HWA CHONG INSTITUTION

C1 Block Test
Higher 2

CANDIDATE
CT GROUP 17
NAME

ECONOMICS 9757/02
Paper 2 27 June 2017
45 minutes
Additional Materials: Answer Paper

INSTRUCTIONS TO CANDIDATES

Write your name, CT class, question number and name of Economics tutor clearly on every
answer sheet.
Write in dark blue or black pen 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 and tape.
Answer ONE question.

At the end of the examination, fasten the cover page and all answer sheets together.

INFORMATION FOR CANDIDATES

The number of marks is given in brackets [ ] at the end of each question or part question.
You may use a calculator.
You are reminded of the need for good English and clear presentation in your answers.

Cover Page
Question Marks
(Circle the question number)

1/2
25

This document consists of 2 printed pages.

© Hwa Chong Institution 2017 9757 / 02 / C1 Block Test 2017

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Answer ONE question.

1. The global natural gas industry has been plagued by low prices due to massive
supplies from mega-projects and low oil prices. However, there may not be enough
output to meet growing demand in the longer term due to greater affluence, and more
mouths to feed.
Adapted from CNBC News, 17 April 2017

Discuss the relative importance of demand and supply factors and elasticity
concepts in determining the price of natural gas. [25]

2. Recently, Singapore raised tobacco tax by 10 per cent to stem smoking. The Health
Promotion Board is also launching its fourth "I Quit" campaign which encourages
smokers to stop smoking for 28 days. All these come on top of existing regulations on
health warnings on cigarette packaging, and the ban of smoking in certain public
places.
NEA website and Straits Times, May 2014

Discuss the reasons for Singapore government’s choice of policies in correcting

market failure that results from smoking, and whether there is a need for change. [25]

END OF PAPER

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible.
Every reasonable effort has been made to the publisher to trace copyright holders, but if any items requiring clearance have unwittingly been
included, the publisher will be pleased to make amends at the earliest possible opportunity.

© Hwa Chong Institution 2017 9757 / 02 / C1 Block Test 2017

 HWA CHONG INSTITUTION
C1 Block Test
Higher 2

CANDIDATE
CT GROUP 17
NAME

ECONOMICS 9757/01
Paper 1 27 June 2017
1 hour 10 minutes
Additional Materials: Answer Paper

INSTRUCTIONS TO CANDIDATES

Write your name and CT class clearly on every answer sheet.

Write in dark blue or black pen 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 and tape.

Answer all questions.

At the end of the examination, fasten all answer sheets together.

INFORMATION FOR CANDIDATES

The number of marks is given in brackets [ ] at the end of each question or part question.
You may use a calculator.
You are reminded of the need for good English and clear presentation in your answers.

This document consists of 4 printed pages.

[Turn over

© Hwa Chong Institution 2017 9757 / 01 / C1 Block Test 2017

 2

Answer all questions.

Water Woes

Extract 1: Singapore’s S$134m bottled water addiction

In a country where tap water quality far exceeds minimum World Health Organization (WHO) and US
Environmental Protection Agency standards, it may come as a surprise to some that bottled water is a
booming, multimillion-dollar business.

While some of these bottled water products are derived from mineral-rich springs, a significant number
which made up more than half the sales value in Singapore are actually sourced from public water
supplies. Drinking bottled water also meant impacting the environment, from the plastic and energy
required to manufacture and transport bottled water to the plastic waste that is created. For example, 1.5
million barrels of oil are used each year to make bottles for the water industry in the US alone. This is
enough to power 100,000 cars for a year.

A 600ml bottle of drinking water usually retails for about S$0.50 to S$1 and the same amount of tap water
only costs 0.1 cent, making it 500 to 1,000 times cheaper than bottled water. This price differential, while
significant, is not sufficient to motivate consumers to move more to tap water.

The relatively low retail cost of bottled water also appears to be a small price to pay for the convenience
of not having to carry a bottle around to be refilled. In addition, bottled water also appeals to short- or
long-term foreign residents, who just do not have knowledge of, or faith in the potability of tap water
anywhere else, including Singapore.

Even amongst Singaporeans, in spite of awareness of the potability of tap water here, some consumers
have become more concerned about health issues surrounding tap water consumption, such as the
hygiene of the water ducts and pipes. However, PUB has clarified that Singapore has a comprehensive
and rigorous maintenance, servicing and monitoring programme which covers the entire water system,
from reservoirs to waterworks, through the distribution network, to the end consumer’s tap, and that the
pipes used in Singapore’s potable water supply complies with international standards.

POTENTIAL SOLUTIONS

Providing more drinking water fountains - One practical solution is to install more drinking water
fountains. This will help consumers overcome the “yuck factor” of having to fill water bottles from taps in
toilets.

