KIANGSU-CHEKIANG COLLEGE (SHATIN)

Second Form Test 2015 – 2016

Form Four
Subject: Economics
Time allowed: 1 hour
Date: April 11, 2016
Time: 8:10 a.m. – 9:10 a.m.
Total Marks: 60

Name: ___________________ Index No.: ___________ F. 4___ Econ ___

There are two sections in this paper. Answer ALL the questions.

Section A: (15 marks)

1. More of a good is preferred to less of it necessarily implies

(1) scarcity.
(2) competition.
(3) market price of the good being above $0.
A. (1) only B. (1) and (2) only
C. (1), (2) and (3) D. None of the above.

2. Which of the following regarding free and scarce goods are correct?
(1) Inputs are scarce goods.
(2) Natural resources are free goods.
(3) Outputs are scarce goods.
(4) Free goods are free of charge.
A. (1) and (2) only B. (1) and (3) only
C. (2) and (4) only D. (3) and (4) only

3. Which of the following can show that Hong Kong has the characteristics of a
market economy?
A. Hong Kong’s income inequality is among the most serious in the world.
B. The Hong Kong government increases the supply of land so as to lower
property prices.
C. The elderly can travel on the MTR for $2 because of a government subsidy.
D. Some public housing units are freely traded on the market.

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4. When the price of sheepskin increases, the ___________ mutton will increase.
A. demand for
B. quantity transacted of
C. price of
D. total expenditure for

5. If the MTR increases its fare, the ________ of bus service will _______.
A. supply … increase
B. supply … decrease
C. quantity supplied … increase
D. quantity supplied … decrease
6. William likes drinking Brand A soft drink. No matter how the market price of
Brand A soft drink changes, his total spending on it remains unchanged. From
this, we can conclude that his demand for Brand A soft drink is
A. elastic.
B. inelastic.
C. unitarily elastic.
D. perfectly inelastic.

7. The government offers a fixed amount of education vouchers to students to pay

for the school fees of either whole-day or half-day kindergartens. The school
fee of whole-day kindergartens is higher than that of half-day kindergartens.
Which of the following is the effect of the provision of education vouchers?
A. The number of whole-day kindergartens students decreases.
B. The relative price of whole-day kindergartens decreases.
C. The proportion of whole-day kindergartens students increases.
D. The proportion of half-day kindergartens students increases.

8. Suppose the government of a country raises an effective rent control, i.e., it

raises the maximum rental per square feet that landlords can charge tenants.
Which of the following statements are correct?
(1) Landlords will have higher incentives to rent out their flats.
(2) Landlords will have a higher willingness to spend money on
maintaining the rental flats.
(3) The surplus of rental flats will decrease.
(4) The change in the total rental income of landlords is uncertain; as it
depends on the elasticity of demand for the rental flats in the market.
A. (1) and (2) only B. (1) and (3) only

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 C. (2) and (4) only D. (3) and (4) only

9. The following table shows the demand and supply schedules of good X.
Per unit price ($) 20 22 24 26 28
Quantity demanded (units) 18 16 14 12 10
Quantity supplied (units) 12 13 14 15 16

When the government provides $6 unit subsidy to the producers, which of the
following statements is CORRECT?
A. The total subsidy is $84.
B. The subsidy benefit of consumers is $32.
C. The supply elasticity is larger than the demand elasticity.
D. The new quantity transacted increases by 4 units.

10. Which of the following statements about a private limited company and a
public limited company must be correct?
A. A public limited company has more owners than a private limited company.
B. A public limited company needs to disclose the financial statement but a
private limited companies does not.
C. Both private limited companies and public limited companies can sell
shares to raise capital.
D. A public limited company enjoys more economies of scale than a private
limited company.
11. It is possible for the US government to sue the Standard Chartered Bank for
money laundering because the Standard Chartered Bank
A. enjoys limited liability.
B. is managed by a board of directors.
C. is a legal entity.
D. has separation of management and ownership.

