Final Exam 2020-2021
1. Which of the following about scarcity is TRUE?
A. Whenever there is a shortage, scarcity will exist.
B. Non-price competition is effective in solving the
problem of scarcity.
C. If the opportunity cost of making a decision
remains unchanged, scarcity will not exist.
D. Scarcity does not exist if the market is cleared.
2. Which of the following is a normative statement?
A. Labour productivity will be raised if more
trainings are provided.
B. Households should choose the option that gives
them the highest level of satisfaction.
C. Minimum wage should be set above the market
clearing level to make it effective.
D. Investors should buy bonds if they are looking for
regular income.
3. David can choose to do one of the following things
during his spare time:
(1) Watch a movie and spending 3 hours, the price of
the ticket is $150
(2) Conducting a 3-hour tutorial, earning $120
(3) Take up a part-time job, earning $60/hour
If he finally chooses to watch a movie, what is his full
cost of doing so?
A. $150
B. $270
C. $330
D. $450
4. Which of the following is an example of price
competition?
A. People queue up outside vaccination centres,
waiting for their turn.
B. Bundled product is sold at a lower average price
than when it is sold separately.
C. Parents give pocket money to their son every
week.
D. Employers select applicants based on their
academic achievement.
5. Suppose the government has decided to change the
usage of a plot of land from constructing a park to
building Temporary Accommodation. Which of the
following statements are correct?
(1) Construction work is an example of secondary
production.
(2) Change in land usage is related to ‘What’ to
produce?
(3) Construction firm engaged in the building of
Temporary Accommodation does not aim at
making profits.
A. (1) and (2) only
B. (2) and (3) only
C. (1) and (3) only
D. All of the above
16-21 Final Exam
6. Which of the following about ‘Interest’ is correct?
A. The existence of interest implies scarcity.
B. People need to bear interest out of uncertainty.
C. Interest is a premium paid to consume a good.
D. Interest is the return of shareholders.
7. Which of the followings are examples of quantity
demanded?
(1) I would like to watch a movie instead of revising
my books.
(2) My salary has increased, I can buy a new smart
phone now.
(3) If I had money, I would travel around the world.
(4) As the supermarket has given a discount on a
brand of yoghurt, I will be able to buy more.
A. (1) and (2) only
B. (3) and (4) only
C. (1) and (3) only
D. (2) and (4) only
8. Which of the following statement is INCORRECT?
A. Owner of a private housing unit has the right to
generate income from his property.
B. If the demand for a good is inelastic, an
improvement in the technology in producing it
will result in a rise in total expenditure.
C. The maximum number of owners is 50 within a
private limited company.
D. To be effective, a price floor should be set above
the market clearing level.
9. Which of the followings will raise the elasticity of
supply of a good?
(1) There is a great number of substitutes available.
(2) Relevant factor inputs are highly mobile.
(3) Firms maintain excess production capacity.
(4) Production of this good does not require any
specific technology.
A. (1), (2) and (3) only
B. (1), (2) and (4) only
C. (1), (3) and (4) only
D. (2), (3) and (4) only
10. Which of the following will increase geographical
mobility of labour within an economy?
A. Trainings are provided to unemployed persons.
B. The government has tightened licensing
requirement in the labour market.
C. The government raises the level of travel subsidy
given to employed workers.
D. Average age of the population is getting higher.
11. Labour productivity will be increased when
A. more workers are being employed.
B. more trainings are being provided.
C. more job vacancies are being created.
D. more machines are becoming obsolete.
1 F.4 Economics
Refer to the following information and answer Q.12-13.
17. Refer to the information of the following table:
Firm A Firm B Factory A B
No. of owners 1 60 No. of workers employed 6 4
Liability condition Unlimited Limited Average working hours 5 10
Receptionist, Total output (units) 45 45
Marketing Which of the following is correct?
Workers employed None
directors, A. Factory A faces a higher labour supply than B.
Clerks etc B. Quality of labour in Factory B is better than A.
C. Factory A enjoys a higher labour productivity
12. Firm A is a _____ whereas Firm B is a _____. than B.
A. private limited company; public limited company D. Factory B has installed more machines than A.
B. sole proprietorship; partnership
C. private limited company; partnership 18. Which of the following about land is CORRECT?
D. sole proprietorship; public limited company A. Geographical mobility of land is rather low.
B. There is no opportunity cost in using land.
13. Which of the followings about the two firms are C. Existence of land is a result of production.
correct? D. The supply of land will never change.
