YJC H2 ECONS 9757 P1 QP

1 YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE YISHUN JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATIONS 2018 H2 ECONOMICS 9757/01 PAPER 1 20 AUGUST 2018 0800 – 1015 hrs TIME 2 hours 15 minutes Additional materials: Answer paper Cover page INSTRUCTIONS TO CANDIDATES Write your name and CTG 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, glue or correction fluid. Answer all questions. Start a new question on a fresh piece of paper. At the end of the examinations, fasten all your work securely together. Tie a cover page to the two questions separately: 1. Case Study Question 1 2. Case Study Question 2 The number of marks is given in brackets [ ] at the end of each question or part question. You are reminded of the need for good English and clear presentation in your answers. This paper consists of 8 printed pages, including this cover page, and 2 blank pages.

2 Answer all questions. Question 1: Fuel subsidies and vehicle emissions Figure 1: Carbon dioxide (CO2) emissions in Gigatonnes (Gt) per year Note: ROW denotes ‘Rest of the world’; 2017 figures are projections Source: The Global Carbon Project and the Carbon Dioxide Information Analysis Centre (CDIAC), accessed 27 March 2018 Extract 1: Fossil fuel subsidies are a staggering $5 trillion per year Fossil fuels have two major problems. First, they cause climate change and the continued use of fossil fuels will cause enormous worldwide economic and social consequences. Second, fossil fuels are expensive and much of their costs are hidden as subsidies. A study published in the journal World Development quantifies the amount of subsidies directed towards fossil fuels globally rose from $4.9 trillion in 2013 to $5.3 trillion in 2015. Typically, people on the street think of a subsidy as a direct financial cost that result in consumers paying a price that is below the opportunity cost of the product. However, a more correct view of the true costs of the fossil fuel subsidies would include environmental costs like global warming, deaths from air pollution and taxes applied to consumer goods in general. Source: Adapted from The Guardian, 7 August 2017 Extract 2: Fossil fuel subsidies – a harmful government expenditure In 2013, oil prices dropped sharply. Some Asian governments took advantage of this new trend to cut fuel subsidies. However, many other governments still find reforms to be very difficult as fuel prices are politically important, and many people feel entitled to low fuel prices.

3 In fact, artificially low fuel prices mostly benefit the better-off since they consume more energy than the poor. Indeed, the most marginalised rural communities still depend on firewood and other biofuels and fuel subsidies bypass them. An IMF study documented that across 20 developing countries the poorest fifth of the population received on average just 7% of the overall subsidy benefit, whereas the richest fifth received almost 43%. Removing subsidies on fossil fuels will also allow the development of an energy mix that reflects the true relative costs of each type of energy. It will also release fiscal resources that could be put to better uses, such as social protection, expanding access to affordable energy services or promoting investment in renewable energy. Source: Adapted from eco-business.com, 5 January 2018 Extract 3: Norway’s electric vehicle revolution Norway is the country with the highest number of electric vehicles per capita in the world. One out of every five new vehicles sold is electric. A calculation shows that an electric vehicle allows a driver to enjoy cost savings of 75% compared to its diesel equivalent. This makes it attractive for Norwegian consumers to replace their gasoline- and diesel-powered cars with electric ones. In fact, the demand for electric vehicles in Norway is currently growing so rapidly that electric vehicle producers cannot keep up with it. Thousands of Norwegians have been waiting for months for their new electric vehicles and sellers have repeatedly extended delivery dates. This is due to the difficulties of mining essential raw materials such as lithium and cobalt. This level of consumer enthusiasm is enabled by a generous array of incentives. There is no road tax (or registration fee) for electric vehicles, no sales tax, no value-added tax, and the corporate-vehicle tax is lower. There is free public parking and exemption from tolls as well. Source: Adapted from www.climatechangenews.com, March 2018 Extract 4: Electric cars are not the solution Comparing carbon pollution between gasoline- and diesel-powered cars to those of electric vehicles can be tricky, because it depends on the source of the electricity generation. For example, Poland uses high volumes of coal in generating electricity. Therefore, electric cars merely move pollution from cities to distant power plants. Carbon emissions from electric vehicles w ould only decline if clean energy continues to expand with falling costs and widespread adoption. In addition, the streets will still not be pollution free because we will still have diesel lorries and buses and electric cars still release particle pollution into the air from wearing off tyres, brakes and road surfaces. In fact, one study found that the extra weight of the batteries in electric cars means more particle pollution compared with the petrol or diesel vehicles. Source: Adapted from The Guardian, 13 August 2017 & 22 January 2018

4 Extract 5: The long and winding road of electric vehicle adoption Electric vehicles are forging the way to the future: vehicle makers want to get their hands on the technology, as many governments look to cut down their carbon emissions. However, the data show that there's a long way to go, with more traditional models still holding the biggest slice of the vehicle market. Electric vehicles are currently heavily subsidised in many countries. Not to be outdone, the UK government is committing £900m to support the growth of its electric vehicle industry. For wider adoption (not to increase private car ownership but to change the mix) of electric vehicles in Singapore, we need to decide on the right number of charging stations per electric vehicle and a network of strategically located and accessible charging stations. For electric- vehicle drivers, the fear of having their car batteries run flat on them if they travel too far is of considerable concern. Therefore, the strategic deployment and distribution of fast chargers will go a long way to encouraging people to switch electric cars even though they are intrinsically cheaper than gasoline- and diesel-powered cars. Source: Adapted from The Telegraph, July 2017 and The Straits Times 11 Dec 2017

5 Questions (a) With reference to Figure 1, compare the trend in carbon dioxide emissions for the European Union (EU) and China between 1990 to 2010. [2] (b) Explain what is meant by ‘tr ue costs’ (mentioned in