HKDSE ECONOMICS

Topic B
Firms and Production
Factors of Production

Prepared by Anson YU
 Classwork & Exercises (Multiple Choices)

B4 Factors of Production – Labour Supply

Q1 C Q2 B Q3 B Q4 C

B4 Factors of Production – Labour Productivity

Q1 A Q2 D Q3 B Q4 B Q5 C

B4 Factors of Production – Methods of Wage Payment

Q1 D Q2 A Q3 D Q4 A

B4 Factors of Production – Mobility of Labour

Q1 C Q2 B Q3 D Q4 D Q5 D

B4 Factors of Production – Capital

Q1 B Q2 B Q3 B

B4 Factors of Production – Factor Return

Q1 D

Classwork & Exercises (Structural Questions)

B4 Factors of Production

1. (a) (i) Advantage: (@2; max: 2)

• It improves the work incentive of the manager.
• Any other relevant point

(ii) Advantage: (@2; max: 2)

• It gives a more stable income as the manager still receives a basic salary even if the
business is poor.
• Any other relevant point

2. (a) (i) It increases the geographical mobility, (1)

as workers are more willing to travel to other districts for work. (2)

3. (a) Entrepreneurship, (1)

as he bears business risk and makes business decisions. (1)

HKDSE Economics – Topic (B) Page 2

4. (a) Advantages: (@2; max: 4)
• The owner of the football team can share some business risks with Player B as the former
would make less payment to the latter when no match is played and/or no goal is scored.
• The owner of the football team can have a lower cost of monitoring players’ performance
as Player B would have a higher work incentive in training and in matches.
• Any other relevant point

(b) Professional football players have low occupational mobility, (2)

as their skills are very specific and not easily transferable to other jobs. (1)

5. (a) Land. (1)

It is because it is a natural resource which is a gift of nature. (1)

6. (a) (i) From the viewpoint of the employees: (2)

possibility of getting higher income with more effort and/or better service

(ii) From the viewpoint of the employer: (2)

lower cost of monitoring the performance of the waiters and/or higher incentives for
the waiters to work harder and provide higher-quality service to the customers

7. (a) The geographical mobility of low-skilled workers from the EU would be lowered, (1)
because the visa requirement would increase the cost for those EU workers to go to work (2)
in the UK.

8. (a) Entrepreneurship, (1)

as she bears business risk. (1)

9. (a) The cost of measuring the output of the foreign domestic helpers is too high / the work of (2)
domestic helpers is not standardized.

10. (a) (i) Subsidy:

Labour productivity would rise as improved technology or higher quality of capital (2)
goods would result in an increase in output per unit of labour.

(ii) Importing more workers:

Uncertain. (1)
Labour productivity would increase if the imported workers are more productive on (2)
average than the existing local ones.

11. (a) Advantage:

Cost of measuring output of the employees can be saved. (1)

Disadvantage:
Work inventive may not be high. (1)

(b) Advantage:
Higher output will yield higher income. (1)

Disadvantage:
Income may be unstable. (1)

HKDSE Economics – Topic (B) Page 3

12. (a) The launch of HSR will increase the geographical mobility of workers, (1)
because the transportation network improves. (2)

HKDSE Economics – Topic (B) Page 4