(1) It is easier for Firm B to practise division of
labour than Firm A. 19. Normal lives has been affected by COVID-19 and
(2) Firm A faces a higher tax rate than Firm B. schools are not allowed to arrange face-to-face
(3) There is less scope of enjoying economies of lessons in the afternoon. Teachers often conduct
scale in Firm A. supplementary online lessons in the afternoon. Which
(4) Firm B is engaged in the long run. of the following will affect teacher’s cost of
A. (1) only conducting these online lessons?
B. (2) and (4) only (1) Teachers are not sure whether students have paid
C. (1) and (3) only attention during these lessons as students are
D. (2), (3) and (4) only reluctant to turn on their cameras.
(2) Teachers need to buy and install computer
14. Which of the following will result in an increase in cameras and microphone to conduct lessons.
the price of petroleum? (3) Teachers need to subscribe software licence to
(1) Oil producing countries decide to reduce daily conduct lessons.
production of oil. A. (1) & (2) only
(2) The government has reduced the per unit tax B. (2) & (3) only
imposed on the sales of electric cars. C. (1) & (3) only
(3) With speedy recovery, industrial output has D. All of the above
soared rapidly.
(4) With the introduction of travel bubble, the 20. It has been witnessed that as the economy is badly
number of international flights has increased. affected by COVID-19 and levels of income are
A. (1), (2) and (3) only decreasing, more people will buy take-away food
B. (1), (2) and (4) only from fast food restaurants. Hence, there are always
C. (1), (3) and (4) only empty seats in restaurants. These show that _____
D. (2), (3) and (4) only (1) As there is a risk of contracting COVID-19 by
eating in the restaurant, people behave according
15. Which of the following is NOT a function performed to the law of demand.
by an entrepreneur? (2) Take away food from fast food restaurants is an
A. To bear risks example of inferior good.
B. To make important decisions (3) Seats in restaurants are examples of free goods.
C. To solicit fund for the firm. A. (1) & (2) only
D. To operate machines in a factory. B. (2) & (3) only
C. (1) & (3) only
16. Which of the following is an example of D. All of the above
conglomerate integration?
A. A computer manufacturer takes over a shop 21. Which of the following is NOT an example of derived
selling computers. demand?
B. A supermarket takes over a distributor of snack. A. Construction worker and residential building
C. A computer manufacturer takes over another B. Fertiliser and vegetable
computer manufacturer. C. Drilling machine and crude oil
D. A supermarket takes over a watch factory. D. Pen and pencil case
16-21 Final Exam 2 F.4 Economics
22. At the beginning of the outbreak of COVID-19, it was
witnessed that prices of masks had surged
tremendously and at the same time, the quantity
transacted had not fallen. This was because,
A. the demand for mask was abnormal.
B. the law of demand had been violated.
C. people were irrational.
D. people’s expectation of the future had changed.
23. Refer to the following diagram about the market of a
brand of electronic game gadget, with E0 as the
original equilibrium.
P B. (2) & (3) only
D1 S1
D0 E1 S0
S2
D2
E0 E4
E3
E2
0 Q
Suppose the production cost has decreased and its
competitor has a new and better model on sales in the
market. Hence, the new equilibrium will be
A. E1
B. E2
C. E3
D. E4
24. Suppose a smartphone manufacturer has combined
with an advertising agency. Which of the followings
are correct?
(1) This is a vertical forward integration.
(2) Originally, both of them were tertiary producers.
(3) This move can secure sources of supplies.
A. (1) only
B. (2) only
C. (1) & (3) only
D. (2) & (3) only
25. Labour productivity will be affected by _____
A. the occupational mobility of labour.
B. the size of the labour force.
C. the wage payment system.
D. the type of production the firm is engaged.
26. Initially a country imposes an effective quota on a
product. If the government has decided to increase
the quota volume and more people like to consume
the product, which of the following must be correct?
A. There is an increase in the quantity transacted.
B. There is an increase in the market price.
C. There is an improvement in the product quality.
D. There is an increase in sellers’ total revenue.
16-21 Final Exam
27. The following table shows the production plan of a
firm which employs only two factors.
Worker (units) 1 2 3 4 5
Capital (units) 2 2 2 2 2
Total output
5 11 18 X Y
(units)
Which of the following statements are correct?
(1) The firm is engaged in the short run.
(2) X and Y must be 24 and 29 respectively.
(3) Even if the firm does not produce anything, its
total cost must be positive.
A. (1) & (2) only
C. (1) & (3) only
D. All of the above
Refer to the following information and answer Q.28-29.
Politician
To control air pollution, taxes should be levied on the
sales of motor vehicles that rely on fossil fuels. There
