Answers written in the margins will not be marked. Level 5 Exemplar Section A (44 marks) 1. The following is the advertisement of an online food delivery firm for recruiting riders. Riders Wanted !!! Eam great mon ‘Bring your own equipment ‘High salary for each delivery! A smartphone ‘© Keep 100% tips from customers. _| # A motorcycle with the necessary safety equipment (@) From the viewpoint of the riders, state TWO vantages of the above arrangements. (2 marks) (b) Explain whether the smartphones and motorcycles of the riders are consumer goods or capital goods. (2 marks) (©) After employing more riders, the firm found that its system was overloaded and the marginal product of riders dropped. State the law that explains this phenomenon and briefly explain why such law can bbe applied in this case. (5 marks) a), Tho. vider. howe. vanstable. jacome, ond the, wtb an galled sebth, ill increaee,.. Phete a a ob) Conpital. gods. becmate. Rt. o@. cota s made,...rasourees vied Ae pdt. ot omsamad by rides dixectly weedy li... Shoet ry... ©) Th bas ot Siinshing oufpat fated they os.....eore code. vavinble foctors...oe...odelad fo Fined factors. Fhe. momar... polact..sall.. ete. IROEEE nn Stace, ridersore, variable factors of prockavfon whew the number of vidend... eee iatrtosing fhe. mammal. produsts bE 9S GIO... FR Loy. 6. ep MTS Case, ‘Answers written in the margins ‘Answers writen in the margins will not be marked. 2021-DSE-ECON 2-2 2Answers written in the margins will not be marked. 2. Refer to the following taxi fare arrangement. Original fare (whole day) First 2 kilometres $30 Every subsequent 200 metres 2 ‘Suppose a late-night surcharge of $20 will be added to the original fare on any taxi trips from 1:00 am to 5:59 am. How will this surcharge affect the average travel distance of taxi passengers during late-night? Explain. (4 marks) Act) te” las oF demn) y. tihim tM pre ntrene FAL quantity... demanded . vill degase haldng Techdoy condastt ) vie verso, Vhea a. faved sorchosae, isodded. fo bth long. Axtenct...ond.. Soct.x. distant. chap ok lites aight the peeentont mertare_ in Ped aE sho donne ep nn aot. cha... the. geen, werent th pid ek Longe ditant...thap.s. The... ooltive. pri of long. diatom. fiap.... deerence,..Cn.. fort... 2b... shad dates.) Fase... selva. cate. tomy. BN Taps ant aan AS pn nreselty.. The.ovtene.. Teel dain. patengors ractcave Sony. ete - mbt ‘ . ‘Answers written in the margins will not be marked, 2021-DSE-ECON 2-3 3 ‘Goontothened page > “Answers writen inthe margins will not be marked.ot be marked. WAN Volant vrtile UTE ecizentil hovinontal Answers written in the margins wil 3. | In 1992, Cathay Pacific Airways acquired an-air-catering company which was renamed as Cathay Pacific Catering Services (ELK.) Limited (CPCS). CPCS provided around thirty million meals for various airlines in 2019. From the viewpoint of Cathay Pacific Airways, name the type ofthe above integration and give TWO motives for this type of integration, G marks) Vertiele,.sategnstion jot MOY oon CIMINES. A SO ne Lengar®, os Stable sappy. fhe... production ood... extend... ifs brad tame fet. dndnstiien,. 4. Give TWO reasons to explain why the smartphone market is NOT perfectly competitive. (marks) Sraadt phong.....1maee We lh. cammpetibinn,...omd.. mane pri to. Semadlghione.. compen) salle. dveativennarEo....promitin The” podut ok smartphne...oalet.2..Retrogenten..... Dect sonatghunt....carpary ral o fet. dePbertnh. Type. ak. a ee a er ‘Answers written in the margins will not be marked. 2021-DSE-ECON 2-4 4 ‘Answers writen in the margins will not be marked.Answers written in the margins will not be marked. 