HKDSE Economics in Life – Microeconomics 1

Chapter 4 Production and Division of Labour

Exam Kit
Extra practice questions (Suggested answers)

Exam Kit
Chapter 4
Extra practice questions (Suggested answers)

Paper 1 Multiple-choice questions

1. C
2. C
3. C
4. D
5. D
6. C
7. B
8. A
9. A
10. B
11. A
12. D

Paper 2 Short questions and structured/essay-type questions

1.
(a) Consumer goods are goods used for final consumption. (2)
Producer goods are goods used in a production process to produce other goods
and services. (2)
(b) A football can be a consumer good or a producer good, depending on the way it
is used. For example, it is a consumer good if people play football for leisure. On
the other hand, it is a producer good if it is used in a professional football match.
(4)

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HKDSE Economics in Life – Microeconomics 1
Chapter 4 Production and Division of Labour
Exam Kit
Extra practice questions (Suggested answers)

2.
(a) Public goods are goods which are both non-excludable and non-rival in
consumption. (2)
(b) Lighthouse. (1)
It is non-excludable and non-rival in consumption. It is impossible to prevent
others from being guided by the lighthouse. When a vessel has benefited from
the lighthouse, the quantity and quality of the service that are available for others
to enjoy will not be reduced. (2)
OR
any reasonable answer (3)

3.
(a) Yes. (1)
In the process of planting flowers, inputs (e.g. seeds, water, sunshine) are turned
into output (flowers). (1)
(b) No. (1)
It is consumption, not production. No output is produced. (1)

4.
The café is involved in tertiary production. (2)
It provides coffee retailing services to customers. (2)

5.
(a) Primary production. (1)
Raw materials (gold) are extracted from nature. (1)
(b) Tertiary production. (1)
He or she is involved in the provision of services (e.g. protecting citizens). (1)
(c) Tertiary production. (1)
He provides catering services to customers. (1)

6.
(a) Tertiary production. (1)
He provides service to customers. (1)
(b) Division of labour. (1)
Advantages (with explanation):
- choosing the best people do the job
- practice makes perfect
- saving time in training

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HKDSE Economics in Life – Microeconomics 1
Chapter 4 Production and Division of Labour
Exam Kit
Extra practice questions (Suggested answers)

- saving time in moving around different tasks

- possibility of mechanisation
- economy of making use of capital
(Mark the FIRST TWO points only, 2 marks each)

7.
(a) Complex division of labour. (1)
Band members specialises in a particular stage of the production of a good (band
show). (1)
(b) Band members are only trained in the skills required for their jobs, which may
not be applicable to other jobs. If they lose their present jobs, it may be difficult
for them to find another one, which may require other skills. Their risk of
unemployment will increase if the demand for their skills falls. (2)

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