should be less cars running on the road.
Economist
A heavier tax on vehicles will only raise the price by a
large extend, it is expected that there will be a minor
drop in the quantity transacted.
28. Which of the followings are correct?
(1) Politician’s statement is a normative statement.
(2) Economist’s statement is a positive statement.
(3) Air pollution and motor vehicles are examples of
complements.
A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)
29. Which of the followings are correct?
(1) Motor vehicles and fossil fuels are in joint
demand.
(2) According to the economist, the demand for
motor vehicles is inelastic.
(3) Based on the economist’s analysis, it is likely that
consumers will bear a smaller tax burden than
producers of motor vehicles.
(4) Based on the politician’s statement, consumers of
motor vehicles behave according to the law of
demand.
A. (1), (2) & (3) only
B. (1), (2) & (4) only
C. (1), (3) & (4) only
D. (2), (3) & (4) only
30. If a firm is engaged in the long run, _____
A. it will face a higher tax rate.
B. it cannot adjust some of the factor inputs.
C. its average fixed cost will be decreasing.
D. its average production cost will decrease when it
is enjoying economies of scale.
3 F.4 Economics
Final Exam 2019-202
1. Which of the following statements about scarcity 6. Many property agencies hire people to give out
is/are CORRECT? leaflets on prices of apartments for sale on the
(1) Scarcity must exist when resources are streets. These leaflets are ________ as
limited. _______________.
(2) The existence of scarcity implies that there A. free goods ….. they are free of charge.
will be winners and losers in the market. B. economic goods….. they provide more
(3) The problem of scarcity is solved when a information to the potential customers
choice has been made. C. man-made resources …..the potential
A. (1) only customers do not need to pay
B. (2) only D. capital….. help boost the business of the
C. (1) and (2) only property agencies
D. (1), (2) and (3)
7. Which of the following statements about the basic
2. Suppose Miss Lee is considering one of the circular flow model is INCORRECT?
following options: A. The household provides factors of production to
Order of the firm.
Option Details
preference B. The household’s expenditure on goods and
1 Buying a smartphone 1st services may not be the same as the firm’s
Joining a study tour revenue as the household may save.
2 2nd C. The firm provides goods and services to the
to France
3 Watching a concert 3rd household and receives revenue in return.
D. The basic circular flow model shows the circular
Which of the following will lower Miss Lee’s flow of goods and services and the circular flow
opportunity cost of buying a smartphone? of money between the firm and the household.
A. Miss Lee enjoys to use the smartphone to
take photos with family. 8. Which of the following is a positive statement?
B. Price of air ticket to France decreases A. The government should spend more resources on
sharply. combating diseases.
C. There is a strike in France that affects most B. When the scale of production increases, more
of the local traffic. workers should be employed to ease the burden
D. All tickets for the concert have been sold of existing workers.
out. C. Extending opening hour of a restaurant raises the
cost of operation.
3. In a market-oriented economy, D. Using machines to produce goods is the best way
A. there is only price competition. to minimise the production cost.
B. private property rights are well-protected.
C. all resources are privately owned. 9. Which of the following situations violate the law of
D. resource allocation is guided by price signals. demand?
(1) Yu buys sanitizer in large quantities when
4. Compared with an office assistant, a doctor is less sellers increase the prices sharply.
likely to change his occupation because (2) Chung buys a new vacuum cleaner when the
A. the cost of being an office assistant is low. price of an old model increases.
B. the cost for an office assistant to change his (3) Fan must consume a cup of coffee everyday no
occupation is lower than that of a doctor. matter what the price is.
C. a doctor has to spend a long time studying (4) Keung no longer buys pirated products when he
medicine. becomes a teacher after graduation.
D. an office assistant is not a professional. A. (1) and (2) only B. (1) and (3) only
C. (2) and (3) only D. (2) and (4) only
5. On a remote island, there is only one man. Which of
the following is CORRECT? 10. Supply refers to
A. There is no competition for goods and A. the quantities a seller is willing and able to sell at
services. different prices.
B. The man does not have to face the problem of B. the quantities a seller is willing to sell at different
scarcity. prices.
C. The man does not have to make choices. C. the quantities a seller is able to sell at a particular
D. There is no opportunity cost in getting any price.
goods. D. the quantities a seller is willing and able to sell at
a particular price.