Imposing clear bottled water labelling requirements - Bottled water sold in Singapore - whether locally
packaged or imported - is subject to the Agri-Food and Veterinary Authority of Singapore's (AVA) routine
surveillance and sampling to ensure that food safety standards are met. But a check with AVA revealed
that bottled water manufacturers are not obliged to clearly label the water’s source. More detailed labelling
may make a difference to changing consumer behaviour.

Dispelling myths about tap water and bottled water – A more intensive programme to educate the
public on the 'safeness' of water and why it tastes the way it does and how such tastes can be modified
in the home by the consumer - if necessary - can help move consumers to tap water.

© Hwa Chong Institution 2017 9757 / 01 / C1 Block Test 2017

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Reducing the carbon footprint in bottled water production - Another approach is to accept that
bottled water is a fixture in our modern consumerist society and to find ways to reduce its environmental
impact. Existing technologies already allow for the “efficient production of plastic bottles that require less
materials”, and even edible "bottles".

Changing corporate, institutional and personal behavior - Lastly, experts said the Government can
take the lead by imposing a tax on plastic, or changing procurement practices to stop the serving of
bottled water in public sector entities and in schools.

Source: Channel NewsAsia, 16 December 2016

Table 1: Selected indicators for Singapore

GDP at 2010 market prices Sales value of bottled water
Year Population (S$m) (S$m)
2007 4,588,599 276484.9 98.3
2008 4,839,396 281427.4 102.4
2009 4,987,573 279729.3 104.9
2010 5,076,732 322361.1 108.2
2011 5,183,688 342426.2 114.7
2012 5,312,437 355683.1 119.7
2013 5,399,162 373471.5 125.3
2014 5,469,724 386812.9 131.2
2015 5,535,002 394288.6 133.8

Source: Singstat and Euromonitor International

Extract 2: Water privatisation a worldwide failure

Water privatisation has been politically hot since Britain became the first and only country to sell off its
entire water industry in the 1980s. However research shows that the tide of water privatisation has now
turned. Many cities that rushed to sign 20-year or longer concessions with water companies in
expectation of clean water at a socially acceptable cost have chosen to terminate agreements and return
urban water provision to public control.

A report by the Transnational Institute (TNI), Public Services International Research Unit and the
Multinational Observatory suggests that 180 cities and communities in 35 countries, including Buenos
Aires, Johannesburg, Paris, Berlin and Kuala Lumpur, have all “re-municipalised” their water systems in
the past decade.

Direct experience with common problems of private water management – from lack of infrastructure
investments, to tariff hikes to environmental hazards – has persuaded communities and policymakers
that the public sector is better placed to provide quality services to citizens and promote the human right
to water. Latest figures showed that about 768 million people still lack access to clean drinking water, 2.5
billion people are without safe sanitation and roughly 3.5 million people die annually from water-related
diseases.

© Hwa Chong Institution 2017 9757 / 01 / C1 Block Test 2017

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In the last five years the failure rate of water and sewerage privatisations has increased to 34%, compared
with a failure rate of just 6% for energy, 3% for telecommunications and 7% for transportation, during the
same period.

Privatisation just doesn’t work. Where near-universal access to water has been achieved, it has virtually
always been through a public commitment to build and maintain infrastructure, which represents 75% of
the cost of delivering water to residents. Privatisation invariably results in raised prices, water shutoffs for
those unable to pay and drastic workforce reductions.

Source: The Guardian, 30 January 2015

Questions

(a) Explain the likely value of income elasticity of demand of bottled water based on Table 1.
[2]

(b) Comment on the extent to which the concept of income elasticity of demand can be used
to account for the rise in bottled water sales value in Singapore from 2007 to 2015.
[4]

(c) Explain the likely value of cross elasticity of demand between bottled water and tap water
based on Extract 1. [2]

(d) (i) Explain two sources of market failure which have led to the overconsumption of bottled
water. [4]

(ii) Assess the effectiveness of any two of the solutions proposed in Extract 1 to address
the two sources of market failure identified in (d)(i). [8]

(e) Discuss the factors that a government should consider in deciding to take over the
provision of water and sanitation. [10]

[Total: 30]

END OF PAPER

Copyright Acknowledgements:

Extract 1 ©http://www.channelnewsasia.com/news/singapore/singapore-s-s-134m-bottled-water-addiction/3364034.html

Extract 2 ©https://www.theguardian.com/global-development/2015/jan/30/water-privatisation-worldwide-failure-lagos-world-bank

Table 1 ©www.singstat.gov.sg and www.euromonitor.com/singapore

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible.
Every reasonable effort has been made to the publisher to trace copyright holders, but if any items requiring clearance have unwittingly been
included, the publisher will be pleased to make amends at the earliest possible opportunity.

© Hwa Chong Institution 2017 9757 / 01 / C1 Block Test 2017