2014 JC 1 Promos Revision Package_H1_Revision Package 2_ANS (Final)

7/21/2019 2014 JC 1 Promos Revision Package_H1_Revision Package 2_ANS (Final)

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Revision Paper 2

Section A: Case Study Question

London Olympics 2012 (Adapted from ACJC 2013 Promos)

(a) (i) escri!e t"e trend in tourist arrivals to t"e #$ %rom 200& to 2012' 2

Option 1

General trend: Tourist arrivals to the UK were

generally falling from 2006 to 2010 before rising

thereafter.

Refinement: The biggest fall was registered in

200!200"

Option 2

General trend: There was a falling#downward trend

in tourist arrivals to the UK from 2006 to 2012.

Refinement: The e$%e&tion was a rise in tourist

arrivals in 2010!2012.

(ii) #sin* +,tract 1- e,plain t"e %all in tourist arrivals to t"e #$ durin* t"e

Olympics mont"- Au*ust 2012'

.

There was de%rease in demand for visits to UK due to:

1' +,tract 1: fears of overcrowding due to the Games! potentia" visitors decided not to visit the #$ to

avoid an% disruption caused &% the Games

(emand fa%tor: e$&e%tation of %rowds alters visitors) &referen%e of traveling to the UK

*isitors %hange their holiday &lans to avoid travelling to the UK in anti%i&ation of +ams and %rowds

during the ,lym&i%s &eriod.

2' +,tract 1: unseasona" wet weather

(emand fa%tor: bad weather

*isitors are aware of the bad weather in the UK and de%ide to do away with travelling to the %ountry.

Rainy s-ies im&ede good travelling e$&erien%e and %onfine &eo&le indoors. These affe%t the uality

of travel and holidaying.

/' +,tract 1: e'change rates

(emand fa%tor: strong &ound %urren%y of UK'

The UK &ound ' was strong against other foreign %urren%ies and visitors may find it more

e$&ensive to travel to the UK and %hoose to %hange their holiday destination to elsewhere.

OR

acjc/JC1 H1 Econs/Promos Revision Package/2014/Revision paper 2/ANS

ACJC Economics

H1 Revision Package

(2014 JC1 Promo Exam)


2/19


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e$ternalities in &rodu%tion.

The %reation of 7Games ;anes) will generate negative e$ternalities.

viden%e from e$tra%t 2:

>t will %ause inevitable traffi% %haos on already busy road networ-s4 as

well as delays on the ;ondon Underground as those trying to es%a&eueues o&ted for &ubli% trans&ort as many drivers will swit%h to &ubli%trans&ort9. There will be %haos on &ubli% trans&ort. The Tube will geteven busier4 and with ma+or delays or hot summer weather4 travelling%ould be%ome un&leasant.

The traffi% +am resulting from the o&eration of 7games lanes) will also

result in greater &ollution with adverse im&a%t on the health of &eo&le as?/00 &eo&le a year die &rematurely due to &ollution mostly disgorged

from e$haust &i&es9.

5s ta$is and &rivate!hire vehi%les are not able to use the lanes9 and

need to ma-e detours or get %aught in traffi% +ams4 the %osts of road+ourneys will in%rease and %onsumers need to &ay more while the drivers)ta-ings will be down as fewer &eo&le will want to ta-e ta$is.

5s some &edestrian %rossings will not be o&erational9 when the games

lanes are o&erational4 the removal of &edestrian %rossings and %hangesto traffi% lights will therefore redu%e &edestrian safety.

OR

There is a missing mar-et in general se%urity at the ,lym&i%s as it is a &ubli%

good whi%h is both non!e$%ludable and non!rival.

viden%e from e$tra%t /:

The total %osts of over 1 billion will be fully funded by the UK government4

the in!venue se%urity alone %osts @@/ million.

or %our own understanding (not re*uired in answer)+

,on-e'c"uda&"e+ Genera" securit% is non-e'c"uda&"e as once the

good is produced! it &ecomes genera""% avai"a&"e to a"". t is notpossi&"e to e'c"ude non-pa%ers from en/o%ing the good. hou"d asecurit% situation arises in the stadium! ever%one wi"" receive theprotection regard"ess of who the% are! whether the% have paid for thegames ticets or the% are woring there.

