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ooEspecially when demand is price inelasticStrain on govt finances especially with ageing population anddiversion of resources away from other areas like education,national defence, healthcare (need to examine the tradeoffs/opportunitycosts incurred)- Reason why govt shdn’t subsidize- If perceived by government to generate zero or negligible positive externality à shouldbe left to the market mechanismConclusion: - Need for govt intervention if there are positive external effects from entry to museums and watching arts performances. - Other than subsidies, other solutions could possibly include campaigns and direct provisions. - If positive benefits are perceived to be low or negligible, then it is best left to the price mechanism to do the allocation of resources. LevelsL3(9m - 11m)L2(6m - 8m)L1(1m - 5m)E2(3m - 4m)Descriptors• Use of appropriate framework/concepts in analysiso MSB/MSC framework• In-depth discussion of questiono Appropriate and well structured thesis/antithesiso Other reason/s for not intervening in the market formuseum and arts performances• Good depth of analysiso Well-elaborated cause-effect relationship• Use of appropriate framework/concepts in analysis- MSB/MSC framework• Sufficient scope of coverage- Thesis/antithesis structure• Sufficient depth of analysis- primary and important cause-effect relationships are explained• Some errors in analysis•• Lacks use of economics framework/concepts in analysis• Lacks scope of coverage- Thesis/antithesis structure• Irrelevant answer• Glaring conceptual errors• No explanation of the type of market failure• For an insightful and explained assessment based on economicanalysisE1(1m - 2m)• For an unexplained assessment of whether Singapore governmentshould subsidise entry to museums and arts performances
(6) 2011 NJC Prelim H1 Paper Q3(a) Explain how the presence of externalities results in inefficiency in the markets for airtravel and education.[10](b) Discuss measures the government can adopt to address the inefficiency in themarket for air travel.[15]Suggested Answers:(a) INTRODUCTIONThe free market fails to take into account the fact that there are externalities in theproduction and consumption of certain goods. In this case, when left to the free market, it willresult in a market failure situation where there is an overconsumption of air travel due to thepresence of positive externalities and an under-consumption of education due to thepresence of positive externalities, both of which are not taken into account by the privateconsumers.BODYIn the education market, consumers only take into account of their own private benefits ofeducating themselves (we assume that there is no externalities in the production ofeducation, where Marginal Social Cost (MSC) = Marginal Private Cost (MPC) ). Theseprivate benefits include the ability to earn higher earnings currently and in future, the abilityto enrich oneself with the power of knowledge etc.However, these consumers fail to take into account that when they educate themselves, theycan benefit society as well through spill over effects known as external benefits, whichinclude a society that becomes more productive as a whole with a more educated workforcethat can help the country to generate economic growth via foreign and local investments, aswell as reducing the level of social problems such as crime rates as a country becomesmore educated.Therefore we see that Marginal Social Benefit (MSB) = Marginal Private Benefit (MPB) +Marginal External Benefit (MEB). Because individuals do not take into account the MEB, wesee a divergence between the MSB and MPB. Looking at Figure 1, individuals only equateMPB and MPC, and consume up to a level Q 0 . However the socially optimal point is at Q * ,where the society’s consumer welfare will be maximise, therefore the under-consumption ofeducation results in a deadweight loss (ABC) to society that is captured by no one.
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ST ANDREW’S JUNIOR COLLEGEH1 ECON
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demand for hotel accommodation. The
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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
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2010 YJC Prelims H1 Paper CSQ1: Hou
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quantity transacted increases and h
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with the large amount of subsidies
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(b) With the help of a diagram, ana
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Hence as long as the West is willin
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Marks Scheme:L3( 7 - 8m)L2(4 - 6m)L
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conclusion about absolute value of
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• Germany’s revival has been bu
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ising making labour relatively more
Page 31 and 32: (ii)With reference to the data, ass
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Page 35 and 36: (b)Explain how a rise in interest r
Page 37 and 38: (d)Consider whether the evidence in
Page 39 and 40: The higher spending, translating in
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Page 43 and 44: This will increase SOL of Chinese a
Page 45 and 46: 2. Appreciation is also needed to d
Page 47 and 48: Increase Real output for Asiaproduc
Page 49 and 50: Section B: EssaysMicroeconomics:1.
Page 51 and 52: Roads for Cars A X B Other infra
Page 53 and 54: With reference to Figure 2 above, (
Page 55 and 56: Conclusion:The future impact in the
Page 57 and 58: ConclusionSummarise and link to par
Page 59 and 60: Explain causes ofan increase in pri
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Page 64 and 65: Take astandConclusionPrice ceiling
Page 66 and 67: Possible non-price determinants of
Page 68 and 69: Suggested answer (b)Price elasticit
Page 70 and 71: Limitations of non-pricing strategi
Page 72 and 73: Internet broadband connectionFoodEf
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Page 76 and 77: EvaluationE2For a reasoned judgemen
Page 78 and 79: LevelsL3(7m - 10m)L2(5m - 6m)L1(1m
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Page 84 and 85: Therefore the market is said to be
Page 86 and 87: (b) INTRODUCTIONTo address the prob
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Page 96 and 97: lower standard of living. This is e
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Page 100 and 101: Explain how policies bring about ac
Page 102 and 103: ConclusionTo have sustained actual
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Page 110 and 111: Thesis (3) -Threat to improvement i
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Page 114 and 115: Trade PoliciesIn the light of an im
Page 116 and 117: • Real-‐wage unemployment o
Page 118 and 119: Knowledge, Application, Understandi
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Page 122 and 123: Marking SchemeL3Well developed expl
Page 124 and 125: Conclusion on demand management pol
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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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à growing affluence àrise in dema
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