mock2.pdf - DSE Economics – Paper 2 by Raymond Kwok 2013-DSE ECON PAPER 2 HKDSE Mock Examination 2013 Economics Paper 2 by Raymond Kwok This paper

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Unformatted text preview: DSE Economics – Paper 2 by Raymond Kwok 2013-DSE ECON PAPER 2 HKDSE Mock Examination 2013 Economics Paper 2 by Raymond Kwok This paper must be answered in English Time allowed : 2 hours INSTRUCTIONS 1. This paper consists of three sections : A, B and C. 2. Section A contains eight questions. Attempt ALL questions. The whole section carries 50 marks. 3. Section B contains three questions. Attempt ALL questions. The whole section carries 54 marks. 4. Attempt all questions from any ONE of the two electives in Section C. Each elective carries 16 marks. Prepared by Raymond Kwok All Rights Reserved 2013 Not for sale 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok Section A (50 marks) 1. (a) Explain whether interest is the opportunity cost of earlier availability of resources. (2 marks) (b) Suppose a property speculator purchased a luxury apartment and borrowed a mortgage loan from a financial institution. However, the market value of the apartment fell by half one year after the purchase. Explain whether the interest already paid on the mortgage loan would affect the speculator's decision on keeping or selling the apartment. (2 marks) (c) Explain why opportunity cost is defined as the ‘HIGHEST’‐valued option forgone, but not ‘ALL’ options forgone. (3 marks) 2. A series of “Wan Kwong (尹光) As Prestigious As a Dragon 2013 concert” is held in the Hong Kong Coliseum. The number of seats in the Coliseum is fixed. At the current fixed ticket price level, not all the demand for the tickets are fully satisfied. When the organizer schedules extra concerts, there are less people who cannot buy the tickets at the current ticket price level. How will the total sales value of the concert tickets change as a result? Illustrate with the aid of a demand‐supply diagram. (8 marks) 3. From the viewpoint of a small investor, explain ONE advantage and ONE disadvantage of becoming a new debenture holder over a new shareholder of a listed company. (4 marks) 4. A part of the Hong Kong‐Zhuhai‐Macao Bridge (港珠澳大橋) is being built by the HKSAR government to provide road transport among the three places. Explain why to the residents in Hong Kong, such construction may cause a divergence between private and social (a) (b) costs during the construction period of the bridge, and benefits after the construction is completed. Raymond Kwok’s website ‐ (6 marks) Page 1 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok 5. In an economy, initially the public hold $500m cash, and the banks keep $200m excess reserves. The balance sheet of the banking system is as follows : Assets ($m) Liabilities ($m) Reserves 4 200 Deposits Loans 20 000 12 500 Suppose the public withdraws $700m deposits, remits 40% of the withdrawal amount overseas, and puts the rest in the safety box of a licensed bank. What will be the maximum possible amount of money supply of the economy? Show your working. (5 marks) 6. Stamp duty on sale of immovable property in Hong Kong is charged at rates which vary with the amount or value of the consideration as follows: Amount or value