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papers_econ1001_291203 - Explain What are the differences...

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THE UNIVERSITY OF HONG KONG School of Economics & Finance 2003-2004 1st Semester Examination Economics: ECON1001C&D Introduction to Economics lC&D Dr J T L Chan December 29,2003 9:30- 1 1 :30a.m. Candidates may use any self-contained, silent, battery-operated and pocket-sized calculator. The calculator should have numeral-display facilities only and should be used only for the purposes of calculation. It is the candidate’s responsibility to ensure that his calculator operates satisfactorily. Candidates must record the name and type of their calculators on the front page of their examination scripts. Answer the followingquestions. Each questioncarriesequal mark. What are the differences and similarities between the law of demand and the consumer demand curve derived from the law of diminishing marginal value? The consumer demand curve will always take the same shape as that of the marginal value curve. Do you agree?
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Unformatted text preview: Explain. What are the differences in the analyses of market price and market output between the demand-supply model and the monopoly model? Explain the (Hicksian) substitution effect and the income effect under the derivation of the money-income-constant demand curve. In particular, explain why there is an income effect when money income is kept constant? Moreover, is there any definite prediction regarding the sign of the slope of the money-income-constant demand curve? If we replace the Hicksian substitution effect by the Slutsky substitution effect, would it make any difference to the derivation of the above demand curve? Is there any definite prediction regarding the sign of the slope of the money- income-constant demand curve? How about the apparent-real-income- constant demand curve? In seelungprediction, which demand curve would you prefer? Explain. - end of paper -...
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