Economics Mock Exam II Paper 2

1a)

120 HKD

1b) The excess demand for 100 HKD is 500 and excess supply for 130 HKD is 250

1c)
SECTION B

a) It is a graph used to measure the output that can be produced typically with 2 products.
b) Land and labor is a factor of production in tourism. There needs to be some sort of land the
tourists can go to and explore for example the Eiffel tower. and there needs to be people
who manage the tourists’ bookings etc.
 c) Doctors have more skill than the nurses, their skills and education are way more demand
than the skills of the nurses and because of this many hospitals will pay high amounts for
doctors. Nurses are important and needed in the medical field however their skills are not
greater than the skills of doctors who spend years in university.
d) Developing countries most often have lower income than developed countries. Most
developing countries also have lower standard of education this means that it will be hard
for them to find good paying jobs which will lower the standard of living. The health care
standard is also lower than developed countries and the life expectancy will be lower.

a) Absolute poverty is when people don’t have basic needs like food, water etc.

b) The government would have to pay fewer people benefits, this can lead to lower taxes or
the money can be spent to improve the community e.g. Building roads. Poverty will reduce
because more people will have income and this will increase the amount of income tax the
government is getting

c) More government spending might lead to more jobs in the public sector e.g. they build a
new public school and they need employees so it will lower the unemployment rate.

d) It mostly will lead to higher living standards however more output can mean the economy
is growing but if it is causing pollution, it will be affecting the living standards of everyone. If
the hours the people work are increasing then the living standard is going to decrease
because they are working most their day. If the additional income is spent or saved and how
the extra income is distributed.

a) rent, interest from past loans.

b) A monopoly only has one supplier which means that they have 100% of the shares of the
market where as a perfect competition has multiple suppliers and shares are split
between each supplier. The monopoly can make the prices really high because that’s the
only option / alternative consumers have where as in a perfect competition market
prices are low because they need to compete with each firm and provide lower prices or
people will choose the other firm.
c) If the demand for the product is high then there will be more workers employed. If skills
required are rare / low in supply and demand for product is high then demand will also
increase. If the job is labor intensive then demand for it will be higher too. If the wage
rate falls then demand will increase.
d) The competition for the firm will decrease this can mean that they can make the product
higher quality and make the price higher which will increase revenue. They will also have
higher market share. More ideas will be shared between the business and can benefit
the business in some way.