(2018) A Level H2 Econs Paper 2 Essay Q3

Disclaimer: The answers provided on our website is a 'first draft outline’ version of the answers provided for your convenience.

For the full, finalised answers, please click here to purchase a hard copy of the Comprehensive TYS Answers authored by Mr Eugene Toh and published by SAP. (The page might take awhile to load)

Search for “COMPREHENSIVE ANSWERS TO A LEVEL H2 ECONOMICS YEARLY EDITION” or “9789813428676” to purchase.

3. The planned Cross Island MRT line is expected to cut through part of the Central Catchment Nature Reserve (CCNR). Conversationists have suggested an alternative route which would preserve the CCNR and be available for a much larger number of residents. However, the alternative route would lead to longer journey times, an increase in costs and private land purchases as well as a possibly more difficult engineering task.

(The original source for this question cannot be published due to copyright restrictions.)

(a) Explain what needs to be considered when a government makes rational spending decisions about such projects. [10]

Introduction 

1. The government should consider  

2. Different perspectives 

3. Costs & benefits 

4. Trade-offs 

5. Unintended consequences 

What does it cost? 

1. What is the total monetary cost associated with such a project 

2. What is the expected opportunity cost associated with such a project (trade-off) 

Who benefits and how do they benefit? 

1. Do consumers, producers & the government benefit from the project?  

2. Are the benefits equitably distributed? 

3. How will different parties benefit from such a project? 

What are potential unintended consequences 

1. Presence of externalities such as environmental impacts  

(b) Discuss whether the government should proceed with the proposed alternative route for the Cross Island MRT. [15]

What is the total cost associated with alternative route? 

1. The alternative route involves a higher cost of construction, how much higher will the higher construction costs be? 

2. The alternative route also involves more land acquisition, which means that more residents will be inconvenienced from having to move. At the same time, the government will have to incur a higher cost to compensate these residents from having to move. 

3. There is also a time cost to the alternative route as travel times will be increased from having to take a more circular route 

Who benefits and how do they benefit from the alternative route? 

1. Construction companies would benefit from the bigger contract. Workers also benefit as there will be more job creation. A more significant increase in Government expenditure also has a stimulus effect on the economy —> increase AD more —> increase real national income —> higher economic growth 

2. More residents benefit as the longer route will be able to potentially increase the number of stations and therefore areas served 

3. Less environmental degradation and increased nature preservation for future generations —> increases standard of living 

Is the net benefit to society greater if we go ahead with the alternative route as opposed to the original route? 

1. Are the increased construction costs & land acqusition compensation worthwhile considering the reduced impact to environmental degradation?  

2. The longer travelling time can be justified since a larger number of residents can be served. 

3. The last question will really be, would the increased costs from the alternative route be a fiscal burden and would the economy benefit from a fiscal stimulus in the next few years (or is there a largely inflationary environment?) 

Found our TYS answers useful?

Maximise your A-Level H2 Economics preparation with the ETG A-Level H2 Economics TYS Crashcourse! Perfect for students looking to enhance their skills in both essay and case study analysis, this comprehensive 3-day crashcourse will cover over 60 essay questions and 20 case studies from the A-Level Economics Ten-Year Series. Whether you're attending onsite or via Zoom, our experienced tutors will guide you through the intricate demands of H2 Economics, offering expert feedback and graded answers. For the best economics tuition in Singapore, sign up now to secure one of the limited onsite seats!