Christian Alliance S C Chan Memorial College

Final Examination (2017-18)

F.3 Economics

Name:__________________ Class:F.3____ ( ) Date: 14 June., 2018

Time allowed: 1 hour 15 mins.
Marks: 80
Section A. Multiple Choice. (25 marks) Choose the BEST answer.
1. Which of the following statements about wants is correct?
A. Wants must be abstract (抽象).
B. When a want is satisfied, scarcity no longer exists.
C. The existence of wants implies the existence of scarcity.
D. The rich may still have unsatisfied wants.

2. Which of the following would increase Macro’s cost of watching a football match?
A. Macro’s favourite player is injured in the match because of the poor quality of the
football pitch.
B. Macro’s favourite team performs poorly after a new manager takes office.
C. Extra time is needed to determine the winner.
D. Macro gets an autograph (簽名) from his favourite player.

3. The following shows Peter’s preferences for how to spend a weekend.

1st choice: playing with his friends

2nd choice: working as a clerical assistant

Peter chooses to play with his friends, and thus spends $500 over the weekend. If Peter
could have earned $2,500 as a clerical assistant, what is his cost of playing with his
friends?
A. $500 B. $2,500
C. $3,000 D. None of the above.

4. Rebecca’s company provides compensation of $45/hour for overtime work (i.e., after
5 pm). Rebecca originally plans to work until 8 pm today and will then go home for
dinner. However, Stephen calls Rebecca and invites her out for dinner. Rebecca
finally leaves the office at 6 pm and Stephen drives her to a restaurant. What is
Rebecca’s cost of having dinner with Stephen?
A. 0 B. $45
C. $90 D. $135
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5. Keung has two options: travelling to Tibet, or writing a textbook for the new syllabus.
Which of the following will increase his cost of travelling to Tibet?
A. The weather is good in Tibet when Keung visits.
B. Tibet’s scenery is not as beautiful as expected.
C. The demand for textbooks increases tremendously.
D. The government postpones the commencement date (推行日期) for the new
syllabus to 2046.

6. Refer to the following diagram:

Which of the following would lead to the above change in demand for
cross harbour bus services from D1 to D2?
A. an increase in the toll fee for taxis using the cross harbour tunnels
B. an increase in the frequency of cross harbour bus services
C. a fall in the wage rate of bus drivers
D. a fall in the ticket price for Mass Transit Railway services

7. Which of the following is/are held constant along the same demand curve for the
iPhone?
(1) The price of the iPhone
(2) Buyer’s income
(3) The prices of Android phones
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

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8. Which of the following statements about want and demand is correct?
A. Since wants are unlimited, demand is unlimited too.
B. The rich have more wants than the poor.
C. Wants must be supported by purchasing power.
D. Wants exist even if we cannot satisfy them.

9. Shawn has a demand for meals at Pizza Hut. This means

A. he goes to Pizza Hut for dinner every day.
B. he likes meals at Pizza Hut very much.
C. he is willing and able to purchase meals at Pizza Hut over a period of time.
D. he spends a fixed amount of money on meals at Pizza Hut.

10. Natalie said, ‘My quantity demanded for Good X per week is 100 units at a price of
$10.’ If the price is $8, which of the following would happen according to the law of
demand?
A. Natalie’s quantity demanded of Good X would be smaller than 100 units per week.
B. Natalie’s quantity demanded of Good X would be equal to 100 units per week.
C. Natalie’s quantity demanded of Good X would be larger than 100 units per week.
D. Natalie’s quantity demanded of Good X would be smaller than 100 units per year.

11. Study the following table.

Joe’s quantity Ida’s quantity

Price supplied of pencils in supplied of pencils in
a day a week
$2.0 5 pieces 5 pieces
$2.2 7 pieces 7 pieces
$2.4 10 pieces 10 pieces
$2.6 13 pieces 13 pieces

Which of the following statements about the above table is correct?

A. Joe’s supply of pencils is the same as Ida’s.
B. Joe’s supply of pencils is less than Ida’s.
C. Joe’s supply of pencils is more than Ida’s.
D. None of the above

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12. Which of the following diagrams can illustrate the situation regarding the shortage
of a good?

A. Price ($) B. Price ($)

S S
PA

PB
D D
0 Quantity 0 Quantity

C. Price ($) D. Price ($)

S D S

PC

D
0 Quantity 0 Quantity

13. The table below shows the market demand and supply schedules of Coca-Cola
Study carefully and answer the following question.