16-21 Final Exam 4 F.4 Economics

 15. During Lunar New Year, people like to buy chicken
11. To attract customers, a bakery decides to lower the for celebrations. As a result, the price of chicken
price of all items by 20% after 5:00pm everyday. increases by 30% and the quantity transacted of it
Which of the following concepts can be used to increases from 250,000 to 300,000 per month.
explain the above behaviour? Within the above price range, chicken has an
A. the law of diminishing marginal returns A. elastic demand.
B. the law of demand B. inelastic demand.
C. the law of supply C. elastic supply.
D. economies of scale D. inelastic supply.

12. Study the following table. 16. Study the information below.
Unit price ($) Quantity transacted (units)
2 200
3 300
4 400
5 200 According to the above information, which of the
6 100 following statements is CORRECT?
Suppose the equilibrium price is $4. Which of the A. Firm A pays a lower profits tax rate than firm
following is INCORRECT? B.
A. At $2, the government should impose a price B. Firm A is a legal entity while firm B is not.
floor. C. Firm B’s continuity is more limited than that of
B. At $3, the quantity supplied is smaller than the firm A.
quantity demanded. D. Both firm A and firm B can issue shares to the
C. At $5, the buyers are satisfied. public.
D. At $6, the quantity supplied is greater than the 17. Compared to public enterprises,
quantity demanded.
(1) private enterprises usually have higher incentive
Answer Questions 13 and 14 by referring to the following
to minimise their costs in order to earn higher
information:
profit.
The table below shows the market of good X. (2) private enterprises usually have higher
Unit price Quantity demanded Quantity supplied sensitivity to market changes.
($) in a month (units) in a month (units) (3) private enterprises usually have more stable
source of capital.
1 500 200
A. (1) only
2 450 250
B. (3) only
3 400 300
C. (1) and (2) only
4 350 350 D. (1) and (3) only
5 300 400
Suppose the government provides a per-unit subsidy of 18. Which of the following would NOT affect the
$2 to the producers of good X. average labour productivity?
A. a change in the wage payment system from
13. The new market price would be ____, and the piece rate to time rate
quantity transacted would change by ___ units. B. an improvement in working conditions
A. $3 … 50 resulting from stricter government regulation
B. $3 … 100 C. a raise in government subsidies for continuing
C. $4 … 50 education
D. $4 … 100 D. a decrease in population due to an outbreak of
infectious disease
14. Based on the proportion of tax burden to be shared
by consumers and producers, the elasticity of
supply of good X between the original and new
market prices is implied to be
A. smaller than its elasticity of demand.
B. greater than its elasticity of demand.
C. equal to its elasticity of demand.
D. unity.