,on-riva"r%+ Genera" securit% is non-riva" as the consumption of the

good &% someone wi"" not diminish others a&i"it% to consume thegood. or e'amp"e! ever%one wi"" &enefit from the 2!000 securit%staff who wi"" &e woring at the 3 4"%mpic venues to perform venue

securit% ro"es 5 &ag checs and genera" securit% at venue gates.6he securit% protection is offered to a"". A spectator who receives



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such protection does not reduce the amount of protection to anotherspectator. 7ver%one receives the same amount of genera" securit% soits consumption is non-riva".

8ue to the characteristic of non-e'c"uda&i"it%! ever%one wants to &e a free

rider. t is therefore not possi&"e to impose a price and therefore there is no

possi&i"it% of maing an% profits. 9ence no wi""ingness of private securit%

firms to provide.

As it is non-riva"! once genera" securit% is provided! the margina" cost of

providing the good to an additiona" user is :ero. or e'amp"e! there is no

need to dep"o% another securit% personne" in the stadium /ust &ecause there

is one more spectator arriving in #$. ;ith :ero margina" cost! the &asic

princip"e of optima" resource a""ocation ca""s for provision of pu&"ic goods at

:ero price or no charge. 9owever! if the price is :ero! no private firm wou"dwant to supp"% the goodt measures the monetary value of all the goods and servi%es &rodu%ed within geographica" &oundar%of

the %ountry during a year.

(ii) "ic" is t"e most important component o% /ross omestic Product %ort"e #$3

2

5s 5( A BC GC >C D!E'4

Fousehold Bonsum&tion B' re&resents the most im&ortant %om&onent of 5( for UK in relation to the

&ro&ortion of the UK)s total G(t forms the largest &ro&ortion of G(< over the years as seen in 8igure

2 where Fousehold Bonsum&tion B' forms 6@." 14024H@6' of the total G(< of UK in 2012.

(iii) +,plain 4"at is meant !y "ealt"y and sustained economic *ro4t"' 5

7conomic Growth an increase in the countr%s rea" G8P which is the va"ue of output=earnings

produced within the domestic &oundaries of a countr% during a period of time. #sua""% o&tainedthrough increase in A8. 6o sustain growth in the "ong run! its productive capacit% (>?A) has toe'pand! too.

Governments aim not on"% for economic growth per se! &ut healthy and sustained growth. 6his

means woring towards actua" growth and potentia" growth. (Potentia" growth defines the "imit ofgrowth a countr% can attain@ actua" growth is the actua" increase in production within this "imit.) ;hi"epotentia" growth is determined &% the efficienc% and *uantit% of resources and production! actua"growth is dependent on the strength of aggregate demand.

(d) it" t"e use o% an A6AS dia*ram- e,plain t"e e%%ect o% an increase in 5



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National !tp!t

"#2"#1

$P%

A&2

"1 "2

A&1

investment on economic *ro4t"'

There is a &ositive#dire%t relationshi& between investment and e%onomi% growth. >nvestment s&ending is

a %om&onent of 5(. 3hen investment in%reases and this raises 5(4 assuming 5 %onstant4 real G(n $tra%t /4 *isa has estimated UK G(< will be boosted by H@0m of s&ending during the

Games9. This s&ending is li-ely to be %ontributed by an in%rease in household %onsum&tion on

domesti% goods and servi%es due to in%rease in %onfiden%e and growth9. UK residents are

o&timisti% of the mar-et outloo- and they are li-ely to be %onfident of their em&loyment and thus

are more willing to s&end. The e$%itement of ;ondon ,lym&i%s 20124 along with the many

,lym&i%s mer%handise4 s&urred s&ending. >n addition4 with many lanes %losed for %ars as

highlighted in $tra%t 24 there will be an in%rease in %onsum&tion of &ubli% trans&ort that%ontribute to more domesti% s&ending as well. Eany drivers will swit%h to &ubli% trans&ort9.

