DHS_H2_ECON_P1_P2_MARK_SCHEMES

Name: Econ Paper Additio Writing READ T Write yo Answer Write yo If you u The num : nomics 1 Case Stu onal Materi g Papers THESE INS our name a r all questio our answers se more tha mber of ma This d DUNMA Prelimi Year 6 s udy als: STRUCTION and class in ons. s on the se an one shee arks is given document c AN HIGH inary Ex NS FIRST the spaces parate answ et of paper, n in brackets consists of 1 Ind Num H SCHO xaminat s provided o wer paper p , fasten the s [ ] at the e f 8 printed ex mber: OOL tion on the answ provided. sheets toge end of each pages incl wer paper. ether. question o luding this Class: 19 S 2 h or part quest cover pag 97 September hour 15 mi tion. ge. [Turn ov 732/1 r 2011 inutes ver

2 Answer all questions. Question 1 Economics of Nuclear Power Extract 1: Economics of New Plant Construction Nuclear power reactors are ex pensive to build but relative ly cheap to operate. The capital costs are a much lar ger proportion of the total th an for other technologies, and that fuel costs are a relatively small fr action. This means that while initial costs are high, the cost of nuclear energy does not fluctuate with uranium prices in the way that electricity from fossil fuels does as gas, oil or c oal prices go up and down. Their economic competitiveness thus depends on keeping construction to schedule to keep financing costs down, and then operat ing them at reason ably high capacity over many years. In contrast, gas-fired power pl ants are very cheap and qui ck to build, but relatively very expensive to operate due to the cost of their fuel. With rising gas prices, and the high cost of moving coal long distances, nuclear plants are becoming more competitive with both gas and coal. Source: World Nuclear Association Report, BBC News Figure 1: Price of Crude Oil (US$ per barrel) and Uranium (US$ per pound) from Jul 2006 to Jul 2011 * Uranium is the fuel used in nuclear power reactors Source: International Monetary Fund 0 20 40 60 80 100 120 140 160 Jul‐06 Nov‐06 Mar‐07 Jul‐07 Nov‐07 Mar‐08 Jul‐08 Nov‐08 Mar‐09 Jul‐09 Nov‐09 Mar‐10 Jul‐10 Nov‐10 Mar‐11 Jul‐11 Crude Oil Uranium

3 Extract 2: The Carolinas Nuclear Cluster (CNC) The Carolinas Nuclear Cluster (CNC) is a collaboration of 47 companies, universities, technical colleges, and nonprof its that advance economic development in North Carolina and South Carolina by strengthening and expandi ng the region’s nuclear energy industry. It o ffers firms proximity to ke y suppliers and customers and the opportunities for like-minded industries to collaborate. With new clean-energy needs, a scarcity of fossil fuels, and growing public support – both at home and around the worl d – the nuclear industry is experiencing a sort of global resurgence. And the Carolinas, with its strong nuclear cluster, top-flight engineering programmes offered by