Quantity demanded Quantity supplied

Price ($ / can)
(cans / period) (cans / period)
10 220 340
8 240 300
6 260 260
4 280 220
2 300 180

What change in price is required when there is an excess supply of 120 cans?
A. Decrease by $4
B. Decrease by $2
C. Increase by $2
D. Increase by $4

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14. When the price of hamburgers increases, the demand for Coke tends to
A. increase because they are substitutes.
B. increase because they are complements.
C. decrease because they are substitutes.
D. decrease because they are complements.

15. Sales of lipstick (唇膏) grow when the unemployment rate is high, although the
supply does not change. Which of the following statements is true?
A. The law of demand does not hold in this case.
B. Lipstick is an inferior good.
C. When the unemployment rate is high, lipstick producers lower prices, and thus the
quantity demanded of lipstick increases.
D. None of the above

16. Study the following advertisement carefully:

Sparta Sportswear
Big Clearance sale!
Up to 30% off #
#
for football boots only

According to the law of demand, the above promotion method can ___________ in the
above sportswear shop.
A. raise the quantity demanded of football boots
B. raise the quantity demanded of football shirts
C. raise the demand for football boots
D. raise the demand for football shirts

17. Which of the following has a supply of smartphones?

A. Tony decides to let his daughter use his old smartphone, rather than selling it.
B. Steve has purchased his first smartphone and he decides to keep using it until it is no
longer usable.
C. Clint has bought a new smartphone. He wants to sell it at $15,000 but he cannot find
buyers.
D. Natasha has bought three new smartphones. She has given two of them to her
friends and decides to keep the last one for herself.

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18. The following shows the effect of a fall in the price of Good X on the demand for
Good Y.
Price Price

D D0 D1
Quantity Quantity
Good X Good Y

Good X and Good Y respectively, are most likely

A. pork and beef.
B. Blu-ray disc players and Blu-ray movies.
C. coffee and tea.
D. bananas and watermelons.

19. Suppose the air pollution problem is getting worse in Yuen Long. The demand for
housing there will
A. increase.
B. decrease.
C. remain unchanged.
D. None of the above

20. Which of the following will lead to an increase in the demand for flats in Tseung
Kwan O?
A. The government plans to expand the landfill near Tseung Kwan O.
B. The MTR Corporation Limited increases the train frequency on the Tseung Kwan O
line.
C. More people think that Tseung Kwan O is too densely populated.
D. Hong Kong’s population decreases.

21. After an advertisement for Brand A sportswear featuring a famous basketball player
has been broadcast, the demand for the sportswear will likely
A. increase.
B. decrease.
C. remain unchanged.
D. None of the above

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22. Study the following supply-demand diagram for luxury cars.
P

S
P2

P1

D2
D1
0 Q
Q1 Q2

Which of the following can explain the above change?

A. The price of steel decreases.
B. Luxury cars are normal goods and people’s income decreases.
C. Diesel price increases.
D. Consumers expect the price of luxury cars to increase.

23. Which of the following changes can result from a decrease in the price of air tickets
to Beijing?
A. Train ticket to Beijing B. Air ticket to Beijing
P ($ / unit) P ($ / unit)

P1

P2

D D2 D1
0 Q 0 Q
Q1 Q2 (units) (units)

C. Accommodation in Beijing D. Taxi service in Beijing

P ($ / unit) P ($ / unit)

D1 D2 D2 D1
0 Q 0 Q
(units) (units)

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24. The following is the demand-supply diagram of a magazine:

Suppose the price of the magazine increases from P1 to P2. Which of the following
statements is INCORRECT?
A. There will be an excess supply of the magazine.
B. The market quantity supplied of the magazine will increase.
C. The market quantity transacted of the magazine will increase.
D. The price of the magazine will face a downward pressure.

25. The following table is the supply-demand schedule a motor car model:

Quantity Quantity
Price ($)
demanded (Units) supplied (Units)
120 000 1 5
100 000 2 4
80 000 3 3
60 000 4 2
40 000 5 1

According to the above schedule, the equilibrium price of the cars of this model is
A. $120 000. B. $100 000.
C. $80 000. D. $60 000.

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Section B. Matching (5 marks) Write your answers on the MC answer sheet.
Match the most appropriate items in column B with each of the descriptions in column
A.