5. Mr Chan, a Hong Kong retired footballer, was employed as a consultant by a football club in the United Kingdom in January 2020. Seven months later, he quitted his position and returned to Hong Kong. (a) Explain whether the salary received by Mr Chan from the football club in the United Kingdom would be included in the calculation of (gross domestic product (GDP) in Hong Kong, (Q marks) (ii) gross national ineome (GNI) in Hong Kong, G marks) (b) If Mr Chan could choose to receive his salary in either British Pound (GBP) or US Dollar (USD), which currency would you recommend him to choose? Explain your answer. (2 marks) 90M bP 6 AB enFh addi tN aed..by... Hone Keng, resent, rode... oo = iD. Yes, GNE. 3s. GOP =. nat. Bebe att fo. seed ode, Sele.. willbe cowmated os fnctive,..intome. fran otbtand...omd.. te GT. Ho Kong... inert. SD Since he refined a Hen Meany Tse etait cond... Dolley. eens. wander linked esthoons, wate. USD ts tare. Stab. vhi. hee. eed USD. HED. Hocerte GBP. may... opprecie mart. HED Phe eget dao tOblk te + jot be marked. nin the margins ‘Answers wri Answers written in the margins will not be marked. 2021-DSE-ECON 2-5 5 ‘Goontothenextpage >Answers written in the margins will not be marked, 6 ‘The following table shows the balance sheet of a banking system. Assets (§ million) Liabilities ($ mi Reserves 600 | Deposits 1500 Loans 1200 Initially the banks hold excess reserves of $300 million and the public always holds $100 million cas. (0) Find the required reserve ratio, (mark) (8) Suppose the required reserve ratios reduced by 5% and banks lend out al exces reserves, Calelate et my peer ei een Sar wai marks) a). Reqared..ceene. katie. pte tO Ne . = 20h ‘S600. * Cates Sha) = $4 000m b. Meu.mestown dopa New rmatey supply... SHom.an. + $1000 FLD nll “Answers written in the margins will not be marked.Answers written in the margins will not be marked. In a country, most of the prisoners in a correctional institution (2/57) use cigarettes as a medium of exchange, but citizens in society refuse to settle payment by using cigarettes. Apart from not being generally acceptable, explain with TWO reasons why cigarettes are NOT a good form of money in society. (4 marks) jonttton..Lee Snails oe a a sen Caorettes....ont... heteroqontons. 8... fleet... type of. cigunetes, Ihove......difleoot alae. g he aed fe dettrming Pht ale. ok....cigpetttes.. Cigavettes,.owe.nt. davisible, divided, the vale. inst a goed abet ak. Suppose the(gutpui)per unit ofrsourses of Country A and Country Bare as follows. pee Rice (units) Wheat (units) Country A 10 04 OR aus Counay B 6 06 OR 32 Find the range of terms of trade over which exchange between these two countries is mutually beneficial Show your workings. G marks) The. opptanty. cast ok podaieg one cantof thant ia. comnty A as EFS ont of me CR) The appestinntty. cect nk predating one..wanst. ok. wheat am. Confey, Bis Ss Duet ab nu CB) ~ _. : t The. exchonge. ok whewt oy. mofally howafical = ee The teams of tiede ok thew (WRX WS SR Answers writen in the margins will not be marked. 2021-DSE-ECON 2-7 a7 Goontothenestpage > ‘Answers written in the margins will not be marked.Answers written in the margins will not be marked. 9. A -small open economy imports junk food from other countries although such food is also produced by local ‘manufacturers. During economic recession, local people consume more junk food. To improve public health, ‘the government imposes an effective quota on the imported junk food. (a) Explain whether junk food is a normal good or an inferior good in the economy. (2 marks) (b) With respect to the imposition of an effective quota during economic recession, indicate the amount of quota as Qa and the final equilibrium point as E, in Figure 1. (4 marks) Price ($) igure 1: Local junk food market So Ss So: local supply of junk food before recession De: local demand for junk food before recession Pw: world price of junk food 9)... ok ectnun St. END OF SECTION A Answers written in the margins will not be marked, 2021-DSE-ECON 2-8 8 “Answers written in the margins will not be marked.Do not write on this page. Answers written on this page will not be marked. 2021-DSE-ECON 2-9 9 ‘Goontothenetpage >Answers written in the margins will not be marked, Section B (60 marks) 10. Masks have become a daily necessity as it is compulsory for people to wear masks in many public areas. (@) ‘Compulsory mask wearing creates a larger burden to the low-income group than the high-income group.’ Justify the statement. (2 marks) (b) The Government distributed ‘CuMask’ to citizens in Hong Kong for free. Explain whether the ‘CuMask’ is a () free good. (2 marks) (ii) public good (2 marks) To stabilise the supply of surgical masks in Hong Kong, the Government has launched the ‘Local Mask Production Subsidy Scheme’, which provides subsidy to local mask producers. masks will decrease because of the subsidy. (7 marks) (© Withthesid ofa diagram, explain under what condition the total expenditure of congymers on surgical (For simplicity, the subsidy is assumed to be apr unit one.) WY (@ Wearing surgical mask can reduce the chance of contracting diseases for an individual and can prevent spreading diseases to others as well. In terms of externality, explain how the subsidy could improve ‘economic efficiency. (4 marks) BD The ott asl welabvely Drawer 1p... bow clncomn, GOA. EIN, Herons. abe In = inceme Gp Junho ok mage include. higher proprtion te (uw trier group's. invene, Thowedot » com pln? eras wenrng. orate... Atte Darden. thease = incon. greet thhan.. high. calamity “Answers written in the margins will not be marked, Answers written in the margins will not be marked. 2021-DSE-ECON 2-10 10Answers written in the margins will not be marked. BED May. becane.....opprbuniy...cah i inwlved in Be predation yond the resowes ab peda CurMask have alternative 8... Jy. cansuamptig. cot AM AN EIB og Bite. Alto.yif 3... exclndeble oy Lis _oediade,_athes by Senteninn the... gods ) . P . J Sy Py Pa ome ey Aenea... people. sam... tinae, cosy... te ae Liken. greta povibes.tasy ta... leal.ask, peda the Sappl..ill __anerease. Price ill decrease ond qoantily merease Ube the demand 9 taalastie. EAL peecentg. derente price to greatior. Alun the pucentne. macrente.an..quurfty. The. lo ey Jy._...grente.. than, qa “expentne will. decrease.» ortin..y.. the... fatal “Answers written in the margins will not be marked. ‘Answers writen in the margins will not be marked. 2021-DSE-ECON 2-11 i Goontothenetpage >Gonsidtiny .... then vattMowt.... pyment Hh... marginal there will ke Subd ronsspnal goal jtten in the margins will not be marked, ho. did. att... potth. edd potageiny.. geanamele. ebtsci 4). Sositive. ertoerlity. han... people. tet... Wb DQ AEFEES TM BK cca pteplt A a EAR an MO... POOR... Jeo... mesh Tht ate Sagan le serial. tort, deaducight Ios. cAAME ad Inefficiency hw, gortenmneef Provide gop---belvetm....mmaraal....sorial. Ronni. Capt decrease cae Answers written in the margins will not be marked. 2021-DSE-BCON 2-12 “Answers written in the margins will not be marked.Answers written in the margins will not be marked. 1. ‘There exists a deflationary (output) gap in Country F. Figure? Price level 4 Leas, AS) SRAS» (- o <—x ep

Aggregate output no © Yo (a) Define deflationary (output) gap and show the gap in Figure 2. (marks) (6) A natural disaster has stuck Country F. A large numberof factories have closed down temporarily. Many people have lost their jobs and become pessimistic about their future, With the aid of Figure 2, explain why the natural disaster would lead to a wider deflationary (output) ap in Country F. (7 marks) (©) Without using a diagram, explain how the central bank of Country F could use an open market operation to narrow the deflationary (output) gap. (4 marks) 2 A the. short, nggregate.....sapphy....dearease..... ANS... F people. hecama...peasioistic...mbawt ...thete forte. the snvertneat will decrease lending, ote dentate. tin agpsante. demons... Me... gta... cthe....egrtaate..owtpatdeertots. mdi, auch... smelor thon, gotentl..aataat 5p aading. fem. deflatone... gap “Answers written in the margins will not be marked. Answers written in the margins will not be marked, 2021-DSE-ECON 2-13 13Answers written in the margins will not be marked, 6). TR....conbal bank can open...owitet purchase... fhe nogoroenmint. bund ty inte EM anal. apply cthe....nteewt th will deere lending... fa... inchenst 20. Coneamption ound... dnwesimanet 9S... ctMe..oggregate. dommnnd.. Rent... hin... demand. INCOR He. napegate... out... intrest. aera. pronto tatty ae Teflon. gop Bnet... “Answers written in the margins will not be marked, ‘Answers writen in the margins will not be marked. 