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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)

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.

HOW 17 FIXED PRICES OF COACH TICKETS
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:

Alisan $10,807
Express Bus Agencies Association $10,000
Enjoy $23,425
Five Stars $450,207
GR Travel $52,432
Grassland $27,706
Gunung Raya $76,668
Konsortium $337,635
Lapan Lapan $10,000
Luxury $10,000
Nam Ho $10,000
Regent Star $103,875
Sri Maju $24,600
T&L $10,000
Transtar $518,167
Travelzone $10,000
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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Life and How to Survive It

Below is a speech to the graduating class of 2008 at NTU convocation ceremony last week by Adrian Tan, a litigation lawyer and the author of The Teenage Textbook.

I must say thank you to the faculty and staff of the Wee Kim Wee School of Communication and Information for inviting me to give your convocation address. It's a wonderful honour and a privilege for me to speak here for ten minutes without fear of contradiction, defamation or retaliation. I say this as a Singaporean and more so as a husband.

My wife is a wonderful person and perfect in every way except one. She is the editor of a magazine. She corrects people for a living. She has honed her expert skills over a quarter of a century, mostly by practising at home during conversations between her and me.

On the other hand, I am a litigator. Essentially, I spend my day telling people how wrong they are. I make my living being disagreeable.

Nevertheless, there is perfect harmony in our matrimonial home. That is because when an editor and a litigator have an argument, the one who triumphs is always the wife.

And so I want to start by giving one piece of advice to the men: when you've already won her heart, you don't need to win every argument.

Marriage is considered one milestone of life. Some of you may already be married. Some of you may never be married. Some of you will be married. Some of you will enjoy the experience so much, you will be married many, many times. Good for you.

The next big milestone in your life is today: your graduation. The end of education. You're done learning.

You've probably been told the big lie that "Learning is a lifelong process" and that therefore you will continue studying and taking masters' degrees and doctorates and professorships and so on. You know the sort of people who tell you that? Teachers. Don't you think there is some measure of conflict of interest? They are in the business of learning, after all. Where would they be without you? They need you to be repeat customers.

The good news is that they're wrong.

The bad news is that you don't need further education because your entire life is over. It is gone. That may come as a shock to some of you. You're in your teens or early twenties. People may tell you that you will live to be 70, 80, 90 years old. That is your life expectancy.

I love that term: life expectancy. We all understand the term to mean the average life span of a group of people. But I'm here to talk about a bigger idea, which is what you expect from your life.

You may be very happy to know that Singapore is currently ranked as the country with the third highest life expectancy. We are behind Andorra and Japan, and tied with San Marino. It seems quite clear why people in those countries, and ours, live so long. We share one thing in common: our football teams are all hopeless. There's very little danger of any of our citizens having their pulses raised by watching us play in the World Cup. Spectators are more likely to be lulled into a gentle and restful nap.

Singaporeans have a life expectancy of 81.8 years. Singapore men live to an average of 79.21 years, while Singapore women live more than five years longer, probably to take into account the additional time they need to spend in the bathroom.

So here you are, in your twenties, thinking that you'll have another 40 years to go. Four decades in which to live long and prosper.

Bad news. Read the papers. There are people dropping dead when they're 50, 40, 30 years old. Or quite possibly just after finishing their convocation. They would be very disappointed that they didn't meet their life expectancy.

I'm here to tell you this. Forget about your life expectancy.

After all, it's calculated based on an average. And you never, ever want to expect being average.

Revisit those expectations. You might be looking forward to working, falling in love, marrying, raising a family. You are told that, as graduates, you should expect to find a job paying so much, where your hours are so much, where your responsibilities are so much.

That is what is expected of you. And if you live up to it, it will be an awful waste.

If you expect that, you will be limiting yourself. You will be living your life according to boundaries set by average people. I have nothing against average people. But no one should aspire to be them. And you don't need years of education by the best minds in Singapore to prepare you to be average.

What you should prepare for is mess. Life's a mess. You are not entitled to expect anything from it. Life is not fair. Everything does not balance out in the end. Life happens, and you have no control over it. Good and bad things happen to you day by day, hour by hour, moment by moment. Your degree is a poor armour against fate.

Don't expect anything. Erase all life expectancies. Just live. Your life is over as of today. At this point in time, you have grown as tall as you will ever be, you are physically the fittest you will ever be in your entire life and you are probably looking the best that you will ever look. This is as good as it gets. It is all downhill from here. Or up. No one knows.

What does this mean for you? It is good that your life is over.

Since your life is over, you are free. Let me tell you the many wonderful things that you can do when you are free.

The most important is this: do not work.

