1 霹雳怡保培南独立中学 SM POI LAM (SUWA) IPOH FINAL EXAMINATION 2023 ECONOMICS PAPER 2 DATE: 9 TH NOV 2023 (THURSDAY) TIME: 1325 - 1540 (2 HOURS 15 MINUTES) NAME: _________________________ REG. NO: ___________ CLASS: S1 LI / S1 ZI READ THESE INSTRUCTIONS FIRST This paper consists of four questions. Answer all the questions. Write your answer on the test pad given. Do not use staples, paper clips, highlights, glue or correction fluid. Write in Blue or Black pen only. You may use non-programmable calculator. The total mark for this paper is 90. DO NOT TURN OVER THIS PAGE UNTIL YOU ARE TOLD TO DO SO This paper consists of 4 printed pages Prepared by: Checked by: ….…………………. ….………………… ( MR.ANBARASAN ) ( MR.MOGANRAJ )
2 Section A Read the source material carefully before answering Question 1. Source material: Big Four Accounting Firm Big Four Accounting Firm advising companies on their financial advices and undertake legal work in drawing up contracts. They work in accounting firm and in large companies including commercial banks. In a commercial bank, a professional bodies may undertake legal work on, for example, the setting up a new companies financial informations, a registration process or on the relatable documentations to the bank's shareholders. Big four accounting firm's employees’ wages are high in comparison to the wages paid in most other countries. In 2016 the average wage received by a US accountant was $120 000 a year. This compared with an average of $30 000 a year in Nepal, for example. Some experienced financial advisors working for top four accounting firms and for multinational companies may earn more than $300 000. The average wage for US corporate accountant has, however, not changed much in recent years. Indeed, it did not increase in 2016. The number of accounting school graduates has been increasing in the country for some time. In recent years, there has also been an increase in financial work with more mergers taking place and more financial advisories being brought against firms. While the average wage paid to chartered accountants in the USA did not rise in 2016, the average bonus paid to chartered accountants did. Bonuses paid to US corporate lawyers can vary significantly from year to year. They rise when firms' profits are increasing and when it is considered that the productivity of the chartered accountant is increasing. The average wage of a chartered accountant in the UK in 2016 was $80 000. In the UK, as in other countries, the average wage a worker receives is influenced by the qualifications she or he possesses. The chart shows the average hourly wage rate for workers with different qualifications in the UK in 2016. 0 2 4 6 8 10 12 14 16 18 20 Hourly wage rate ($) No Qualification GCSEs A Levels Degree
3 Answer all parts to Question 1. Refer to the source material in your answers. 1 (a) Identify an example of a horizontal merger. (1) (b) Calculate, in percentage terms, how much more on average chartered accountants earned in the USA than in India in 2016. (2) (c) Explain one function of a commercial bank. (2) (d) Analyse, using a demand and supply diagram, one possible reason why the average wage of US chartered accountants did not increase in 2016. (5) (e) Explain why US firms prefer to pay bonuses rather than raise the wages of chartered accountants. (4) (f) Analyse the relationship between qualifications and the average hourly wage rate. (4) (g) Discuss whether or not a firm will benefit from its workers' specializing. (6) (h) Discuss whether or not higher wages in the USA will result in Indian chartered accountants moving to the USA. (6)
4 Section B Answer all questions. Each question is introduced by stimulus material. In your answers you may refer to the material and/or to other examples you have studied. 2 Air-India is a state-owned airline. Most airlines are, however, in the private sector and the prices they charge move between equilibrium and disequilibrium as a result of changes in market forces. The price elasticity of demand for air travel differs from other forms of transport. (a) What is meant by market forces? (2) (b) Explain the difference between an equilibrium price and a disequilibrium price. (4) (c) Analyse why different products have different price elasticities. (6) (d) Discuss how useful knowledge of price elasticity is to an airline company. (8) 3 Recent years have seen a number of mergers in food processing firms throughout the world. In 2015 two large US food processing firms, Kraft Foods and H.J.Heinz, merged to form the Kraft Heinz Company. It was hoped that the merger would reduce average fixed cost. The food processing industry is growing at a rapid rate and becoming more capitalintensive. These changes are having an impact on the profits of the firms in the industry. (a) Define average fixed cost. (2) (b) Distinguish between a horizontal merger and a vertical merger and give an example of each. (4) (c) Analyse three causes of an increase in demand for capital goods. (6) (d) Discuss whether or not the growth of an industry will increase the profit earned by the firms in the industry. (8) 4 The unemployment rate in Sri Lanka fell between 2015 and 2016 while its inflation rate rose. Government spending increased over the period and it introduced a number of policy measures designed to increase the incentive to work. (a) Identify two measures of unemployment. (2) (b) Explain how a government could increase the incentive to work. (4) (c) Analyse why a fall in unemployment may be accompanied by a rise in inflation. (6) (d) Discuss whether or not an increase in government spending will cause inflation. (8) - ALL THE BEST -