2021-DSE-ECON 2-14 14-poreus 9q 00 [1m surseU a HY UOHUM stoMsUTY ‘poxseur oq ou jm suiBreur oy UW UaHHIM SIOMSUY ‘Answers written in the margins will not be marked, Goontotenet page 15 2021-DSE-ECON 2-15Answers written in the margins will not be marked. 12. The declining labour force would be one of the problems of Hong Kong in the futur. Source A: Some information about Hong Kong's fertility Broadly speaking, Hong Kong's fertility showed a declining trend over the past three decades, The birth rate was 16.8 per 1000 population in 1981 and 7.7 per 1 000 population in 2017. Source B: Projection of the manpower situation in Hong Kong a Population | Total labour force | Labour force participation rate# (ailtion) (oiltion) %) 2016@ 734 3.62 59.2. 2021 761 3.68 586 2026 73 | 3.59 555 2031 8.00 351 529 [2036 8.4 3.49 517 # labour force participation rate = total labour force / population aged 15 and above @ actual figure Source C: Composition of non-labour force * in Hong Kong in 2016 Others Home-makers 1% 16% J Students f 33%. opulation — total labour force ‘A person who is neither employed nor unemployed would be regarded as outside the total labour force, i.e. non-labour force. ‘Answers written in the margins will not be marked Do 2021-DSP-ECON 2-16 16 we “Answers written in the margins will not be marked.not be marked. Answers written in the margins wi Source D: Highlight of a report on manpower to the Legislative Council | * Te lieve manpower shortage and to supplement skis not really available inthe market, local | employes can import workers through dfient schemes ‘© Forhigher-skilled professionals, the annual number of imported professionals (via different schemes) was 67656 in 2018. ‘+ For lower-skilled workers, employers can import them through the Supplementary Labour Scheme (SLS). Under this scheme, restrictions are placed to protect the local workers. For example, wages of imported workers cannot be lower than the median wage of local workers in such positions. ‘Total number of imported workers under SLS was 3 225 in 2018 and a high portion of them worked in elderly care service industry. * Despite the importation of workers, there were still unfilled vacancies of 2630 in elderly care service industry. ~ J (@) Refer to Source A. In terms of the cost of child-raising, explain the trend of Hong Kong's fertility (2 marks) (b) Refer to Sources B and C. Suggest TWO possible reasons to explain the opposite trends of the projected population and projecied total labour force. (Q marks) (©) Refer to Source D. With the aid of a supply-demand diagram, explain the phenomenon ‘despite the importation of workers, there were still vacancies in elderly care service industry’ (7 marks) (@) Refer to Source D. Assume imported workers will have an inital contract of two years. Which ONE component of the current account of Hong Kong might be affected after the importation of workers? Explain. G marks) Please turn to page 20 to answer Questions 12(¢) & 12(0). OD. Tine. thet ot child vaso needy Le. people an ont fe give bint. inate te give bith decrease leading tes ecininn frend, 1 Stet Yf rennen 2 2...Agt 9) popalation., The. retned te ts reat. faa bith ote. . : Mert... people... tomigrate.. faethe mantis. thas. all. eed Fhe lat... Forte. Qt. poplin... NOLES co not be marked. z £ s z 2 3 £ = 8 3 ‘Answers written in the margins will not be marked. 2021-DSE-ECON 2-17 17 Id »Answers written in the margins will not be marked, Questions 12(¢) & 12(f) are printed on page 20. ct) ae ee Ny Gey S ele. ee ok wth. FER sah otd elon equilib. Pritt shatoge oun The vnpaletn actors... dail. Mores... tsbawe not be marked. Seppo. yn dieetly...anereere.... Howerte the tng 8 til below.eguilibsionn the. quantity demanded id cca til ci Hn... gina... SpE. shortage. deta ot st 9 ve St wan Filled vocameies ta deny. CON... SOO. Indes . 8) Met faster agenda fleas dA i fee... SN. chee MOEA... esl a. dleotae net prone. frno....sbredd.y. Rona. FRE cere xteownf id dearest ‘Answers written in the margins ‘Answers written in the margins will not be marked. 