12. Which of the following descriptions about division of labour are correct?
(1) It can increase the competitiveness of goods in the international market.
(2) Firms can save costs on buying producer goods.
(3) It helps shorten workers’ working hours.
A. (1) and (2) only B. (1) and (3) only
C. (2) and (3) only D. (1), (2) and (3)

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13. Study the following information about an economy:
Proportion in gross domestic product (GDP)
Types of production
2010 2015
Primary production 0.20% 0.01%
Secondary production 32.30% 15.29%
Tertiary production 67.50% 84.70%
What can we conclude based on the above table?
A. The production value of the primary sector is lower than that of the
other two sectors in both 2010 and 2015.
B. The secondary sector employs a smaller proportion of the working
population in 2015 than 2010.
C. The tertiary sector employs the greatest proportion of the labour
force in both 2010 and 2015.
D. None of the above.

14. Study the following information about Firm X and Firm Y:

Firm X Firm Y
Number of workers 200 250
Average number of working hours per worker 50 40
Total output (units) 40,000 40,000

Which of the following statements about Firm X and Firm Y is/are correct?
(1) Labour supply of the two firms is the same.
(2) Average labour productivity of the two firms is the same.
(3) Workers in the two firms are provided the same quantity of capital
goods.
A. (2) only B. (1) and (2) only
C. (1), (2) and (3) D. None of the above

15. As a factor of production, capital is different from land because

(1) the demand for capital is a derived demand while that for land is not.
(2) there is a cost of using capital while the cost of using land is zero.
(3) capital is made of scarce resources while land is not.
A. (3) only B. (1) and (3) only
C. (1), (2) and (3) D. None of the above

Section B: (45 marks)

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1. Tommy will give a concert at a community hall which has 500 seats. He
distributed the tickets free of charge. However, only 40 people have accepted the
tickets.
(a) Explain whether Tommy’s concert is a free good. (2 marks)
(b) Due to the poor response, Tommy decides to end the concert one hour
sooner, although he has paid to book the community hall for two hours.
Explain whether his cost of holding the concert will change. (2 marks)
(c) Tommy starts to learn how to compose, write lyrics and play a few musical
instruments. Which type of Tommy’s mobility of labour will change?
Explain how it will change. (3 marks)

2. Paul owns a factory which suffered a great loss last year. Recently, he borrowed
$100,000 from a bank.
(a) What is interest from Paul’s viewpoint? (1 mark)
(b) What is interest from the bank’s viewpoint? (1 mark)
(c) Paul’s friend, Lily says, ‘Paul should not borrow from the bank as he needs
to pay interest, which will worsen the financial position of the factory.’
Explain why Lily may be wrong. (2 marks)

3. Tobacco duty is an indirect tax in Hong Kong. The Financial Secretary has
increased the tobacco duty rate with the aim of discouraging smoking.
(a) An economist stated, “Other things being constant, the rise in the tobacco
duty rate would not effectively reduce the quantity consumed of duty-paid
cigarettes.” Justify his statement WITHOUT using a diagram. (4 marks)
(b) In addition to the rise in tobacco duty, the Customs has made more effort to
prevent the illegal sale of duty-not-paid cigarettes and has cracked down
several illegal sellers. Is it possible that the price of duty-not-paid cigarettes
would decrease? Explain your answer WITHOUT using a diagram.
(4 marks)

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4. The fares of franchised bus services are regulated by the HKSAR Government.
Suppose the supply of such services is perfectly inelastic and fixed. It is
observed that during the rush hours in day time, long queues develop at bus stops.
But later on during midnight, empty seats are often found in buses. With the aid
of a diagram, illustrate the above phenomenon. (7 marks)

5. In the annual general meeting of an automobile sales-related listed company in

Hong Kong, the ordinary resolution of whether to privatize the company was put
to a vote. Explain why a shareholder may vote
(a) for
(b) against
the resolution. (4 marks)

6. The following table shows the labour productivity index (LPI) of Hong Kong
from 2010 to 2014.
Year 2010 2011 2012 2013 2014
LPI* 138.9 144.4 145.7 148.3 153.7
*The LPI is an index that measures changes in labour productivity.
(a) Define the average labour productivity. (1 mark)
(b) Suggest TWO possible reasons for the change in labour productivity in
Hong Kong between 2010 and 2014? (2 marks)