of the consideration Rate Exceeds Does not exceed $0 $2,000,000 $100 $2,000,000 $2,351,760 $100 + 10% of excess over $2,000,000 $2,351,760 $3,000,000 1.5% $3,000,000 $3,290,320 $45,000 + 10% of excess over $3,000,000 $3,290,320 $4,000,000 2.25% $4,000,000 $4,428,570 $90,000 + 10% of excess over $4,000,000 $4,428,570 $6,000,000 3% $6,000,000 $6,720,000 $180,000 + 10% of excess over $6,000,000 $6,720,000 $20,000,000 3.75% $20,000,000 $21,739,120 $750,000 + 10% of excess over $20,000,000 $21,739,120 4.25% Explain whether stamp duty on property transaction is a (a) direct or indirect tax, and (2 marks) progressive, proportional or regressive tax. (2 marks) (b) Raymond Kwok’s website ‐ Page 2 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok 7. Suppose the expected inflation rate and the expected real interest rate are 3% and 5% respectively. However, the actual inflation rate turns out to be 6%. (a) Calculate the nominal interest rate. Explain your answer. (2 marks) (b) Calculate the nominal cost of holding cash balance. Explain your answer. (3 marks) (c) Calculate the actualized real return rate of holding interest‐generating assets. Explain your answer. 8. (3 marks) The following table shows the actual output of two countries in producing digital camera and MP3 player. Japan uses 40% of resources to produce digital camera and 60% to produce MP3 player. Taiwan B uses 30% of resources to produce digital camera and 70% to produce MP3 player. Digital camera (units) MP3 player (units) Japan 200 480 Taiwan 240 560 (a) Calculate the opportunity cost for EACH economy to produce 1 unit of digital camera. Show your working. (4 marks) (b) What is the minimum transportation cost per unit of digital camera (expressed in terms of MP3 player) which will result in both countries NOT gaining from trade? Explain your answer. (4 marks) End of Section A Raymond Kwok’s website ‐ Page 3 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok Section B (54 marks) 9. (a) A music production company produces compact discs of pop singers. The company receives 85% while the singers receive 15% of the gross sales revenue. For EACH party, suggest ONE reason why this method of wage payment is advantageous. (4 marks) (b) Explain with TWO reasons why it is more advantageous to run a large instead of a small music production company. (4 marks) (c) With the aid of an AD‐AS diagram, explain how a depreciation of the currency of the trading partners of Economy A affect Economy A’s general price level and the aggregate output in the short run and in the long run. (10 marks) Raymond Kwok’s website ‐ Page 4 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok 10. (a) The national income accounting equation states that Y = C + I + G + NX, where Y, C, I, G and NX stand for national income, consumption, investment, government expenditure, and net exports (i.e., difference between exports and imports) respectively. Define private saving as SP = Y ‐ T ‐ C and public saving (or fiscal budget surplus) as SG = T ‐ G, where T stands for the government’s tax revenue. Define national saving as the sum of private and public savings, so that S = SP + SG. Suppose net external factor income flow and net current transfers are both zero. (i) “When investment exceeds national saving, the