16-21 Final Exam 5 F.4 Economics

19. The following diagram shows the relationship B. (1) and (3) only
among each type of production: C. (2) and (3) only
D. (1), (2) and (3)

23. The following table shows the production

information of a firm:
Total product Fixed cost ($) Variable cost ($)
(Units)
1 10 5
P can be ________ and Q can be . 2 10 6
A. oil ... marketing services 3 10 8
B. transportation ... vegetables 4 10 10
C. agricultural products ... raw materials 5 10 12
D. garments ... designing services According to the above information, which of the
following statements is INCORRECT?
20. Which of the following statements about division of A. Total cost is rising.
labour is correct? B. Marginal fixed cost is zero.
A. Division of labour has both advantages and C. The firm is in the short run.
disadvantages to consumers. D. The firm enjoys internal economies of scale.
B. Complex division of labour cannot be practised 24. The following table shows the total product and the
in tertiary production. total cost of a firm after it increases all its input:
C. Division of labour will lower workers’ Total product (Units) Total cost ($)
geographical mobility. 500 3 000
D. Division of labour will not affect the inheritance 1 000 7 000
of traditional craftsmanship. According to the above information, we can
conclude that
21. The following table shows the production A. the law of diminishing marginal returns
information of three firms. applies to the firm.
A B C B. the firm suffers from internal diseconomies of
Number of workers 10 15 12 scale.
(Persons) C. the firm enjoys external economies of scale.
Daily working hours 6 4 5 D. the firm is under the optimal scale.
per worker (Hours)
Total product (Units) 180 120 150 Answer Questions 25 and 26 by referring to the following
information:
According to the above table, which of the following In the past, the Walt Disney Company was only an
deductions is correct? animation studio. Now, it has expanded its business to
A. Labour supply of Firm A is the largest. film and animation production, film distribution,
B. Firm B’s average labour productivity is the television broadcast (e.g. sports channel ESPN) and
lowest. theme parks.
C. Firm C may provide better welfare than Firm A
does. 25. Since its establishment, the Walt Disney Company
D. Firm C’s working environment is better than has involved in ___________ expansion.
Firm A. A. Forward
B. Lateral
22. Study the following information: C. Conglomerate
D. all of the above

26. The possible motives for the above expansion do

NOT include
A. enjoying external economies of scale.
B. ensuring sufficient market outlets.
H Broadband Company changes its wage payment C. using the existing goodwill to expand business.
method from piece rate to the above probably D. diversifying business and investment risk.
because this
(1) can lower the cost of calculating wage.
(2) can improve the service quality of salespersons.
(3) can lower the cost of monitoring salespersons’
performance.
A. (1) and (2) only
16-21 Final Exam 6 F.4 Economics
27. Which of the following is/are NOT an 3. Which of the following statements about scarcity is
advantage/advantages for a garment manufacturer correct?
to acquire a department store? A. Scarcity does not exist in an economy with only
(1) The manufacturer can enjoy economies of scale. one person.
(2) The manufacturer can ensure that there are B. Scarcity does not exist after people have made
market outlets for the manufacturer’s products. their choices.
(3) The manufacturer can ensure a reliable supply C. The existence of scarcity implies there is a cost in
of raw material. obtaining some goods.
(4) Resources can be used more efficiently. D. The existence of scarcity implies human wants
A. (2) only are unlimited.
B. (3) only
C. (2) and (3) only 4. Suppose the resale price of the mobile phone drops
D. (1), (3) and (4) only from $10000 to $6000. The cost to Samuel of using
the mobile phone himself will_________.
28. Which of the following statements about perfect A. remain unchanged
competition is / are correct? B. decrease by $4000
(1) Sellers sell economic goods. C. decrease by $6000
(2) Each seller has the same total cost. D. decrease by $10000
(3) Sellers may engage in non-price competition.
A. (1) only 5. Which of the following statements is correct?
B. (2) only A. One can possess private property rights only in a
C. (1) and (2)only market economy.
D. (1) and (3)only B. There are no private property rights in a
traditional economy.
29. Which of the following is the similarity between C. Without well-protected private property
price takers and price searchers? rights,market mechanism cannot function properly.
A. Both of them sell homogeneous goods. D. Private property rights are always well protected
B. Both of them engage in price competition. in a command economy.
C. Both of them engage in non-price competition.
D. Both of them need to face the competition from
substitutes. 6. A shop reduced the price of its massage chairs but
there were still unsold stocks. This shows that
30. Which of the following will DEFINITELY make a (1) the market was not in equilibrium.
firm become a monopoly? (2) the price was set below the equilibrium level.
A. It is owned by the government. (3) the law of demand does not hold.
B. It owns important resources. A. (1) only
C. It enjoys economies of scale. B. (1) and (2) only
D. It has a franchise exclusively. C. (2) and (3) only
D. (1), (2) and (3)
Final Exam 2018-19
1. The government proposes to build a third airport 7. When the money prices of goods X and Y increase,
runway to meet the future demands for air transport. the relative price of good X in terms of good Y
To do so, it needs to employ many construction will_________.
workers. The above case is related to A. increase
the_______problem(s) in economics. B. decrease
A. what to produce C. remain unchanged
B. how to produce D. be uncertain
C. what to produce and how to produce
D. what to produce, how to produce and for whom 8. The increase in the demand for foot massage services
to produce will lead to an increase in the demand for foot
massage workers. This is an example of
2. Which of the following markets in Hong Kong relies A. joint demand.
heavily on government planning to solve the three B. competitive demand.
basic economic problems? C. derived demand.
A. education D. individual demand.
B. mass media
C. entertainment
D. gasoline