7. (a) Explain which type of production car agents belong to. (2 marks)
(b) Explain which type of factors of production the cars displayed in the
showrooms belong to. (2 marks)
(c) The salespersons in car agents are paid a basic salary plus commission.
From the viewpoint of the owners, explain ONE advantage of using this
wage payment method over the payment method of a basic salary only and
ONE advantage over the payment method of a commission only.
(4 marks)
(d) Suggest ONE fixed factor and ONE variable factor employed by car agents
in the short run. Explain your answer. (4 marks)

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Extra credit question:

8. Suppose the government imposes an effective price floor on agricultural products

and supports the price floor by buying up all surpluses. Explain the effect of the
price floor and price supports on the rental price of agricultural land. (4 marks)

End of Paper

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Name: ______________________ Index No.: ___________ F. 4___ Econ ___

Suggested Answers to F.4 Economics Second Form Test 2015-16

Section A: (15 marks)

1. (1) Scarcity exists whenever we __want more__ than we __have__.

(2) In a __Robinson Crusoe__ economy, no one competes with Robinson
even though scarcity exists.
(3) The market price of an economic good can be zero, e.g., free
__education__, free __wi-fi services__, etc.
So the answer is __A__.

2. (1) Some inputs are free goods, e.g., __air _______.

(2) Some natural resources are scarce goods, e.g.,natural scenery, gold mines.
(3) Outputs must be scarce goods. If outputs are not scarce, no producers
will be willing to use ___scarce resources___ to produce outputs.
(4) As free goods are __enough__ to satisfy all wants, no one is willing to
pay a price for them. They must be free of charge.
So the answer is __D__.

3. (A) Uneven income distribution is not a distinctive feature(特色) of market

economies.
(B), (C) They show government __intervention__ in the market.
(D) Distribution of goods to people who are __willing and able to pay the
market price____ is a distinctive feature of market economies.
So the answer is __D__.

4. If the price of sheepskin increases, __more___ sheep will be killed to provide

sheepskin. Since mutton (羊肉) and sheepskin are in joint supply /
competitive supply / joint demand / competitive demand , the supply of /
demand for mutton will __increase. Hence, the price of mutton will
__decrease while the quantity transacted will __increase. Whether the total
expenditure on mutton will rise or fall depends on the ___elasticity of
demand_____.
So the answer is __B__.

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5. A rise in the MTR fare will decrease the quantity demanded for MTR services.
People will __substitute__ bus service for it. As the __demand for__ bus
service __increases, the price of bus service will __increase. The higher price
of bus service will increase its quantity supplied_/ demanded .
So the answer is __C__.

6. When price increases, total spending will remain unchanged when the
_____percentage increase in price____ equals the ____percentage
decrease in quantity demanded________.
So the answer is __C__.

7. Suppose the value of the voucher (S) provided by the government = $500
School fee of half-day kindergartens (HD) before & after S = $1 000 & $500
School fee of whole-day kindergartens (WD) before & after S = $2 000 & $1 500
Before S, relative price of half-day kindergartens: 1HD = _0.5WD_
After S, relative price of half-day kindergartens: 1HD = _0.33WD_
The relative price of __half-day kindergartens falls, so the proportion of
students of __half-day kindergartens will rise.
As the education voucher decreases the school fee of whole-day kindergartens,
the number of students of whole-day kindergartens will ___rise___.
So the answer is __D__.

8. A rise in the effective rent control will increase the rental price, so
- the quantity supplied of rental flats will __increase.
- the willingness to maintain the rental flats will __increase.
- the surplus / shortage of rental flats will decrease.
- the quantity transacted of rental flats will __increase (to Qs2). The total
rental income will __increase when both price and quantity transacted
__increase.

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 Rental price S

New shortage

P2 price ceiling 2
+P1 price ceiling 1
D
0 Qs1 Qs2 Qd2 Qd1 Q
old shortage
So the answer is __A__.

9. Per unit price ($) 20 22 24 26 28

Quantity demanded (units) 18 16 14 12 10
Original quantity supplied (units) 12 13 14 15 16
New quantity supplied (units) 15 16 - - -

Original equilibrium price = _$24_

Original equilibrium quantity = _14 units_
New equilibrium price = _$22_
New equilibrium quantity = _16 units_
(A) Total subsidy = _$(6  16)__ = _$96_
(B) Consumers’ subsidy benefit = _$[(24 – 22)  16]__ = _$32_
Producers’ subsidy benefit = _$96 – $32_ = _$64_
(C) As producers’ benefit is __larger than__ consumers’ benefit,
the supply elasticity is __smaller than__ the demand elasticity.
(D) The new quantity transacted increases by __2__ (= __16 – 14__) units.
So the answer is __B__.