Thus4 there will be an in%rease in C. This is in line with 8igure 2 with Fousehold %onsum&tion

going u& to 102 H@6m in 2012 !" shifts to the right

o 5s %onfiden%e &i%-ed u&4 firms are more willing to in%rease in inventory and %a&ital investment

as they e$&e%t more sales. 8or se%urity4 as more &ersonnel are being hired to ta-e on the roles4

they will have to be trained and this is a form of investment with an im&a%t on ;R5.

increases!" shifts to the right, *!S shifts to the right as well

o /overnment e,penditure in%reased as well with an investment of "./bn $tra%t /' to

develo& the venues and ne%essary infrastru%tures. This will have an im&a%t on ;R5 as wellwith some of the government e$&enditure being su&&lied!side &oli%iesLRAS s"i%ts ri*"t

o Government e$&enditure is also &um&ed u& due to the total se%urity %osts of over 1 billion

whi%h was' fully funded by the UK government.9 / increases!" shifts to the right

o Fowever4 8igure 2 showed that im&ort e$&enditure has risen as well. This %ould be due to

im&ort of raw materials to build the various infrastru%ture for the ,lym&i%s!" shifts left

o Fowever4 there %ould be a cumulative impact on t"e various components o% A4 es&e%ially

when effe%ts are multi&lied a%ross various industries. Though 5( may di&&ed due to anin%rease in E4 the net im&a%t is that of 5( in%rease as the other %om&onents register strong

&ositive in%rease.

!ssess the extent to which hosting of the Olympics $ames in 2+12 has contributed to the

economic growth of the %nited &ingdom'

There will be e%onomi% growth e$&erien%e but it may not be sustainable for the UK e%onomy. $tra%t

/4 the Games %ould &rovide an e%onomi% growth s&urt4 albeit short!lived4 to the UK)s shrin-ing

e%onomy9.

The Government)s &re!o%%u&ation with the tourism industry %ould result in more *overnment

e,penditurebeing made to fund tourism &ro+e%ts or to subsidise training and u&grading of wor-ers)s-ills4 at the e$&ense of e$&enditure on other industries li-e manufa%turing and %ommuni%ations



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infrastru%ture.

The industrial growth will be short!lived if there is insu%%icient development o% supportin*

industries and in%rastructure to su&&ort e$&ansion in tourism in%luding insuffi%ient training orman&ower needs'.

5fter the games4 the government needs to %ontinue on its effort to ma-e the e%onomi% growth &ro!

longed. This is e%hoed in $tra%t 1 where the s&o-esman of the 5sso%iation of the =ritish Travel

5gents mentioned that he would e$&e%t a tourism boost from the Games to %ome in the ne$t few

years and it will be essential for the UK to %ontinue to mar-et itself at home and overseas to ma-e

the most of the o&&ortunities that being a host nation has o&ened u&.I

Level escriptors %or (e)

;/ 5n answer that integrates the %ontribution of tourism on 5( J 5 with the

benefits on e%onomi% growth.

5nswer also in%or&orates the e$tent of %ontribution to e%onomi% growth.

@!6

;2 Ans4er correctly attempts to apply A6AS conceptsand %om&onents to the

tourism industry but undevelo&ed.

;a, 5 mars for answers that are one!sided4 only 5( or 5 e$amined.

;a, . mars %or ans4ers 4it"out an assessment on the %ontribution of

tourism industry to e%onomi% growth.

/!?

;1


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&rodu%es &ositive e$ternalities.

od%

Point 1: Pu!lic *oods are non>e,cluda!le 4"ile merit *oods are e,cluda!le'

Non!e$%ludable: on%e a good is &rovided4 it is not &ossible or e%onomi%ally feasible to

e$%lude someone from using the good even if he does not &ay for it.

$am&le: ,n%e street lights are &rovided for4 everyone regardless of whether they have

&aid ta$es' %an en+oy it as it is not &ossible to sto& &eo&le from en+oying the lights as theywal- &ass on the street.

Pu!lic "ousin* is e,cluda!le !ecause it is possi!le to mae consumers pay %or t"e

%lat !e%ore t"ey can o4n it' 7"ose 4"o do not pay 4ill not !e a!le to o4n andle*ally stay in t"e %lat'

Point 2: Pu!lic *oods are non>rival 4"ile merit *oods are rival'

Non!rival: 3hen the good is made available4 everyone %an %onsume the same level at

the same time. The %onsum&tion of the good by one additional &erson does not diminishthe amount of the good available for another.