16-21 Final Exam 7 F.4 Economics

9. Suppose there is a drastic fall in the price of oil and
fewer people go on business trips because of a global
recession. The price of air tickets________and the
quantity transacted_________.
A. will increase……….will decrease
B. will decrease……….will increase
C. will decrease……….will decrease
D. will decrease……….may increase, decrease or
remain unchanged.
10. With a decrease in demand, the price will remain
unchanged when
A. supply is inelastic.
B. supply is perfectly elastic.
C. demand is elastic.
D. demand is perfectly inelastic.
14. Which of the following are inconsistent with the law
of demand?
(1) When there is an increase in per-unit tariff of
imported garments, the average quality of
imported garments increases.
(2) Relatively more high quality fruits are sold in
urban markets than in rural markets which are
closer to the farms.
(3) The number of car accidents falls when the law
requires drivers to wear seat belts.
(4) When a $1 additional gasoline surcharge is added,
the number of long distance taxi trips increases.
A. 1 and 2 only
B. 1 and 3 only
C. 2 and 4 only
D. 3 and 4 only

11. The following table shows the market demand and 15. Suppose the government of a country raises an
supply schedules of Good X: effective rent control, i.e., it raises the maximum
Good X Quantity Quantity rental per square feet that landlords can charge
(unit price) demanded supplied (units) tenants. Which of the following statements are
(units) correct?
$20 10 50 (1) Landlords will have higher incentives to rent out
$18 20 40 their flats.
$16 30 30 (2) Landlords will have higher willingness to spend
$14 40 20 money on maintaining the rental flats.
$12 50 10 (3) The surplus of rental flats will decrease.
If the government imposes a unit tax to fix the (4) The change in the total rental income of landlords
output of Good X at 20 units, the unit tax will is uncertain; this depends on the price elasticity of
be_______. demand for the rental flats in the market.
A. $8 A. 1 and 2 only
B. $6 B. 1 and 3 only
C. $4 C. 2 and 4 only
D. $2 D. 3 and 4 only

12. In Economics, a nuclear power plant is classified 16. The table below shows the demand-supply schedule
as___________, while nuclear power generation of Good X.
belongs to__________production. Price ($) 7 6 5 4 3 2 1
A. land………primary Quantity supplied 15 14 13 12 11 10 9
B. capital……primary (units)
C. capital……secondary Quantity 9 10 11 12 13 14 15
D. capital……tertiary demanded(units)
Suppose the government set the quota limit of Good
13. A rise in the toll for the Eastern Harbour Crossing will X to 10 units. The new market price will be_______.
lead to A. $2
A. an increase in the total revenue of the Eastern B. $4
Harbour Crossing. C. $6
E. an increase in supply of the services provided D. There is insufficient information to answer.
by the Eastern Harbour Crossing.
F. a drop in the traffic flow in the Eastern 17. Which of the following is a correct description of a
Harbour Crossing. sole proprietorship?
D. a decrease in the demand for the services A. The firm size is smaller than that of a partnership.
provided by the Eastern Harbour Crossing. B. The liability of the owner to the company is
limited to his investment on the company.
C. The owner has to bear the legal responsibility
involving the company.
D. The firm can hardly enhance productivity with
division of labour.