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10. (A) Though a public limited company can have more owners than a private
limited company, it may not actually have more owners.
(B) All limited companies need to disclose the financial statements to their
owners, though private limited companies need not disclose their financial
information to ___the public__.
(C) All limited companies are allowed to sell shares to raise capital, though
only listed companies can sell shares to ___the public__ to raise capital.
(D) Whether a company enjoys more economies of scale depends on its
__size___ but not its type of business ownership.
So the answer is __C__.

11. Being a legal person, a limited company can be _____sign contracts_____

__own properties__ and ____sue or sued__ in its own name.
So the answer is __C__.

12. (1) Since specialization increases __productivity__ and decreases the cost
of using __capital goods__, it helps lower the production costs and raises
the competitiveness of goods in the world market.
(2) Since each worker __specializes in__ one production process, firms
need not provide a whole set of tools to each worker, so they can save the
costs on buying producer goods.
(3) Specialization increases __labour productivity__. This helps shorten
workers’ working hours because they can produce the same quantity of
output within shorter working hours.
So the answer is __D__.

13. (A) Production value of a primary production in

- 2010 = __GDP in 2010 × 0.2%__
- 2015 = __GDP in 2015 × 0.01%__
(B), (C) There is no information to tell the proportion of labour force
employed by the different sectors.
So the answer is __A__.

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14. (1) Labour supply of Firm X = __200 workers  50 hours__
= _10,000 man-hours_
Labour supply of Firm Y = __250 workers  40 hours__
= _10,000 man-hours__
(2) Labour productivity of Firm X = _40,000 units / (200  50) man-hours__
= _4 units per man-hour_
Labour productivity of Firm Y = _40,000 units / (250  40) man-hours__
= _4 units per man-hour_
(3) There can be other reasons for the same productivity of the two firms.
So the answer is __B__.

15. (1) The demand for all factors of production is called derived demand because
the demand for them is derived from the demand for the __goods and services
they produce____.
(2), (3) Land refers to all __natural__ resources used in production while capital
refers to all __man-made__ resources used in production. Since land is a gift of
the __nature__, there is no cost of __producing__ it. However, there is a cost of
__using__ it. For example, the cost of using a piece of land for farming is the
giving up of building houses.
So the answer is __A__.
Section B: (45 marks)

1a) __No__, because (1)

the concert is _produced from scarce resources that have alternative uses__. (1)

b) __Yes__, because (1)

his __time___ cost of holding the concert will ___fall___. (1)

c) __Occupational__ mobility. (1)

As Tommy acquires more skills, he is __more able__ to change to other
__occupations__. (1)
So his occupational mobility will __increase. (1)

2a) To Paul, the borrower, interest is the ____cost of earlier availability____ (1)
of goods or resources.

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b) To the bank, the lender, interest is the ___compensating for delaying____ (1)
the use of resources.

c) If Paul finds that the __benefit___ of borrowing money, e.g., he can

increase his profit by purchasing more advanced machines for production,
is ___greater than__ the interest payment/cost, he should borrow money
from the bank. (2014-15 KCCS F.4 Mid-year Exam, Q3c) (2)

3a) The tobacco duty would decrease the supply of duty-paid cigarettes.
Their price will ___rise__ and this will __reduce__ the quantity
transacted/demanded. (1)
Since cigarette consumers are __addicted to smoking___ / cigarettes are
__habit-forming___ goods / there are no ___close substitutes___ for
cigarettes, (1)
the demand for them is ___inelastic___. (1)
So the ____percentage increase in price will be greater than the percentage
decrease in quantity demanded________. (1)
In this case, even a huge increase in tobacco duty may not be effective in
reducing the consumption of cigarettes. (2015 HKDSE, Q11c)

b) The HK Customs’ effort will __decrease the ___supply of__ duty-not-paid

cigarettes. (1)
The tobacco duty will __increase the ___demand for___ duty-not-paid (1)
cigarettes, as they are the ___substitutes___ for duty-paid cigarettes. (1)
Since __supply__ falls but __demand__ rises, it is / is not possible that the (1)
price of duty-not-paid cigarettes would decrease. (Adapted from 2015 HKDSE, Q11d)

