the fourth industrial revolution has the potential to add $957 billion to India’s economy by 2035, lifting it by 15%. However, there is widespread concern over its potential impact on the employment, especially in the Indian meat industry. A vast range of jobs are at risk of extinction and rapid scaling could lead to accumulation of job losses. The other fear is that new technologies would lead to increase in inequalities and lack of social cohesion. There will thus be considerable need for re-skilling and training. India needs massive upgradation programmes in new technologies. It must redefine itself as an institute driving cutting edge technologies for the fourth industrial revolution. Source: The Times of India, February 2018, accessed 1st July 2018 Questions 1 (a) (i) Compare the relative price changes of different meat products in India from 2010 to 2016 shown in Figure 1. [2] (ii) With the help of a diagram, explain the factors that contributed to the above overall trend of meat product prices in India. [4] (b) Analyse the likely impact of the subsidies and exemption on excise duty on employment in the Indian meat industry. [4] (c) Given the information in Table 1, explain which type of meat product may be considered more of a luxury by Indian consumers. [2] (d) To what extent is the fourth industrial revolution likely to lead to an improvement in standard of living of Indian meat producers? [8] (e) Discuss the factors that could influence the government’s decision to levy a tax on meat and other animal related products. [10] [Total: 30]

5 Question 2 Challenges and opportunities in China Extract 4: Three things that weakened China's economy in 2016 Bringing about growth was tough for Chinese policy makers throughout 2016. Even with loosened liquidity and government intervention, annual growth fell to a consistent 6.7% in the first three quarters of this year, the slowest rate seen in 25 years. These numbers belie three important weaknesses in the large economy that threaten China's role as a major global growth driver: • Fixed asset investment is no longer coming from the private sector. • Overcapacity is acting as a burden on the government. • The services sector is not competitive enough to make up for lost growth elsewhere. First, fixed asset investment grew 9% year-on- year in the first half of this year, but slowed thereafter. The figure was down from 10% last year. Government-ordered investment by state- owned enterprises also helped boost numbers, but private investment, a reflection of market sentiment, lagged behind due to lack of confidence in growth prospects. Second, overcapacity in heavy industrial sectors, like steel, aluminium, cement and coal, remains a problem. As internationa