CJC_H2_ECONS_Answer

© Catholic Junior College Economics Department 2018 H2 Economics 9757 2018 JC2 Preliminary Exam Answer Package Paper 1: Case Study Questions  Answer Scheme

© Catholic Junior College Economics Department 2018 Question 1 Suggested Answers a (i). Compare the price changes of different meat products in India from 2010 to 2016 shown in Figure 1. [2] Suggested Answer Similarity Prices for different types of meat were all increasing from 2010 to 2016. [1] Difference Ham and Bacon’s prices changed by the greatest extent (increased by $1.46) as compared to Sausages (increased by $1.08) and Cold and Roast Meat Products (increased by $1.28). [1] Note: Comparison of price levels (i.e. Ham and Bacon Prices are higher than the rest) will not be accepted given that the question is asking for a comparison of relative price changes. a (ii). With the help of a diagram, explain the factors that contributed to the trend of meat product prices in India. [4] Suggested Answer Demand Factor (Knowledge + Evidence) [1] Extract 1 “The demand for meat 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.” Change in Consumers’ Tastes and Preference will lead to a rise in Demand for meat. Or Increase in consumer income will lead to an increase in demand for meat, assuming that meat is a normal good. Supply Factor (Knowledge + Evidence) [1] Extract 1 “ This increase in demand called for capitalisation on the p art of producers. This primarily occurred in the form of increased development of technology which hastened the processing of livestock based products.” Technological advancements lead to an increased productivity, which lowers costs of production. Thus, Supply increases Explanation of extent of shifts [1] Extract 1 “an increase in production that has picked on rather dismally.” Hence, it is likely that demand has increased more than supply, hence price of meat products in India has risen. Diagram [1]

© Catholic Junior College Economics Department 2018 b. Analyse the likely impact of the subsidies and exemption on excise duty on employment in the Indian meat industry. [4] Suggested Answer Direction [1] Subsidies and exemption of excise duty will reduce cost of production. This leads to an increase in Supply. Output will hence increase and there will be higher demand for labour. This will result in an increase in employment. [1] Magnitude [3] Demand for meat likely to be inelastic due to lack of close substitutes. [1] Hence, a fall in price will lead to a less than proportionate increase in quantity demanded. [1] Since the output increase is not significant, increase in demand for labour is not significant. Hence, employment does not increase significantly. [1] c. Given the information in Table 1, explain which type of