$am&le: treet lights %an be en+oyed by everyone on the same street at the same time

at the same level. Oust be%ause one &erson is en+oying the light4 does not diminish theamount of light available for another &erson on the street at the same time.

Pu!lic "ousin* is rival- !ecause i% one %amily o4ns and stays in t"e %lat- anot"er

%amily cannot o4n and stay in t"e same %lat due to limited space' One consumer!uyin* one %lat reduces t"e num!er o% %lats availa!le %or ot"er consumers topurc"ase'

Point 5: Pu!lic *oods 4ill not !e produced at all i% le%t to t"e maret- 4"ile merit *oods

4ill !e provided- !ut 4ill !e under>produced or under>consumed'


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growth4 &romotion of family values4 and overall greater so%ial %ohesion. (ue to thesee$ternal benefits4 the government deems &ubli% housing to be so%ially desirable.

>ndividuals are only %on%erned about their own interests4 and do not %onsider these

e$ternal benefits in their de%isions to %onsume these goods. They only ta-e into a%%ounttheir marginal &rivate benefit4 whi%h in this %ase would be a shelter and home for their

families and themselves. Therefore due to the &ositive e$ternalities generated4 the marginal so%ial benefit will be

greater than the marginal &rivate benefit.

>f left to the mar-et4 the mar-et euilibrium out&ut Q m' will be lower than the so%ially

o&timal out&ut Qs' as shown in the diagram.

There will be under %onsum&tion of &ubli% housing and therefore the mar-et fails.

There is &artial mar-et failure be%ause demand!su&&ly for%es are at wor-4 but the level of

&rodu%tion#%onsum&tion is below the so%ially!o&timal level.

The welfare loss arising from this mar-et failure is shown by the shaded area4 Bsm.

Conclusion:

in%e &ubli% housing is e$%ludable and rival4 and also &rodu%es signifi%ant &ositive

e$ternalities and is deemed by the government to be so%ially desirable4 it is a merit good and

not a &ubli% good. Given that it is a merit good4 there is some s%o&e for government

intervention to %orre%t the resulting mar-et failure.

!nswer should adopt a comparative approach in comparing each

pointcharacterisitics between the public goods - merit goods (characteristics such

as nonexcludability, nonrivalry and resource allocation issue).

Level escriptors %or +ssay 1(a)

L5 3ell!develo&ed e$&lanation on the %hara%teristi%s of &ubli% and merit goods4

integrating the e$am&le of &ubli% housing into the analysis.

Blear e$&lanation on the im&li%ations of the %hara%teristi%s of &ubli% and merit

goods on their im&a%t on resour%e allo%ation4 using &ubli% housing as an e$am&lefor merit goods.

/ax 0 marsfor answers without %lear use of e$am&les4 but %orre%t %lassifi%ation

of &ubli% housing as a merit good.


Qty of

housing


10/19Qty of cigarettes smoked

Benets/ Costs

!C

PC

PB " !B

Qs Qm#

Es

B

Em$

L2 Underdevelo&ed e$&lanation on the %hara%teristi%s of &ubli% and merit goods

ome attem&t to e$&lain how &ubli% housing is neither non!e$%ludable nor non!

rival4 but &rodu%es signifi%ant &ositive e$ternalities.

5ble to identify &ubli% housing as a merit good.

L1 Eere listing of &oints with no e$&lanation

Bon%e&tual errors hows some -nowledge about &ubli% and merit goods but no a&&li%ation to the

%ase of &ubli% housing

Blassifies housing as a &ubli% good

Su**ested Ans4er to Qn 1!)

b' (is%uss whether government intervention %an lead to a more

effi%ient allo%ation of resour%es where goods with e$ternalities e$ist

in mar-ets.

