1

H1 Essays 3. Oil importing countries need to remove energy subsidies as quickly as possible as they are a spur to higher consumption despite high oil prices. "We think that the time has come to launch adequate energy efficiency programmes and policies in consuming countries to help market forces react to high prices signals," explained an executive director of the International Energy Agency.
Adapted from The Financial Times (April 3, 2005)

(a) (b)

Explain the impact of energy subsidies on oil importing countries. [10] Do you agree with the assertion that the economic activity of the government should be restricted to the provision of public goods? [15]

4.

The competitiveness of European economies is decided not on the currency markets but by their capacity for restructuring and innovation.
BBC News 12 July 2007

(a)

(b)

Explain why an economys capacity for restructuring and innovation may be more significant than its exchange rate in determining its competitiveness. [10] Discuss whether an improved economic competitiveness is the best way to achieve a governments macroeconomic goals? [15]

TPJC/Economics/2007 Preliminary Examination/ H1 H2 Essays

H2 Essays 1. Airbus has unveiled its new A380 super-jumbo. Everything about the new plane is big, from its capacity of 555 paying customers to its flight range of 15,000km.
Adapted from: The Economist (January 18, 2005)

(a) (b)

Using airlines as an example, explain price elasticity of demand, income elasticity of demand and cross elasticity of demand. [10] Assess the relevance of the above concepts to an airlines decision to purchase the A380. [15]

2.

Shoppers are so resistant to price increases on staple items that supermarkets actually cut the cost of some products at the exact moment that demand for them jumps, according to a study of stores in Chicago. Beer is about ten percent cheaper in summer the season in which demand for it jumps than in winter.
Adapted from: The New York Times (June 27, 2005)

Analyse the factors influencing the pricing decision by a supermarket and examine how this differs from the pricing decision of a firm in a perfectly competitive market. [25]

3.

Britons will take more than half a billion flights annually by 2020, up from 189 million in 2002 and far in excess of recent government forecasts. Air travel is our fastest growing source of greenhouse gases and the most pernicious, since emissions at altitude have more than twice the impact of those on the ground.
The Observer, April 2 2006

(a) (b)

Explain the market failure that exists in the air travel industry. [10] How far do you agree that an aviation tax is the best solution to the problem of greenhouse gas emissions? [15]

TPJC/Economics/2007 Preliminary Examination/ H1 H2 Essays

4.

In the Middle East, there was a marked increase in the number of Singapore companies keen to explore business opportunities in the booming infrastructure sector. There was also increased interest in Russia in 2005. (a) (b) Explain why companies may be keen to explore business opportunities abroad. [10] To what extent will such a trend conflict with the macroeconomic goals of the government? [15]

5.

While the US economy continues to power ahead more or less as expected, the rest of the world is struggling. Oil producers are exacting a heavy tax from the world economy.
Business Times (Jun 27, 2005)

(a) (b)

Explain the likely reasons why an economy like the US may power ahead even as the rest of the world is struggling. [10] Discuss the likely impact of the changes described above on the Singapore economy. [15]

6.

Even as Singapores economy continues to grow and provide enough jobs for Singaporeans, workers who do not upgrade their skills will face significant challenges. They are vulnerable to structural unemployment and downward wage pressures from lower-cost workers in emerging economies like China, India and Eastern Europe.
Economic Survey of Singapore 2005

(a) (b)

Explain the factors that influence the competitiveness of a developed countrys economy. [10] Discuss whether you consider a fall in exchange rate to be the most effective way to achieve full employment. [15]

TPJC/Economics/2007 Preliminary Examination/ H1 H2 Essays