4. During rush hours, since the regulated fare is ___below the equilibrium__,
a ___shortage___ arises. (1)
During midnight, there are fewer passengers, so the ___demand for___
bus service __decreases. (1)
After the fall in demand, the regulated fare is ___above the equilibrium___,
so a ___surplus___ arises. (1)

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 P D2 D1 S Diagram:

surplus - Vertical supply (1)

P1 - P1 < Pe  shortage (1)
shortage - D (1)
- P1 > Pe,  surplus (1)
0 Qd2 Qs Qd1 Q
(Econschool Journal Nov
issue DSE Exam Practice, Q3)

5a) Reason for a shareholder to vote for privatizing the company:

- As the transfer of shares of private limited companies requires the
___consent of the board of directors_______, the firm would
___face a lower risk of being taken over____.

- As private limited companies need not disclose their accounts to the public,
the firm can keep their __financial condition secret______.
Any ONE point, max. (2)

b) Reason for a shareholder to vote against privatizing the company:

- As private limited companies cannot raise capital ____from the public__,
the firm would have a ___narrower source of capital______.

- As shares cannot be traded ____in the stock market freely_____, the

__liquidity ___ of investment is lower. (2014-15 KCCS F.4 Form Test 2, Q4)
Any ONE point, max. (2)

6a) Average labour productivity = __output per man-hour____ (1)

OR: output per working hour
OR: total output ÷ (number of workers × number of working hours)

b) Reasons for a higher average labour productivity:

- __Better production methods__
- __Better production technology / capital goods__
- __Better / more training__
- __Better management__

14
 - __Improved public health__
Mark the FIRST TWO points only, 1 mark each, max. (2)

7a) __Tertiary__ production because (1)

__services__ are provided by the car agents. (2004HKCEE, Q9d) (1)

b) __Capital__ because (1)

the cars are __man-made resource for production__. (2004HKCEE, Q9e) (1)

c) Advantage of this payment method to the owners over the payment

method of a basic salary only:
- As workers can earn more commission when they work harder, it
increases their __working incentive__. So the owners can save the
cost of __monitoring the workers___. (2)
- It helps to spread the ___business risk__ between the employers and the
Max. employees because wage payment will be __reduced automatically____
(2) when business is not good.
(2)
Advantage of this payment method to shop owners over the payment
method of a commission only:
- The basic salary raises __workers’ sense of belonging__ and helps to
__maintain a team of staff__. So the employers can save the cost of
____staff recruitment______. (Adapted from 2010HKCEE, Q3)

(2)

d) Example of fixed factor: ___shop premises / entrepreneurship___, (1)

because it is a factor that __does not vary in quantity with the output level__. (1)

Example of variable factor: _electricity / labour of part-time salesmen__, (1)

because it is a factor that __varies in quantity with the output level_____. (1)

Extra credit question:

15
8. The effective price floor and price supports would __increase__ both the
__price__ and __quantity transacted__. (1)
As producers can earn _more total revenue__ from producing agricultural
products, ___more___ people would be attracted to grow agricultural
products. (1)
The __derived demand for___ agricultural land would __increase__. (1)
Hence, the rental price of agricultural land would __increase__. (1)
Note:
Agricultural products Agricultural land
surplus purchased by P
the government
P D1 D2 S
P2
Pf S
P1
Pe TR

D
0 Q
0 Qd Qe Qs Q

It is the size of one's will which determines success.

http://hd.stheadline.com/news/columns/417/20160317/434838/

巴士的點評 —— 人機大戰之考 5** 攻略

人機圍棋大戰落幕，谷歌的 AlphaGo 人工智能電腦完勝人腦。我

們之前詳細探討過這個人工智能電腦如何模仿人類的神經系統思考，
然後不斷深度學習、超越模仿，發展出圍棋對戰戰略。

了解 AlphaGo 如何發展思維能力，我覺得啟發良多，可以將它的
鍛煉邏輯，應用在人類日常生活中，最現實的課題，不是如何發展出
懂得打麻將的機械人，而是學習 AlphaGo 培養捉棋能力的方式，去提
升應付考試的能力。

