RESTRICTED MUBBXtF gaccR-tcoN IL Ped arkiag Sel Marke 1. (a) the demand for hamburgers is elastic (+ there are substitutes) 2 ~ £ decrease in price ¢ = increase in Qd 3 T Jeceease in expenditure due to price fall ¢ increase Mex 13 Ga expenditure due to increase in quantity 3 Unit Price D | 2 D 9 itty (s) law of diminishiag (marginal) returas 2 he law states that as scrz variable factors ars added sucsesrivel7 te the dined factors, marginal output will eventually diminish. 3 (2) G) tong run nil factors ate variable/the scale of production is “elarged because the employment of all factors is increased 2 (ii) - economies cf scale (without explanation) o = jower cost of keeping reserve for maintenance and operation = management econony I ichaieal economy, i.e., indivisibility, principle | 2@ | Max: 6 of multiples, e.g. 2 van for deliveryiservice - marketing economy > any other relevant point (Mere Listing cf points without elaboration ~ maz : 2 marks. Mark the FIRST TWO points only.) e rates “the manager's output is difficult or costly to seasur work not standardized ~ easy to calculate the wage payment 2@ Max 3 2 = any other relevant poiat (Mark the FIRST point oniy.)RESTRICTED ABD xtF Bxce=RcoN T Man 1. (a) (e) Scheme = the manager has higher incentive to manage the fira - better control of production coat = the manager is sore loyal to the firm 28 = any other relevant point (Mark the FIRST point only:) (i) Lose. the real value of the receipt will decrease during inflation : the cost of supplying the lunch packageawill 2@ increase during inflation (4d) Les the real value of the sum of xoney ond orithe intarest income will decrease during inflation. RreTNIATEN mate h Maxsees (a) () ai) 0) (ce) G@ KREDI ne tee ranrA~i The opportunity cost of ona unit of-clothing is 2 units of toys, while that for toys is ¢ units of clothing. No, we can't + to find out the comparative advantage, one has te compare the opportunity cost of toy production in the Uo3.Av with that in-China (and see whichacust is lower). the principle of comparative advantage iif each country Specializes in producing the good in whichit has jener opportunity cost, then the total output will increase. ‘The opportunity cost of producing clothing: (or toys) in Caine ia the same as that in the U.S.A.,as.a., 1 unit of clothing is exchanged for 2 units of toys. => there is no gain from specialization and trade The new opportunity cost of producing onesunit of clothing in China is 3/2 units of toys which is smafler than that (2 units) in the U.S.A. =) china chould specialize in producing clothing and the U.S.A. should specialize in producing toys. ‘frada between th countries can benefit both. sports 1 pore raw metarials and aachines to China via Hong Kong more Chinese exports via Hong Kong - retraining is required/lack of qualifications, } exserience end skills in sew jobs ~ age problem ; - loss in income earnings = Jicensing requirenents/entrance barriers = lack of information about the job markat = adaptation to new working environment = any other relevant point (Mark the FIRST THREE points only.) Chinese garments more expensive in the U.S.A. G) Gi) more demand for substitutes/South Koreas garments => South Korean garment producers gain lose demand for ER's re-export service and or less demand for bank loans to finance the investment China ft Ma: less denand for HK’s banking service 1 HK's banks lose 1 RESTRICTED AASB P.3 »