L1@M

ntroduction

e%ine:

Eore effi%ient allo%ation of resour%es9: This refers to allo%ative effi%ien%y4 whi%h is

a%hieved when all firms &rodu%e out&ut whi%h %onsumers want to ma$imiPe theirsatisfa%tion. This is a%hieved when firms sell the good at


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Qty of cigarettes

Benets/ Costs

!C

PC

PB " !B

Ps

Pm

Qs Qm#

AB

C

$

PCt

Point 2 (a): 7"esis > /overnment can intervene to correct t"e maret %ailure in a maret

4it" ne*ative e,ternalities to ac"ieve a !etter allocation o% resources

$am&le of measure ! ta$es on &rodu%ers:

t isim&ortant for students to show how government intervention may or may not lead to a better

allo%ation of resour%es.

trengths of using ta$es:

Using ta$es allows the mar-ets to %ontinue o&erating a%%ording to mar-et for%es

Ta$ation also &rovides revenue for the government to finan%e so%ial and %ommunity

develo&ment &ro+e%ts

Point 2(!): Anti>7"esis > /overnment intervention may not ac"ieve a more e%%icient

allocation o% resources in a maret 4it" positive e,ternalities



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't( o# p!)lic *o!sing

&A

+

Cost,+ene-ts !C " PC

!B

PB

Pc

Pm

's'm

Ps

!Cs " PCs

Bonstraints of using ta$es:

>t is diffi%ult to measure e$ternal %ost4 and hen%e diffi%ult to im&ose an a%%urate amount

of ta$. ,ver!valuation or under!valuation would result in over! or under!%onsum&tion ofthe good.

>f


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Bonstraints of using subsidies:

nstead4 students %an fo%us

on e$&laining mar-et!based solutions for this uestion. tudents may also use another

e$am&les other than housing. >t is im&ortant for students to show how government

intervention may or may not lead to a better allo%ation of resour%es.

+valuation6Conclusion:

#valuationof government intervention in a mar-et with e$ternalities:

Government intervention %ould lead to a more effi%ient allo%ation of resour%es when there

is mar-et failure due to e$ternalities. Fowever4 due to the limitations of ea%h &oli%y as dis%ussed earlier4 there is also a

&ossibility of government failure whereby intervention by the government %ould lead to aless effi%ient allo%ation of resour%es.

riteria'Therefore whether the government %an a%hieve a better allo%ation of resour%es

de&ends on the e%%ectiveness o% *overnment intervention4 and the suita!ility o%policiesunderta-en by the government *iven t"e conte,t o% t"e country.

ontext 1'>n inga&ore4 the government has been su%%essful in raising the %onsum&tion

of &ubli% housing through subsidies. This %an be seen as more than 0 of the&o&ulation resides in F(= flats &rovided for and heavily subsidised by the government.This %ould be be%ause inga&ore is a relatively small %ountry with a small &o&ulation.Thus it is easier for the government to manage and monitor the &rovision of &ubli%housing4 and the burden of the government budget is not as heavy.

ontext 2+Fowever in some develo&ed %ities li-e ;ondon with a large &o&ulation4 the

number of homeless &eo&le is still e$tremely high. This %ould be due to the governmentalready s&ending a lot in other areas li-e health%are and having insuffi%ient funds tosubsidise &ubli% housing enough. >n other %ities li-e Fong Kong where land is e$tremelys%ar%e4 &ubli% housing is still insuffi%ient and over%rowding in flats is a %ommono%%urren%e. Thus government in these %ases has not led to a better allo%ation ofresour%es.

>n %on%lusion4 the government must %arefully access t"e state o% t"e economyand the

c"aracteristics o% t"e country. >n doing so4 they %an sele%t an a&&ro&riate &oli%y4 or



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%ombination of &oli%ies4 to a%hieve a more effi%ient allo%ation of resour%es.

Level escriptors %or +ssay 1(!)

L5 3ell!develo&ed analysis of how negative e$ternalities lead to mar-et failure4 and

how various measures %an hel& to %orre%t mar-et failure in a mar-et withe$ternalities

Good use of e$am&les and good a&&li%ation of the measures to a %onte$t

5 balan%ed dis%ussion on how the government intervention may or may not lead

to a better allo%ation of resour%es

L2 5deuate analysis of how negative e$ternalities lead to mar-et failure4 and how

various measures %an hel& to %orre%t mar-et failure in a mar-et withe$ternalities

ome use of e$am&les and attem&ts to a&&ly the measures to a %onte$t

Ea$ ;2 for answers that do not address limitations of &oli%ies#governmentfailure

L1 ome -nowledge of what measures a government %an use but does not use

e%onomi% %on%e&ts

u&erfi%ial listing of measures with wea- e$&lanation

>n%orre%t#ina%%urate e$&lanation of measures or %on%e&tual errors

+2 valuative dis%ussion that refers to how a government may or may

not be able to solve mar-et failure based on %riteria e.g. &oli%ies %hosen4%ountry'

+1 u&erfi%ial evaluation of the effe%tiveness of government

intervention4 with no basis for +udgements.

