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This document consists of 9 printed pages. [Turn over ECONOMICS 8819/01 Paper 1 12 September 2011 3 hours Additional Materials: Answer Paper READ THESE INSTRUCTIONS FIRST Write your index number and name 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, hand in your work for Section A and B separately. The number of marks is given in brackets [ ] at the end of each question or part question. RIVER VALLEY HIGH SCHOOL YEAR 6 Preliminary Year Examination in preparation for General Certificate of Education Advanced Level Higher 1

2 © RVHS 2011 8819 Section A Answer all questions. Question 1 Energy Consumption in China Extract 1: China’s Coal Consumption International coal prices hit $124 per ton this week, the highest levels in five months, as strong demand from reconstruction projects in Japan and reduced supply from flood-ravaged Australia made coal supply tight. Perhaps no country is more affected by surging coal prices than China. Coal powers the Chinese economy, accounting for 71% of China’s energy in 2008. The country is the world’s largest consumer, gobbling up nearly half of the world’s coal consumption in 2009. The Electricity Council estimates that the country’s coal demand will reach 1.92 billion tons in 2011, up nearly 10% from 2010. Many people attribute the above to the rising demand for electricity in China. The rapid urbanisation and rising middle class has led to an exponential number of new refrigerators, air conditioners and other appliances in homes. The Chinese government has made it clear that it wants to wean the country’s power grid from coal. That’s proven to be a difficult task. China’s 12 th Five Year Plan calls for bigger improvements in energy efficiency and the development of additional sources including natural gas. Massive projects such as the Three Gorges Dam have sought to increase capacity of alternatives, but hydroelectric, nuclear and other renewables combined make up only 10% of total power. Source: U.S. Gobal Investors, 10 May 2011 Extract 2: What’s really driving China’s energy demand? Between 1978 and 2000, China grew at 9% while energy demand grew at 4%. After 2001, economic growth accelerated slightly, but energy demand growth surged to 13% a year. Many China watchers assume that the recent evolution of China’s energy profile reflects growth in consumption and transport, for instance, air conditioning and personal cars. This is not correct. Consumption-led energy demand will be the major driver in the future but the main source of today’s growth is energy-i