Work is anything that you are compelled to do. By its very nature, it is undesirable.

Work kills. The Japanese have a term "Karoshi", which means death from overwork. That's the most dramatic form of how work can kill. But it can also kill you in more subtle ways. If you work, then day by day, bit by bit, your soul is chipped away, disintegrating until there's nothing left. A rock has been ground into sand and dust.

There's a common misconception that work is necessary. You will meet people working at miserable jobs. They tell you they are "making a living". No, they're not. They're dying, frittering away their fast-extinguishing lives doing things which are, at best, meaningless and, at worst, harmful.

People will tell you that work ennobles you, that work lends you a certain dignity. Work makes you free. The slogan "Arbeit macht frei" was placed at the entrances to a number of Nazi concentration camps. Utter nonsense.

Do not waste the vast majority of your life doing something you hate so that you can spend the small remainder sliver of your life in modest comfort. You may never reach that end anyway.

Resist the temptation to get a job. Instead, play. Find something you enjoy doing. Do it. Over and over again. You will become good at it for two reasons: you like it, and you do it often. Soon, that will have value in itself.

I like arguing, and I love language. So, I became a litigator. I enjoy it and I would do it for free. If I didn't do that, I would've been in some other type of work that still involved writing fiction – probably a sports journalist.

So what should you do? You will find your own niche. I don't imagine you will need to look very hard. By this time in your life, you will have a very good idea of what you will want to do. In fact, I'll go further and say the ideal situation would be that you will not be able to stop yourself pursuing your passions. By this time you should know what your obsessions are. If you enjoy showing off your knowledge and feeling superior, you might become a teacher.

Find that pursuit that will energise you, consume you, become an obsession. Each day, you must rise with a restless enthusiasm. If you don't, you are working.

Most of you will end up in activities which involve communication. To those of you I have a second message: be wary of the truth. I'm not asking you to speak it, or write it, for there are times when it is dangerous or impossible to do those things. The truth has a great capacity to offend and injure, and you will find that the closer you are to someone, the more care you must take to disguise or even conceal the truth. Often, there is great virtue in being evasive, or equivocating. There is also great skill. Any child can blurt out the truth, without thought to the consequences. It takes great maturity to appreciate the value of silence.

In order to be wary of the truth, you must first know it. That requires great frankness to yourself. Never fool the person in the mirror.

I have told you that your life is over, that you should not work, and that you should avoid telling the truth. I now say this to you: be hated.

It's not as easy as it sounds. Do you know anyone who hates you? Yet every great figure who has contributed to the human race has been hated, not just by one person, but often by a great many. That hatred is so strong it has caused those great figures to be shunned, abused, murdered and in one famous instance, nailed to a cross.

One does not have to be evil to be hated. In fact, it's often the case that one is hated precisely because one is trying to do right by one's own convictions. It is far too easy to be liked, one merely has to be accommodating and hold no strong convictions. Then one will gravitate towards the centre and settle into the average. That cannot be your role. There are a great many bad people in the world, and if you are not offending them, you must be bad yourself. Popularity is a sure sign that you are doing something wrong.

The other side of the coin is this: fall in love.

I didn't say "be loved". That requires too much compromise. If one changes one's looks, personality and values, one can be loved by anyone.

Rather, I exhort you to love another human being. It may seem odd for me to tell you this. You may expect it to happen naturally, without deliberation. That is false. Modern society is anti-love. We've taken a microscope to everyone to bring out their flaws and shortcomings. It far easier to find a reason not to love someone, than otherwise. Rejection requires only one reason. Love requires complete acceptance. It is hard work – the only kind of work that I find palatable.

Loving someone has great benefits. There is admiration, learning, attraction and something which, for the want of a better word, we call happiness. In loving someone, we become inspired to better ourselves in every way. We learn the truth worthlessness of material things. We celebrate being human. Loving is good for the soul.

Loving someone is therefore very important, and it is also important to choose the right person. Despite popular culture, love doesn't happen by chance, at first sight, across a crowded dance floor. It grows slowly, sinking roots first before branching and blossoming. It is not a silly weed, but a mighty tree that weathers every storm.

You will find, that when you have someone to love, that the face is less important than the brain, and the body is less important than the heart.

You will also find that it is no great tragedy if your love is not reciprocated. You are not doing it to be loved back. Its value is to inspire you.

Finally, you will find that there is no half-measure when it comes to loving someone. You either don't, or you do with every cell in your body, completely and utterly, without reservation or apology. It consumes you, and you are reborn, all the better for it.

Don't work. Avoid telling the truth. Be hated. Love someone.

You're going to have a busy life. Thank goodness there's no life expectancy.