SAJC H1 ECON P1 W SUGGESTED ANSWERS AND MARK SCHEME

ST ANDREW’S JUNIOR COLLEGE PRELIMINARY EXAMINATIONS – 2011 General Certificate of Education Advanced Level Higher 1 ECONOMICS 8819/01 Paper 1 14 Sep 2011 3 hours Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your name and class 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 staples, paper clips, highlighters, glue or correction fluid. Section A Answer all questions. Section B Answer one question. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 8 printed pages. [Turn Over © SAJC 2011 Suggested Answers and Mark Schemes

© SAJC 2011 8819/01/PRELIM Suggested Answers and Mark Schemes 2 Section A Answer all questions in this section. Question 1 New Formula and Glittery Growth for Singapore Extract 1: Singapore Tourism Revenue Surges on Record Visitor Arrivals The money spent by tourists visiting Singapore su rged last year after a record number of people travelled to the city-state, attracte d by two new casinos amid a rebound in the global economy. Spending rose 49 percent to S$18.8 billion last year, exceeding the government’s forecast, the Singapore Tourism Board said in a statement today. International visitor arrivals rose 20 percent to 11.6 million in 2010. Efforts to boost tourism in 2010 included th e inaugural Youth Olympic Games, while the Singapore leg of Formula One, the world’s most-watched motor sport, took place for a third year. Source: The Straits Times, 12 November 2010 Extract 2: Call for Tripling Casino Levy A lone MP on Monday caut ioned the Government against bei ng attracted by the glitter of revenue from casinos. Ms Denise Phua argued that an over-reliance on gaming revenue would hurt Singapore over time. Currently, while foreigners do not have to pay the S$100 levy before entering the casino, locals will have to do so at the booth. Before arriving at the booth, visitors to the casino will be segregated acco rding to whether they ar e Singaporeans or overseas guests. She called instead for the casino entry levy to be tripled, and for a cap on the number of integrated resorts (IRs) to the current two. 'All that glitters is not gol d,' she said, in a speech that warned about the 'dark side' of problem gambling and organised crime. The Government should instead take 'the more difficult journey of honing our own expertise in building quality tourism products'. Source: The Straits Times, 01 March 2011

© SAJC 2011 8819/01/PRELIM Suggested Answers and Mark Schemes 3 Table 1: Quarterly Revenue earned by Marina Bay Sands (MBS) and Resort World Sentosa (RWS) in 2010 – 2011 (in million SGD) Integrated Resorts/Year 1Q 2010 2Q 2010 3Q 2010 4Q 2010 1Q 2011 2Q 2011 Marina Bay Sands N.A. $281 $631 $728 $760 $958 Resort World Sentosa $460 $979 $744 $788 $922 $728 Note: N.A. = Not available; 1Q 2010 = 1st Quarter 2010 Source: Quarterly Financial Reports of MBS and RWS, www.straitstimes.com, June 2011 Extract 3: F1 Tickets Sold Online Buck High Price Trend People fishing for a quick buck have cast thei r eyes on the latest happenings in town - the F1 race this weekend. More than 300 ti ckets have been spotted for sale on popular auction websites such as eBay just days before the race is flagged off this Sunday. One listing is offering a three-day pit grandstand ticket for more than S$2,000. That's some S$600 above the official price of S$1,400. However, a large number of the tickets sold online are going for as much as 60 per cent below the official price. The practice is prohibited. Under the official purchase terms and conditions, tickets may not be resold or transferred for free or otherwise. Singapore Grand Prix has served legal notice on at least one website for reselling F1 tickets and is in the midst of gathering more evidence against several more. Source: Channel NewsAsia, 25 September 2008 Extract 4: F1 Race in Singapore Will Not Harm the Environment There will be measures in place to make sure the F1 race in Singapore will not harm the environment. Minister of Stat e for Trade and Industry, S Iswaran, said that noise and smoke are inevitable during the race, but organisers are studying ways to minimise their effect. Mr Iswaran said F1 organisers have been undertaking various research efforts to keep the race green like adopting bio-fuel, for example. "But having said that, the F1 organisation is based in Europe where environmental consciousness is very high and they, as an organisation, have undertaken many measures to make sure they are minimising their carbon footprint, if not making it zero. So although the F1 is seen, at least in firs t blush, it might be anti-environment, there are many things they are doing that is actually pro-environment," said Mr Iswaran. The race is set to generate $100 million for Singapore each year. But many question whether the returns are big enough for the government to fund 60% in organising the $150 million race. The spill over benefits to t he economy are very large, whether it is tourism spending or consumer spending or busin ess activity. "If STB is able to support this at a level comparable to the benefit s for tourism and the economy, then it is justifiable. There are also mech anisms in place to ensure that if in fact the race is very

© SAJC 2011 8819/01/PRELIM Suggested Answers and Mark Schemes 4 successful, very profitable, then, profits beyond a certain pre-agreed level between STB and Singapore Grand Prix Pte Lt d will be ploughed back to defr ay the cost, in other words, to reduce the government grant," he added. Mr Iswaran also defended the government's dec ision to impose extra tax for hotels during the F1. He said that based on mark et studies, unlike restaurants and pubs, hotel rates are expected to go up 3 times duri ng the race. Additional revenue to the government from the re staurants will come in the form of GST and other taxes already in place. Source: Channel NewsAsia, 26 May 2007 Questions (a) (i) Compare the trends of t he revenue earned by Resort World Sentosa (RWS) and Marina Bay Sands (MBS) from 1Q 2010 to 2Q 2011. [2] (ii) Using economic concepts and the data given, account for the comparison of trends you have given in (a) (i). [4] (b) Using a demand and supply diagram, account for the high prices of F1 tickets resold online compared to the official price. [4] (c) Identify the two different sources of market failures mentioned in the extracts. [2] (d) Analyse whether Singapore go vernment should consider tripling casino entrance levy for Singaporeans and continue not imposing any on foreigners. [8] (e) Using economic analyses, assess whether the efforts to boost tourism in Singapore are justified. [10] [Total: 30]

© SAJC 2011