capital and financial account is in surplus.” Explain this statement. (3 marks) (ii) Explain the condition under which an economy would balance its budget when it has a trade surplus. (3 marks) (b) The supply of housing under the Home Ownership Scheme (HOS) is fixed. At the current price level, there are unsold housing under the HOS. Suppose the prices of the HOS and private housing both decrease. With the aid of a diagram, (i) explain why there are even more unsold HOS housing, and (ii) indicate the change in the total market value of the HOS housing. (8 marks) (c) Use the quantity theory of money to explain why deflation is possible during monetary (i) contraction. (2 marks) expansion. (2 marks) (ii) Raymond Kwok’s website ‐ Page 5 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok 11. (a) The China Lights and Power Co. Ltd. (CLP) is the only supplier of electricity in Kowloon, the New Territories and outlying islands (except Lamma Island). (i) What is the market structure of electricity supply in the above areas? (1 mark) (ii) Explain with TWO economic reasons why there has been no other firm entering the market. (4 marks) (iii) Explain with ONE reason why, being the only seller of electricity in the above mentioned areas, the CLP has still been spending money on advertisement. (2 marks) (b) (i) Explain whether the cash reserves held by the authorized institutions of an economy are included in money supply. (2 marks) (ii) Suppose in an economy, the amount of currency in public circulation is $400 million, and the money supply M2 is $1,600 million. What is the total amount of deposits in all licensed banks? (1 mark) (c) (i) With the aid of a diagram, indicate how consumers and producers’ surpluses would be affected by the imposition of a per‐unit tax on the sellers of a good. (4 marks) (ii) “In a market economy, there is a trade‐off between income equity and economic efficiency.” Explain the statement. (4 marks) End of Section B Raymond Kwok’s website ‐ Page 6 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok Section C (16 marks) Elective 1 12. (a) Simple monopoly pricing is a common pricing practice adopted by monopolists. With the aid of separate diagrams, identify the elasticity of demand at the price charged by a monopolist adopting simple monopoly pricing under (i) positive (ii) zero marginal cost of production. Also indicate the deadweight loss in EACH of the diagrams (8 marks) (b) Anti‐competitive behaviours and competition policy have recently been a heated debate in society. (i) Explain with TWO reasons why anti‐competitive behaviours may not be desirable from a social viewpoint. (4 marks) (ii) Use TWO economic reasons to explain why competition policy is justified. Raymond Kwok’s website ‐ (4 marks) Page 7 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok Elective 2 13. Figure 1 below shows the production possibility frontier of a country. FF’ is the production possibility frontier of the country. Without trade, the country produces at point A. Y 90 Figure 1 80 70 60 50 40 F 30 20 A 10 F’ 0 10 20 30 40 50 X 60 Raymond Kwok’s website ‐ 70 80 90 Page 8 2012 – 13 版權所有 不得翻印、出售 All rights reserved / No unauthorized photocopying or sale / Raymond Kwok The slope at point A is 4. When trade opens up, 1.5 units