2. In the Figure 2, PPFA and PPFB represent the production possibility curves of
Country A and Country B respectively. When the two countries specialize in
producing one good, both countries can produce the same amount of food, but the
amount of clothing
Section A (2 marks)
1. Study the following information about firm A and firm B.
Number of owners
Transfer of ownership
Needs the consent of
According to the above information,
1. Crude oil is used to produce plastic toys. In recent years, the price of crude oil has
increased sharply. With the aid of a diagram, explain under what condition the
total revenue of the toy factories would decrease. (8 marks)
2. More foreign investors
1. The US government is suffering from serious fiscal deficit. Suppose the US
government raises general sales tax rate so as to reduce the fiscal deficit.
(a) With the aid of a diagram, explain how the increase in general sales tax rate
would affect the p
Section A (6 marks)
1) A Mainland accountant is working in Hong Kong on a long-term basis. Which of
the following amounts should be included in the calculation of the balance of
Hong Kongs current account?
(1) the salary he receives from his accounting fi
1. In a secondary school, teachers are responsible for teaching, officers are
responsible for administration work and janitors are responsible for
maintenance and security.
(a) What economic principle is illustrated by this? Give TWO reasons to explain
1. Refer to the following data of Country A and Country B.
Number of workers employed
Number of working hours per worker per day
Units of output produced per day
(a) Which country has a
(a) Consider the market structure of convenience stores in Hong Kong. Give
THREE reasons to explain why the market structure is NOT perfect
competition. (6 marks)
(b) All these convenience stores sell soft drinks. However, identical soft drinks
1. Which of the following is true about the AS-AD model?
(1) Long-run equilibrium implies short-run equilibrium.
(2) An increase in aggregate demand will not affect potential output.
(3) An increase in labour productivity will increase aggregate output an
Section A (1 mark)
1. A public good is
A. A free good that satisfies all human wants.
B. A good that can be used by a consumer free of charge.
C. Converted to private good if it is produced by a private company.
D. A good that can be consumed by an unlimi