Candidate Name: __________________________ Index no.

: ______

CT Group: ______

PIONEER JUNIOR COLLEGE JC 2 PRELIMINARY EXAMINATIONS 2007

ECONOMICS
Higher 2 Paper 2 Thursday Additional materials: Answer paper INSTRUCTIONS TO CANDIDATES Do not open this booklet until you are told to do so. 13 SEP 2007

9732/02

2 hours 15 mins

Write your name, CT group and index number in the spaces provided on the cover page and all the answer papers provided. Begin each section on a fresh sheet of paper. At the end of the examination, you will be required to hand in your answers to the different sections separately. Attach the cover page to your answer for Section A. Answer three questions in total, of which one must be from Section A, one from Section B and one from either Section A or Section B. The number of marks is given in brackets [ ] at the end of each question or part question. You are reminded of the need for good English and clear presentation in your answers. Enter the Question number attempted in the boxes below Section Question No. Marks Section A Q( ) / 25

Section B

Q(

/ 25

Section A or B Total

Q(

/ 25 / 75

This question paper consists of 2 printed pages (inclusive of this page)

Answer three questions in total Section A One or two of your three chosen questions must be from this section. 1 Microsoft has announced a price cut to its Xbox gaming console as well as introduce the new black Elite version. These measures are meant to counter the fall in the price of its competitor (Sony Playstation 3) and reverse falling Microsoft sales as a result of previous defects in its Xbox. Explain the factors affecting the demand for the Microsoft Xbox. [10] Discuss how an understanding of price elasticity of demand, income elasticity of demand and cross-elasticity of demand might be helpful to the manufacturer of the Xbox. [15] Times are so tough in the American auto industry that the country's two biggest car manufacturers, GM and Ford, had discussions about the possibility of a merger or alliance. ABC News, Sept 18, 2006 Explain the likely market structure that car manufacturers are likely to be operating in. [10] Discuss the possible impacts of merger of two large companies on consumers, producers and the economy. [15] The government of Ireland imposed a 15 cent levy on the use of plastic bags on 4 March 2002. Explain why the use of plastic bags may lead to market failure and discuss whether indirect tax is adequate and desirable in solving the market failure. [25] Section B One or two of your three chosen questions must be from this section. 4 (a) (b) In 2004, higher global oil prices pushed up inflation in developed countries, which should result in a moderation of economic growth in 2005. Explain the possible impact of rising global oil prices on the Singapore economy. [10] Comment on the possible measures that Singapore can adopt to alleviate the adverse impact of rising global oil prices. [15] Singapore retained pull of foreign investment despite economic uncertainties. The Straits Times 2005 Explain the ways in which government might influence the level of private investment. [10] Assess the impact of an increase in foreign investment on the Singapore economy. [15] On the trade front, progress is being made among ASEAN member countries to reduce tariffs on imports and create an ASEAN Free Trade Area in 2003 Asian Development Bank Discuss the impacts of removing barriers of trade on an economy. [25]

(a) (b)

(a) (b)

5 (a) (b) 6