Section A

One or two of your chosen questions must be from this section

1. Rising incomes have seen a rise in demand for luxury hotels, although business and leisure
travellers are increasingly focused on value affordable prices combined with the basic
amenities are what they look out for. Most hotels also offer their own loyalty rewards programs
as a method of improving customer retention.
(a) Explain the factors that can affect price elasticity of demand and cross elasticity of demand
for a product. [10]
(b) Discuss the relevance of demand elasticity concepts to a hotel chain operator. [15]

2. Economies of scale were the main drivers of corporate gigantism in the 20 th century. They
were fundamental to Henry Fords revolutionary assembly line, and they continue to be the
spur to many mergers and acquisitions today.
Adapted from: The Economist
(a) Explain the different types of economies of scale. [10]
(b) To what extent is economies of scale the main consideration to mergers and acquisitions
today? [15]

3. Income inequality in Singapore last year was the lowest in a decade, showing a decrease
in the Gini Coefficient from 0.463 in 2015 to 0.458 in 2016.
Source: The Straits Times
(a) Explain why governments intervene when income inequality and market dominance is
present. [10]
(b) Discuss whether there is a need to make changes to the policies to reduce income
inequality in Singapore. [15]
 Section B
One or two of your chosen questions must be from this section
4. The figure below shows Singapores economic performance in 2013.

Source: The Straits Times

Discuss whether the Singapore government should be concerned about the above scenario.
[25]
5. According to an IMF report, Singapores economy continues to grapple with an ageing
population, tightening of foreign worker inflows and slow productivity growth. This, in addition
to tightening global financial conditions can adversely affect the Singapore economy. There
is scope to strengthen Singapores permanent social insurance arrangements, including the
introduction of a time-bound unemployment insurance, noted the IMF.
Adapted from: The Straits Times
(a) Explain how Singapore would be affected by the above economic conditions. [10]
(b) Discuss whether introducing an unemployment insurance scheme is the best policy to raise
the standard of living of Singaporeans during a gloomy outlook. [15]

6. International trade is the exchange of goods and services between countries. In 2016, world
trade was at $30.98 trillion.
(a) Explain the benefits and disadvantages of international trade. [10]
(b) Discuss the view that government subsidies to domestic industries are the best way to
cope with the challenges of international trade. [15]