of good X can be exchanged for 1 unit of good Y. (a) Without trade, what is the marginal cost of producing 1 unit of (i) good X (ii) good Y for the country? (2 marks) (b) Explain which good the country has a comparative advantage in production. (i) Draw in figure 1 the consumption possibility frontier with trade and label it (2 marks) (c) TT’. (ii) (2 marks) Indicate in figure 1 the production point of the country with trade and label it P. (iii) (2 marks) Indicate in figure 1 the increase in the consumption possibilities of the country after trade. (2 marks) (d) After trade, the ratio of the quantities of good X and good Y consumed is 3:1 in the country. (i) Indicate in figure 1 the consumption point of the country with trade and label it C. (ii) (2 marks) What are the quantities of export and import of the country? Indicate such export and import quantities in figure 1. (4 marks) End of Paper Raymond Kwok’s website ‐ Page 9 導師簡介 系出名門:他於香港大學經濟及金融學院畢業,而於修讀期間在 Microeconomics、Macroeconomics 及張五常教 2012 – 13 版權所有 不得翻印、出售 All rights / No unauthorized photocopying or sale / Raymond Kwok 授親自任教的 The Economics of Property Rightsreserved 等學科均考取優異成績,其後亦於香港大學教育學院接受正統師 資培訓,並獲教育局「註册教師」正規專業教學資格 經驗豐富:他曾於港島某 band 1 中學任教會考及高考經濟科,教學經驗超過二十年,因此他對經濟科公開試的評分準則及 取分竅門可謂暸如指掌 IT 教學:他特別擅長應用資訊科技 (IT) (如 Flash、Authorware、Director、PowerPoint、JavaScript、Excel 等軟件及工 具) 於經濟科的互動教學。教育局曾邀請他設計經濟科的 IT 教材套,派發予全港中學使用 地位肯定:他曾獲教育局、香港經濟日報、香港電腦教育學會、香港教育圖書公司及其他不同辦學團體的邀請,於香港會議 展覽中心、香港中文大學、香港浸會大學、香港生產力促進局、香港教師中心及港、九、新界各區中學,出任多個經濟科研 討會及工作坊的講者。他亦曾往台灣及內地作學術交流,公開教導中、港、台經濟科教師如何有效將 IT 溶入教學 業界推崇:他連續 10 年(03 – 12)獲邀為「香港經濟日報-校園經濟」撰寫會考卷一及高考卷一及卷二乙、丙部建議答案, 及 12 年首屆文憑試經濟科建議答案,行內領導地位毋容罝疑 貼題準確:他於 05 – 08 年為「香港經濟日報 – 校園經濟」、07 – 09 年為「明報」獨家撰寫的會考試題,準確貼中大量題 目,12 年 3 月的首屆文憑試中六 Capture A 課程亦貼中大量題目,使眾多報讀他補習班的同學奪取佳績 334 學制權威:他與香港教育圖書公司合作,為其暢銷的新高中經濟科教科書 ”New Horizon Economics”「新視野經 濟學」作編審、程式顧問及撰寫持續評估試卷套及模擬試卷,並獲邀主持及主講多個為新學制而舉辦的經濟科研討會,協助 現職經濟科教師以適應新高中學制下經濟科文憑試的挑戰 天書作者:由他編寫萬眾囑目、熱切期待,針對新高中文憑試經濟科的參考書及教材套 - ”Economics – Key Notes and Exambuilder” 「經濟 – 強化筆記及應試練習」 與終極天書”Getting 5** in 9 weeks – Economics”「9 星期奪 5**袐笈 – 經濟」經己出版,鞏固並延續其參考書領導地位 培訓專家:培正教育中心曾邀請他負責「中學教師資訊科技教育複修課程——經濟科」的統籌工作及擔任主講導師,指導 教師有效地應用 IT 以教授經濟科,全港眾多中學經濟科教師均曾為郭 sir 的學生,當中包括眾多經濟科教科書、參考書的作 者,以及其他補習社的經濟科導師,可見郭 sir 乃“ trainer of the trainer ”,其專業地位不容罝疑 帶領改革:他於 01 年的資訊科技教育節中,負責經濟科的統籌及擔任主講嘉賓,向全港經濟科教師講解如何有效使用 IT 於教與學之上 講座達人:他在 08 及 10 年於香港會議展覽中心舉辦的香港書展中作大型講座的講者,亦於 09 年應香港青年協會-會考寬 頻及香港教育圖書公司邀請,擔任於香港理工大學香港專上學院舉行的「中五會考應試策略講座」經濟科唯一的講者,使數 百名出席的考生獲益良多;於 11 年 3 月,他更被香港青年協會 – U21 Live 邀請,出席「如何在 334 經濟科取得佳績」綱上 直播講座的嘉賓,向同學以即時互動形式講解奪取優良成績的秘訣,增強首屆文憑試考生的信心與把握; 11 年 11 月亦應 香港教育圖書公司邀請,於大型講座裏向首屆文憑試考生講解試卷特點及奪分關鍵,使眾多同學得益 創新媒體:他於 09 年為 Now TV 獨家撰寫經濟科模擬試卷(卷一),於 10 年為英皇教育撰寫經濟科模擬試卷(卷二),並以視 像方式講解參考答案與答題技巧,使同學可於家中以自選及互動形式學習,令應試表現更上一層樓 營商經驗:他曾是本港某大連鎖式電腦銷售店合夥人,把書中所學實踐於真實營商環境中,亦把營商經驗溶入課堂中,實能 大大提升學生於處理應用題目時的信心與表現 著作暢銷他的著作極受學生歡迎,於 03 – 12 年香港書展中,由香港教育圖書公司出版的必讀參考書剛推出便迅即售罄, 亦為多間中、英文中學經濟科的指定參考天書;可見其市場地位 學生擁戴:多年來經他教導奪 A 的學生,都認為他的教導深入淺出、課堂互動、能一針見血地將重點有效表達出來,教授 的題目分析及答題技巧更可使他們避免犯錯,使他們可以最少的付出得到最大的收穫,於公開考試中表現勝人一籌 老師推介:他創作的題目極受日校老師歡迎,多年來參考他的題目作校內測驗及考試之用的經濟科教師多不勝數,因此郭 sir 的實力可見一斑 持續創新:他曾為「蘋果日報——進取領域」撰寫有關經濟科教學的文章,而現時「香港經濟日報 - 校園經濟」逢星期一 亦會連載由他撰寫的 “文憑試練習室” 專欄 個人網站 Raymond Kwok’s website ‐ email / MSN / Facebook : [email protected] Page 10 ...
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