Suggested Answers of BT2 Revision Package - ASKnLearn

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Take astandConclusionPrice ceiling provide a most effective way to reduce inflation without solving it. Toreduce inflation with the aim of solving it requires other policies despite theirlimitations. There is no one effective way. Very often governments resort to eitherprice ceilings or appreciation to dampen price increases in the short run but need apolicy package of supply side, MP and FP policies to maintain long-term pricestability as these policies tend to tackle the root cause of the inflation.MARK SCHEMEL1 (1-4) Sketchy answer with concept errorsL2 (5-7) Answer shows price ceiling is not the most effective due to limitations & explains 2or 3 other policies with limitations. Concludes that price ceiling is not the mosteffective.L3 (8-11)E1(1-2)E2(3-4)Answer does little to explore when price ceiling is most effectiveBalanced answers clearly explaining when the price ceiling is most effective andwhen it is notTakes a stand with little economic justificationTakes a stand with sound economic justification
(3) 2011 JJC Prelim H1 Paper Q3Taxi fares are going up at an additional 50 cents per ride due to an increase in fuel prices.Land Transport Authority of Singapore has increased the number of taxi licenses granted inthe midst of a stronger economy. In the same year, the car COE prices hit a 14-year high.Adapted from The Straits Times, 2011(a) Account for the fare increases in the taxi market. [10](b)Explain the concepts of price elasticity of demand and supply, and discuss therelevance of price elasticity of demand of Premier Taxis Company in maximising itsprofits. [15]Suggested answer (a)The taxi fare is determined by the interaction of demand and supply of taxis. Demand is thewillingness and the ability of the buyer to pay a particular price for a particular quantity of agood while supply is the willingness and ability of the seller to offer different quantities of aparticular good at different prices.Possible non-price determinants of increased supplyThe Land Transport Authority of Singapore (LTA) has increased grants of taxi licenses to theall the taxi firms in Singapore, to increase the number of taxis on roads. This causes arightward shift of the supply curve to the right.Fuel prices hit a two and a half year high as a result of spiraling global crude oil prices spiral.As fuel is a factor input to operate the taxis. This increase in price of petrol leads to anincrease in cost of production. Taxi drivers will incur more cost when they increase theirnumber of travelling trips on the road. Due to the higher cost, the supply of taxis on the roadwill decrease quite significantly, causing a bigger decrease in supply leftwards.Net change in supplyWith the increase in fuel prices, taxi drivers may be more conscious of how much fuel they useand how efficiently they use fuel, they may be more selective over their destinations, chosenroutes, and times when they choose to drive, so as to avoid consuming more fuel thannecessary; but few taxi-drivers may consider stopping taxi-driving altogether, since it is afterall a livelihood for them; especially when the rise in fuel prices continues to increasesignificantly or rises sharply.Hence, the decrease in supply may be outweighed by the increase in supply of taxis, andoverall the supply of taxis will decrease, albeit by a small extent.
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ST ANDREW’S JUNIOR COLLEGEH1 ECON
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Cost/Benefits/$ Welfare loss MSC =
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more than proportionate fall in qua
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Price S P 1 P 2 D 1 D 2 Market for
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ERP• Works by charging drivers an
Page 13 and 14: 2010 YJC Prelims H1 Paper CSQ1: Hou
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Page 21 and 22: Hence as long as the West is willin
Page 23 and 24: Marks Scheme:L3( 7 - 8m)L2(4 - 6m)L
Page 25 and 26: conclusion about absolute value of
Page 27 and 28: • Germany’s revival has been bu
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Page 45 and 46: 2. Appreciation is also needed to d
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Page 57 and 58: ConclusionSummarise and link to par
Page 59 and 60: Explain causes ofan increase in pri
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Page 72 and 73: Internet broadband connectionFoodEf
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Page 76 and 77: EvaluationE2For a reasoned judgemen
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Page 86 and 87: (b) INTRODUCTIONTo address the prob
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Page 102 and 103: ConclusionTo have sustained actual
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Trade PoliciesIn the light of an im
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• Real-‐wage unemployment o
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Knowledge, Application, Understandi
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aggregate demand in U.S. and decrea
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Marking SchemeL3Well developed expl
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Conclusion on demand management pol
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E2 For an evaluative assessment bas
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Long run• Provided higher course
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• Exchange rate policy may not be
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economic growth, a fall in demand-d
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Illustration:Assumptions:• Only t
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(18) 2011 DHS Prelim H2 Paper Q1Sin
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Singapore does not specialise c
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As output increases, real national
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oooHigh level of integration in
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2010 IJC Prelim 2010 H2 Paper Q6(a)
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