MJC_H2_ECONS_CSQ1_Q_A

JC2 H2 Prelim Exam 2018 Case Study Q1 Education Suggested answer scheme: (a) (i) With reference to Table 1, compare the government expenditure per student on primary and university education in Singapore between 2010 and 2016. [2] • Similarity: Government expenditure per student on primary and university education both increased overall during 2010 to 2016. • Difference: - Expenditure per student on primary education has always been lower than that on university education. OR - The increase in expenditure per student on primary education is around 10 times more than that on university education. (ii) Explain one possi ble reason for the difference observed in (a)(i). [2] For 1 st difference - The expenditure on university education on a per student basis has always been higher than that for primary education: The cost of university education has always been higher than that of primary education due to the need for research fa cilities and equipment, payment of salaries to professors (who are mo re highly trained/skilled and command higher wages), etc. However, university class sizes are smaller compared to primary schools, leading to a higher government expenditure per student on university education compared to pr imary education throughout the time period. OR For 2 nd difference above - The increase in expenditure per student on primary education is more than that on university education: This may be because the government has perceived the extent of the market failure in primary education to be larger over the years. This is because the external benefit of pr imary education to the whole population is large compared to its private benefits, whereas the larg e private benefits of university education incentivise individuals to pursue higher education (Ext 2). (b) With reference to Extract 2, expl ain how investment in human capital can ‘raise incomes for the whole economy’. [4] Investment in human capital would mean increased spending on education and training of labour, which increases quality of labour due to productivity gains (Ext 2). This leads to an increase in productive capacity of the economy. As a result, the LRAS increases, leading to potential growth as full employment level of output increases. As the Singapore economy operates close to full capacity, AD is high enough. Moreover, the rise in G on education and training in the short run will cause AD to rise and be high as well. This causes the potential growth to be actualised. The increase in real output leads to firms hiring more labour and hence wages rise in the economy, leading to an increase in real incomes, which ‘raises incomes for the whole economy’.

JC2 H2 Prelim Exam 2018 Case Study Q1 Education (c) Use the concept of opportunity cost to explain one possible effect on each of consumers of education and the US government due to the ‘rising stud