ANDERSON JUNIOR COLLEGE

JC2 PRELIMINARY EXAMINATION

9732/01

Higher 2
ECONOMICS

9732/02

Paper 2

4 September 2009
2 hour 15 mins

Additional Materials:

Answer Paper

READ THESE INSTRUCTIONS FIRST

Write your name, PDG and index number in the spaces provided on all the work you hand in.
Write in dark blue or black ink 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.

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. Start a new question on a fresh sheet of paper.

At the end of the examination, fasten all your work securely together.
Attach this cover page in front of your answers.
Indicate in the table below the question numbers of the three questions you have attempted.
The number of marks is given in brackets [ ] at the end of each question or part question.
Question
Number
Name: ________________________________

Marks Awarded

/25
/25

PDG: _________________________________

/25
Total Marks

/75

This document consists of 2 printed pages, including this cover page.

[Turn over
Page 1

2
Answer three questions in total.
Section A
One or two of your three chosen questions must be from this section.
Certificate of Entitlement (COE) supply for the fiscal year starting April 2009 will be
cut by 24 per cent. A smaller COE quota will mean that overall sales of cars will be
affected across the board since the supply of new cars will be restricted by the smaller
quotaOn the other hand, SMRT has decided to reduce bus and train fares and to
increase number of train trips given the severe economic crisis...
Adapted from the Straits Times, Feb 2009

(a)

Using a diagram, explain how the recession and fall in the supply of COEs will affect
the market for new cars.
[10]

(b)

Discuss the relative significance of price elasticity of demand and cross elasticity of
demand in explaining the decisions made by the public transport operator SMRT.
[15]

Sim Lim Square is a six-storey shopping centre in Singapore where tourists can find
over 300 small shops selling electronic items such as computers and cameras.

(a)

Explain how a shop retailing electronics in Sim Lim Square can determine its price and
output to maximise profit, and consider whether a perfectly competitive firm
determines its price in a similar way.
[10]

(b)

To what extent does the market structure in which electronics retail shops operate in
explain how all firms in Singapore compete?
[15]

Explain why the level of innovation in markets is likely to be less than desirable and discuss
the view that innovation should therefore be solely carried out by the government.
[25]

Section B
One or two of your three chosen questions must be from this section.
4

(a)

Explain the conditions for equilibrium in the circular flow of national income.

(b)

Discuss how an increase in import expenditure may affect the standard of living of a
country.
[15]

In light of the current worldwide recession, some countries have allowed their
exchange rates to depreciate.

[10]

(a)

Explain how macroeconomic problems might result from a depreciation of Singapores

exchange rate.
[8]

(b)

Using the concepts of income elasticity of demand and the multiplier, assess whether
Singapore is among economies that have most to lose in the current worldwide
recession.
[17]

In view of globalisation, discuss the appropriate policies that the Singapore government
should use to achieve its internal macroeconomic aims.
[25]
END OF PAPER 2

Anderson Junior College 2009