Friday, November 20, 2009

2009 'A' Level Paper 2

Section A (Micro):
1. Governments around the world protect consumers against market failure due to market dominance.
a) Analyse with supporting examples, how market dominance might lead to market failure. (10)
b) Assess the extent to which market dominance, rather than any other potential market failure, is the major cause of government intervention in the markets for goods and services within Singapore. (15)

2. A very popular band is due to play one concert at a 5000 capacity venue. The plan is to charge different prices according to the area in which the seat is located.
a) Explain whether this pricing policy could be considered to be an example of price discrimination. (10)
b) Discuss the problems that are likely to be faced in determining the prices to be charged for the seats. (15)

3. There have been large changes in the price of crude oil over the past few years.
Discuss what determines whether consumers or producers are more likely to bear the cost of these oil price changes. (25)

Section B (Macro):

4. The relative importance of the components of the circular flow of income for a small and open economy, such as Singapore, is likely to be different from a large and less open economy, such as the USA.
a) Explain this statement. (10)
b) Assess whether a change in the external value of its currency is more likely to have a larger impact on Singapore or the USA. (15)

5. Economic measures of the Singapore economy for 2007 indicate that GDP was S$243b. The current account on the balance of payments was S$59b in surplus.
a) Explain how you might use GDP and balance of payments data to measure the performance of an economy. (12)
b) Assess whether these economic indicators are the best measures of economic performance and standard of living in Singapore. (13)

6. An economist stated "The trend towards globalisation leaves no room for protectionism".
a) Account for the trend towards globalisation. (10)
b) Discuss whether you agree with the economist's view. (15)

Tuesday, November 03, 2009

Coach Operators Fined $1.7m for price fixing

Nov 3, 2009 (Straits Times)

By Maria Almenoar

SIXTEEN coach operators and their association have been fined $1.69 million by the Competition Commission of Singapore (CCS) for fixing the prices of express bus tickets to Malaysia.

They were found to have set a minimum price for tickets and agreed on prices for a fuel and insurance charge (FIC) to the tickets between 2006 and June last year.

Investigations by the Competition Commission of Singapore revealed that the coach operators met regularly with the Express Bus Agencies Association to fix:
  • Minimum selling prices of the coach tickets. As a result, these coach operators adjusted ticket prices to either at or above the minimum level, resulting in higher ticket prices
  • Fuel and insurance charges (FIC) across the board to mark up ticket prices. The charges were revised upwards on various occasions after they were implemented.

During this period, it is estimated that the coach operators pocketed over $3.65 million from the sale of the FIC. The 17 fined are:

  1. Alisan $10,807
  2. Express Bus Agencies Association $10,000
  3. Enjoy $23,425
  4. Five Stars $450,207
  5. GR Travel $52,432
  6. Grassland $27,706
  7. Gunung Raya $76,668
  8. Konsortium $337,635
  9. Lapan Lapan $10,000
  10. Luxury $10,000
  11. Nam Ho $10,000
  12. Regent Star $103,875
  13. Sri Maju $24,600
  14. T&L $10,000
  15. Transtar $518,167
  16. Travelzone $10,000
  17. WTS $13,611
These operators represent 60 per cent of the industry and are estimated to have earned $3.65 million from the surcharge imposed.

The penalties ranged from $10,000 to $518,167, with fines corresponding to the size of the companies. The fines were up to 3.85 per cent of the companies' turnover.

Mr Teo Eng Cheong, Chief Executive of CCS, said: 'Our investigations show clearly that the 16 companies and the association colluded to fix prices. Instead of stopping the collusion, the association facilitated the price fixing through its regular meetings and a rebate system to encourage the sale of FIC coupons.

'When faced with cost increases, businesses should aim to improve productivity or innovate so as to maintain their profitability without increasing prices. Instead, these coach operators took the easier path. They colluded to increase prices and passed on their costs to consumers. Consumers therefore bore the brunt of the cost increases.'

Last year, six pest companies were investigated and fined between $4,300 and $92,600 for bid-rigging.

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