CJC_H2_ECONS_P1_P2

© Catholic Junior College 9732/01/Prelim/11 CATHOLIC JUNIOR COLLEGE JC2 PRELIMINARY EXAMINATIONS In preparation for General Certificate of Education Advanced Level Higher 2 ECONOMICS 9732/01 Paper 1 13 September 2011 1300-1515 Additional Materials : Answer Paper 2 hrs 15 minutes READ THESE INSTRUCTIONS FIRST Write your name, class and question number 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 paper clip, highlighters, glue or correction fluid. Begin each case question on a new sheet of paper. Answer ALL questions. At the end of the examination, fasten your work securely together. Submit each case question separately. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 7 printed pages.

2 © Catholic Junior College 9732/01/Prelim/11 [Turn over] Answer all questions. Question 1 Bus transport systems Extract 1: Bus system in Singapore The public transport system in Singapore consists of heavy and light rail systems, public buses and taxis. The rail and bus services are provided by two operators: SBS Transit Ltd and SMRT Corporation. These companies are run as private firms, within the maximum fares adjustments approved by the regulator, the Public Transport Council, with no direct operating subsidies from the government. The fares, advertisement and rental revenues earned by these firms thus cover operating and maintenance expenditure and depreciation. However, government funds the capital cost of public transport infrastructure. The two companies are expected to deliver satisfacto ry bus services to meet the mobility needs of commuters. While provision of concessionary travel for students, senior citizens and national servicemen is mandatory, the shortfall in revenue is borne solely by the operators. All buses are diesel powered rather than petrol powered. Due to their higher efficiency and reliability, diesel engines are usually the dominant power source for heavy duty buses. Petrol pump prices include taxes while diesel pump prices do not, but diesel vehicles pay a diesel tax. However, buses are exempt from paying this diesel tax. A bus monopoly can lead to deterioration of services and inefficiency, with the public suffering insufficient coverage, poor frequency, poorly maintained buses affecting safety and comfort or even high fares. The two companies are now two mutua lly-exclusive monopolies crea ted by artificially carving up the market into non-competing segments, except in the popular destinations such as the city. It merely broke up one natural monopoly into two smaller monopolies. There is only a limited amount of cross-territorial competition. But, there may be sound economic reasons for granting the two bus operators the d