HCI_H1_ECON_P1

HWA CHONG INSTITUTION JC2 Preliminary Examinations Higher 1 CANDIDATE NAME CT GROUP 10A/S CENTRE NUMBER INDEX NUMBER ECONOMICS Paper 1 Additional Materials: Answer Paper 8819/01 12 September 2011 3 hours INSTRUCTIONS TO CANDIDATES Write your name and CT class clearly in the spaces at the top of this page and on very page 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 staples, paper clips, highlighters, glue or correction fluid and tape. Section A Answer all questions. Section B Answer one out of 2 questions. Begin your answer to each question on a fresh sheet of writing paper. At the end of the examination, fasten the answer scripts to Section A: Questions 1, 2 and Section B separately with the cover pages provided. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 9 printed pages. [Turn over

© Hwa Chong Institution 2011 8819/ 01 / JC2 Prelim 2011 2 Section A Answer all questions. Question 1: The market for Olive Oil Extract 1: The expanding olive oil market As the world begins to explore alternative uses of vegetable oils, especially those that held promises to be redeveloped as “Biodiesel”, olive oil has been spared from this oil hungry world. In an unexpected spin-off from the Eurozone contagion hitting the Mediterranean countries in 2011, Greek producers being uncertain of the future of the debt-laden state, are now hoarding stocks of olive oil rather than selling them on the open market. It is reported in The Grocer magazine in 2011 that there would be further increase s in the price of the olive oil that is widely used in UK for frying and as a salad dressing sinc e Greece is the world's third-largest olive oil producer, after Spain and Italy. Figure 1: World Price of Olive Oil World Price of Olive oil ( US $) 2,500.00 3,000.00 3,500.00 4,000.00 4,500.00 5,000.00 5,500.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 World Price of Olive oil ( US $) Source: International Monetary Fund Yet, we are seeing a continuous increase in production by the three main producer countries, Spain, Greece and Italy. The main reason is due to an increase of the field productivity which resulted from better crop and harvest practices, the use of irrigation and the disappearance of marginal fields. This is with the exception for the effects of El Nino which peaked in the middle of the decade. El Nino causes extreme weather (such as floods and droughts) in many regions of the world. Developing countries dependent upon agriculture and fishi