Su**ested Ans4er to Qn 2a)

2

.

a' Using a&&ro&riate e$am&les4 e$&lain why the e$isten%e of negative

e$ternalities and &ubli% goods %auses mar-et failure.

L10M

ntroduction

1 e%ine maret %ailure

;ess than desirable out%ome where resour%es are not used in the most effi%ient way.

Fen%e4 there is allo%ative and &rodu%tive ineffi%ien%ies.


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&

E.PC

.SC

'!antit(

C

Cost, )ene-t

0

.P+.S+

's 'm

(efine negative e$ternalities by ma-ing referen%e to any e.g.: road %ongestion4

smo-ing': e$ternal %ost to /rd &arties who are not dire%tly involved in the &rodu%tion

and#or %onsum&tion of the good. 8or e$am&le4 road %ongestion generates noise and air

&ollution that affe%t the uality of living for residents living near the %ongested roads or

road %ongestion leads to a delay in arrival time for wor- for other road users su%h as

&assengers on &ubli% buses. This %ould lead to a fall in the revenue for firms when the

wor-ers re&ort late for wor-.# mo-ing generates se%ond hand smo-ers whi%h %an %ause

other non!smo-ers to have health &roblems li-e breathing diffi%ulties.

=e%ause of the &resen%e of negative e$ternalities4 there is a divergen%e between &rivate

%osts and so%ial %osts by the e$tent of the e$ternal %osts.

2. $&lain how road %ongestion#se%ond hand smo-e results in negative e$ternalities and

hen%e4 mar-et failure.

(iagram showing so%ially o&timal level of %onsum&tion EBAE=' and the euilibrium

level of %onsum&tion without government intervention E


16/19

?o4 Pu!lic /oods cause marets to %ail:

m&ortant to highlight the non!e$%ludable and non!rival nature of &ubli% goods with the

use of a&&ro&riate e$am&les >t is im&ossible for the &rodu%er to -now where4 when4 how mu%h and who to %harge and

hen%e no &rofits %an be made.

=ut &ubli% goods are vital or essential to the nation g: 3ational "efence, 4olicing for

eeping law and order .et%

10 Good analysis of welfare loss using relevant marginal %ost and benefit

%on%e&ts4 with hel& of a&&ro&riate diagram. Bom&etent e$&lanation with

good des%ri&tion of terms and a %lear understanding of the %on%e&ts

involved..

L2 >& hows understanding the mar-et failure whi%h results in welfare loss

and#or with little e$&lanation

(iagram is drawn but with errors

$am&les are missing but may show some ina%%ura%ies if they are

in%luded4 %on%e&t of e$ternal %ost is not %learly e$&lained.

L1 1>. howed little# some basi% %on%e&ts. Eay %ontain ina%%ura%ies and#or

irrelevant information

Su**ested Ans4er to Qn 2!)

b' (is%uss the various &oli%ies whi%h the inga&ore government ado&ts in

%orre%ting the mar-et failures above.

L1@M

ntroduction

Negative e$ternalities li-e smo-ing o%%urs when there is over %onsum&tion of the use of

%igarettes. >t is again ne%essary to im&lement &oli%ies to redu%e the mar-et failure.#

Traffi% %ongestion o%%urs when there are too many %ars on the road4 given the road

%a&a%ity. Therefore4 it is ne%essary to note that &oli%ies im&lemented to redu%e the

&roblem of traffi% %ongestion must ta%-le the &roblem of %ar ownershi& and %ar usage.