2021-DSE-ECON 2-18 18Answers written in the margins will not be marked, ee Questions 12(e) & 12(f) are printed on page 20. ‘Answers written in the margins will not be marked. ‘Answers written in the margins will not be marked. 2021-DSE-ECON 2-19 19Il not be marked. Answers written in the margins. 12. (cont'd) Forpart(e), candidates are required to present their answers in an essay form. Criteria for marking wil include the use of sources and economic theories, relevant content, logical presentation and clarity of expression. (©) Suppose the Government has two strategies to address the problem of declining labour force. Strategy I: Providing extra childcare service and cash to parents in order to increase the birth rate Expanding the existing schemes in order to import more workers Strategy IL: With reference to Sources A-D and your own knowledge in Economics, discuss the effects of each strategy on the following variables inorder to evaluate the two strategies. ~ aggregate output + government expenditure - average labour productivity (14 marks) (Hint: One ofthe strategies may have different short-term and long-term effects on some ofthe above variables.) (Other than those mentioned in (¢), suggest ONE strategy to the Government to increase the labour force. Briefly explain how it achieves the goal. (2 marks) acco Agyeeages....arstpa = . Tan... Strcteny Ty providing cosh. partatty. will inerente. fie disposed. income cansamption... wilh. Ie. ote norense. tw sayy denmand Hane). the. aap. output... ancareate. a Tn. Long ran goncthe. onlectoe te give, a InGreae Moc AMeetn ON i eh the babe Sol to TR, Se. deren he “hg ra weet Saggy. ieee. NAAM. Ate PBAb cept. $e oye gute. gmp tal nye... len . t Suhuene to. ipet seater. IMMER Fh late pl leading. e 8 NAR iA lm tn gop. pa cote tacts poche. gga ‘Answers written in the margins will not be marked 2021-DSE-ECON 2-20 20 ‘Answers written in the margins will not be marked.Answers written in the margins will not be marked. Government.expenditar Tn... Shebegy, Ly providing, tin chil deawe cash ct pauls. ede Thee... fha..gaveenmtaat..crganditing INURE - a _ rel He. gpa. “ei in... “od th.....attost: ; rane Warng Thatlore. 4 the. _-quvenman wat 908. Te... sped.n ARI apna. tmert Set Rene the gortenmeant ox penditare. pereasa, i Nv Labsoe prdastvit a : a “L shrteyy T . ht (abowe pobatty is....amwt. afer 9. AAAS, nth, a a tha... labor SPP dnhhongy Yona yon The Aen ies {oboe perhatty . _ ee Dy... Stradey) ......panding th - - haber. =Sbka....profetsinnel..ceald..onteense..oxerge... lena prodastvely.. Since. th... profewion..tll he. Aes ovr... capttal high = SEG pe Reson al nore. te Leave. pads Sta. the.,.owerane..luhowe...prodactint.. ngrene. ‘Answers written in the margins will not be marked. Goontothenertpage (2021-DSE-ECON 2-21 21 ‘Answers written in the margins will not be marked,Answers written in the margins will not be marked. Mocdver expanding schtenes. Sor. fa= Sed vert. cold ne wwertnce FUL overage. baba. pind if aan only, Jackenge,. fhe Mabe free os rm them serkiny 19 Lon ctnwme,.varlls.. 9M lelawepadactivty.... omy deren. remnan,..sanchuanaed £)._ Garcenmont can nerente fhe nttaten, ob sete oa cn eenase..@ted peopl. seh. Re teed os. aban, fore Jnnension the... eefiad... Bf HN reduce non babe force ome y .iwurense. bow... firth. J “Answers written in the margins will not be marked. ‘Answers written in the margins will not be marked. 2021-DSE-ECON 2-22 22Answers written in the margins will not be marked. END OF PAPER Sources of materials used in this paper will be acknowledged in the HKDSE Question Papers booklet published by the Hong Kong Examinations and Assessment Authority ata later stage. “Answers written in the margins will not be marked. ‘Answers written in the margins will not be marked, 2021-DSE-ECON 2-23 23Supplementary Answer Sheet Question No. Answers writen in the margins wil ‘Answers writen in the margins will not be marked. ‘Answers written in the margins will not be marked. 2021-DSE-ECON 2-24 24