Column A

(1) Bread and jam

(2) The Hong Kong Disneyland and the Shanghai Disneyland

(3) More tourists were attracted go to Shanghai when the Shanghai Disneyland
opened in June, 2016.

(4) There is a buy-one-get-one free promotion of the Häagen-Dazs Stickbar Ice

Cream at 7-11 convenience stores
(5) Blue-ray discs and Blu-ray disc players

Column B

(A) Competitive demand

(B) Joint demand

(C) Increase in demand

(D) Increase in quantity demanded

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Section C. Fill in the blanks. (12 marks)
a.
Change in quantity demanded Change in demand
Caused by a change in the good’s (1)_____ Caused by a change in other (2)_____
Represented by a (3)______ along the same Represented by a (4)______ of the
demand curve entire demand curve
b. Apples and oranges are (5)_______ when they can replace each other to satisfy the same
want. When the price of apples increases, the demand for oranges will (6)_______.
c. Gasoline and cars are (7)_______ as they are used together to satisfy a want. When the price of
gasoline increases, the demand for cars will (8)_______ .
d. Surplus occurs if the price is set (9)_______ than the equilibrium price.
e. When consumers’ income increases, the demand for (10) ______________________ goods will
increase, and vice versa.
f. Demand refers to the quantities of a good a consumer is (11)_______ and able to buy at
(12)_______ price over a period of time.

Section D. Questions. Answer ALL questions. (38 marks)

1. Explain why a good is still scarce even if human wants for it are limited. (3 marks)

2. On new years’ eve, many people go out and celebrate until midnight, so red minibuses usually
provide 24-hour transport services that day. During rush hour, the traffic is so congested that
people who get to work or school by red minibuses may arrive late.
(i) Define opportunity cost. (2 marks)
(ii) Explain how traffic congestion will affect the opportunity cost of passengers taking red
minibus. (3 marks)
(iii) Explain whether the opportunity cost of passengers taking red minibus will change if they feel
so bored in the minibus during travel congestion. (3 marks)

3. (a) State the law of demand. (2 marks)

(b) A drug addict said, ‘I will buy the same amount of heroin (海洛英) regardless(不管)
of the price.’ Is his behaviour consistent with the law of demand? Explain. (4 marks)
(c) Draw the demand curve of heroin based on the situation in (b) (1 mark)

4. The number of mosquitoes is on the rise in many places in Hong Kong during
summer. There are more and more housing estates hire pest control contractors to
eliminate mosquitoes.
With the aid of a diagram, explain how the price and quantity transacted of pest
control services will change. (4 marks)

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5. Fun says, ‘When my wage rate (工資)increases, I will buy more of Good A.’
Keung says, ‘When my wage rate increases, I will buy less of Good A.’
Does Fun’s and Keung’s behaviour violate the law of demand? Explain. (5 marks)

6. Read the following news and answer the questions below. (11 marks)
Local News | 2016-04-01 | Compiled from the Hong Kong Economic Times

Speculators shop all Apple iPhone SE in 3 hours

Yesterday the sale of iPhone SE started simultaneously
in Hong Kong and China. Before Apple IFC Mall opened,
more than 100 people was queuing, while the queue was cut
half an hour later due to a lack of stock. All iPhone SE were
sold after three hours of opening.
Electronic chain stores including Broadway, Fortress
and Suning also started the sale on the same day. Our
reporters visited several stores on Sai Yeung Choi Street
South. All stores sold iPhone SE at official price, yet most
branches only had a few iPhone SE 16GB left in which
most of them were in rose gold. All models were sold out in Fortress stores, yet shop assistants did not know
when would iPhone SE be back in stock.

(a) “Before Apple IFC Mall opened, more than 100 people was queuing, while the
queue was cut half an hour later due to a lack of stock.” With the aid of a diagram,
explain why there are long queues outside the Apple IFC. (6 marks)

(b) With the aid of a diagram, explain how the release of iPhone SE will affect the price
and quantity transacted of smartphones with similar functions. (5 marks)

*7. Bonus Question (Optional) (4 marks)

Suppose the fare of minibus services between Tai Wai and Central increases greatly.
With the aid of a diagram, explain how the demand for and the price of the Shartin-
Central Link (沙中線) services will be affected. (4 marks)

End of Paper
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