The inga&ore government has im&lemented a range of &oli%ies to ta%-le the &roblem of

smo-ing. These &oli%ies in%lude ta$ation4 moral suasion and edu%ation. # The inga&ore

government has im&lemented a range of &oli%ies to ta%-le the &roblem of traffi%

%ongestion. These &oli%ies in%lude B,4 R< system and im&rovement of the &ubli%

trans&ort system. >t is im&ortant to note that main %ause of inga&ore)s %urrent traffi%

%ongestion &roblem arises &rimarily due to e$%essive %ar ownershi&.



17/19

trac o 3n!m)er o# cars on t*e roa5

costs, )ene-ts

.P+ .S+

.PC

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1 7a,ation

inga&ore has im&lemented various forms of ta$es to %urb the &roblem of %ongestion.

a ;otor


18/19

done through Bertifi%ate of ntitlement B,'4 whi%h are essentially tradable &ermits.

The number of B,s determines the number of %ars on the roads. 5nd this number

de&ends on the annual rate of %ar growth and the number of vehi%les deregistered in the

&revious &eriod.

+valuation

B, is effe%tive in %ontrolling %ar ownershi&. Fowever4 be%ause it %ontrols %ar ownershi&

but not %ar usage4 this means that %urrent %ar owners are not affe%ted by the fall in the

number of B,s issued. 5s a result4 traffi% %ongestion may not be redu%ed if %ar usage

does not fall.

5 mprove pu!lic transport system and road system

3ith the above &oli%ies in &la%e to redu%e %ar ownershi& and %ar usage4 it is therefore

ne%essary for the government to im&rove &ubli% trans&ort so as to ma-e demand for

&rivate trans&ort &ri%e elasti%.

=uild more roads and e$&ressways- widen e$isting roads to ease traffi% flow4

underground tunnels4 et%.

>m&rove the e$isting infrastru%ture through building a more effi%ient &ubli% trans&ort

system. .g.: The Bir%le ;ine in the Eass Ra&id Transit system.

ubsidies for &ubli% trans&ort to -ee& travelling by &ubli% trans&ort affordable

+valuation

The diffi%ulty in im&lementing this &oli%y is to balan%e between &roviding uality &ubli%

trans&ort and -ee&ing %osts low and hen%e4 affordable for users.

?. Eoral uasion# du%ation

Through the use of imageries and advertisement messages4 &ersuade and dis%ourage

the %onsum&tion of %igarettes.

Pu!lic *oods

Government ado&ts a&&ro&riate &oli%ies i.e dire%t &rovision' in %orre%ting non!&rovision

of &ubli% goods

.g. National defense# street lighting

5s a result of the la%- of mar-et4 government &rovision is needed.

valuate a&&ro&riateness of &oli%ies

%onomi% analysis of how the non!&rovision is being addressed

valuation: Ban analyPe amount of deadweight loss before and after government

intervention

(efen%e ta-es u& the largest &ro&ortion of government budget in inga&ore.

Bould be a %ase of government failure4 over! %onsum&tion. Fowever4 situation hasbeen im&roved from a %ase of non!&rovision. >n view of the in%reasing threat ofterrorism Bhanging situations'

Reuires government to %onstantly review their &oli%ies e.g. Byber se%urity are

we s&ending suffi%iently on that



19/19

Conclusion

5s far as dealing with road %ongestion is %on%erned4 the inga&ore government has

im&lemented a &a%-age of &oli%ies that see- to redu%e traffi% %ongestion by addressing %ar

ownershi&4 %ar usage and uality of &ubli% trans&ort.

>n addressing the issue of %om&lete mar-et failure of the &ubli% goods4 su%h as national

defense4 inga&ore government has been &laying a %ru%ial role to enable a %olle%tive

%onsum&tion of the good for the so%iety.

Ans4er Sc"eme

;/ 8or an analyti%al dis%ussion referring to &oli%ies em&loyed by the

inga&ore government with well!develo&ed evaluative %omments.

" 11

;2 Under!develo&ed answer with insuffi%ient de&th in e%onomi% analysis 6

;1 &uttering of &oints 1 @1 8or une$&lained assessment 1 2

2 8or evaluative assessment based on e%onomi% analysis on most

a&&ro&riate &oli%ies.

/ ?


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2014 JC 1 Promos Revision Package_H1_Revision Package 2_ANS (Final)