　　現今的學生想考試拿到好成績，參加補習班是一條捷徑，但我
認為更加重要的是修正讀書的方法。

　　谷歌的 Deep Mind 團隊設計好 AlphaGo 模仿人類學習的深度思維

學習系統後，第一步是要電腦學習人類過去三千萬種圍棋下子方式；
第二步是自己與自己下棋，培養棋力；第三步是挑戰真人高手，達致

16
頂峰狀態。

　　我認為中學生要應付考試，只要做好第一步，已經有機會拿到
5**。我過去研究過不少名校培養學生應付考試的方式，可以簡單地
總結成兩點：第一是 超前學習 ，第二是 重複操練 。所謂超前學
習，在一般的學校，會一直教應考課程至中學六年班為止。有些名校
則會將課程提前到中五甚至中四完成，這樣壓縮課程，學生自然
比較吃力，但好處是可以騰空最後的一至兩年時間，讓學生去操
練試卷。

　　AlphaGo 要學習的三千萬種下子方式，演變成考試，起碼就是做
好歷年的試題。無數高考尖子講到考試心得的時候，都提到 至少
操練過去十年的試卷 ，當你做熟了過去十年的試卷，考試局
出題的方法，你已經瞭如指掌。

　　對此，我有切身體驗，讀中學時，我雖然是文科生，但數學的水
準不差，但應考時成績只能拿到 C。我事後向拿到 A 的同學請益，他
聽完我的考試方法後哈哈大笑，說我到考試時還逐條數計算，而他們
見到試題時，題目的算法已自動浮現眼前，主要原因是他們已經
做熟了所有試題，題目基本上已很熟悉，雖然數字不同，但解題
方法已瞭然於胸，所以可以很快地完成所有問題，還有很多時間
覆核答案。而我卻逐題思考，作答完畢後已沒有時間覆核了，成績
自然很一般了。

　　我後來讀法律課程時，特意選擇了「法律會計科」去做實驗，我
找齊了過去十年的考卷，重複操練。結果發現這個方法真的可行，我
最終得了當年這一科所有全職及兼讀法律學生的最高成績，獲得了大
學的科目獎學金。

　　由此可見，只要達成 AlphaGo 的第一步，操練了過去的棋局下子

方法（試題），便可以拿到相當高的成績。至於 AlphaGo 第二步培訓，
自己與自己下棋，在日常的學習環境中，不一定可以做得到。不過，
就讀名校有一個好處，就是所有學生的成績都很好，一定程度可以激
發潛能。如果學生能夠找到與自己段數相近的同學，一起組織學習
小組，不斷切磋功力，肯定會提升水平。

　　AlphaGo 的第三步，是與神級對手對戰，向極高難度挑戰，香港
一般沒有這樣的環境，印度卻有這樣的培訓。印度最好的大學是印度

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理工大學（IIT），要考入這間大學，比考入美國麻省理工要難得多。
印度也有一間超強學校叫拉馬努金數學學院，其學生獲 IIT 取錄人數
全印度第一。其教學方式是向最高難度挑戰，學生學習的數學題，不
單止是高考或者大學數學題，甚至會將大學教授刊登在學刊上的論文
的題目，叫學生試做，用以訓練應考的學生。我覺得這種方式可以類
比 AlphaGo 第三步的試練，是 拆解遠比自己水平高難題，
以此提升自己水平 。
　　如果說使用學習培訓 AlphaGo 的第一步，大力操練過去十年試
卷，其實還是一個以考試為本的方式。去到第二步，能夠與大量高
水平的同學互相切磋，已經超越只為考試的範疇。若去到第三步，
與高手過招、比併或者挑戰遠超自己的難題，我覺得已經不是純粹
訓練高分低能的傻瓜，而是直接培養出有頂尖思維能力的人才，
因為他在入大學之前，已經到達甚至超越一個大學生的學術水平。

　　有句老話說，任何事情做超過一萬小時，你便會成為專家。學生
應付考試，如果能夠在幾個關鍵科目，每科用上一萬小時、或者五千
小時去加強鍛煉，要摘星，並不是遙不可及的事情。

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