16-21 Final Exam 8 F.4 Economics

18. Peter has purchased some shares of a listed company.
Which of the following is correct?
A. He will have the rights to coordinate the factors
of production in the company.
B. He can receive repayment before debenture
holders when the company winds up.
C. He will receive dividends at fixed periods if the
listed company earns money.
D. He can sell his ownership of the company without
the consent of the board of directors.
19. Which of the following is a possible reason for a
private limited company to go public?
A. The company will become government-owned
and acquire financial back-up from the
government.
B. Shareholders can participate in business
management.
C. The company will less likely be sued.
D. The company can raise fund more easily.
20. If the wage payment method for manufacturing
workers is changed from piece rate to time rate,
the________will increase.
A. average labour productivity
B. costs of monitoring output quality
C. costs of measuring output quantity
D. costs of monitoring workers’ performance
21. Owing to the overconcentration of logistic firms
around the container terminal, there is always traffic
congestion that greatly increases the travelling time
spent by each lorry during times of loading and
unloading cargoes in the terminal. This is an example
of__________of scale.
A. internal economies
B. internal diseconomies
C. external economies
D. external diseconomies
22. In Hong Kong, the market of bakery shops
is_________because_________.
A. perfect competition……there are perfect
information
B. monopolistic competition……there is free entry
C. oligopoly…..there is imperfect information
D. oligopoly…..there are a few dominant sellers
23. Which of the following is/are classified as production
in economics?
(1) a boy making a train model for himself
(2) a mother cooking steak for her family
(3) a waiter serving customers in a restaurant
A. 1 only
B. 2 only
C. 2 and 3 only
D. 1, 2 and 3
24. Practising division of labour may not be desirable if
16-21 Final Exam
A. workers are not well-educated.
B. the price of the product is low.
C. the size of the factory is small.
D. the size of the market for the product is small.
25. The return of an entrepreneur
A. is more stable than the return of labour.
B. is higher than the return of labour.
C. is always positive.
D. can only be determined after the products or
services are sold.
26. Which type of integration is referred to when a glass
firm takes over an Italian food restaurant?
A. vertical forward integration
B. horizontal integration
C. conglomerate integration
D. lateral integration
27. The occupational mobility is the highest for
A. a civil engineer.
B. a solicitor.
C. a street cleaner.
D. a teacher.
28. The diagram below shows the market for housing in
Hong Kong. Point E is the original equilibrium. If the
government plans to impose the stamp duty to the
sellers and the buyers need to pay more tax when
buying properties, the new equilibrium will
be___________.
A. E1
B. E2
C. E3
D. E4
29. Which of the following is an example of “land” in
economics?
A. the rainfall in a desert
B. the water in a swimming pool
C. the oxygen provided on an airplane in
emergencies
D. the panda living in Ocean Park Hong Kong
30. Hotels in Hong Kong charge different prices for their
accommodation services. This is because
A. there are many hotels in the market.
B. it is impossible for customers to compare the
prices of all hotels.
C. there are barriers to entering the hotels market.
D. the services provided by each hotel are different.
9 F.4 Economics
Final Exam 2017-18 7. Mr. Tin, a Hong Kong citizen, is going to travel to
London for leisure. Which of the following will
1. From the viewpoint of society,
increase his cost of having the trip?
A. people will not compete for both free and
A. It is predicted that the weather will be poor during
economic goods.
the time he stays in London.
B. scarcity still be found in a barter economy (an
B. Pounds depreciates against other currencies.
economy without money).
C. The scenery in London is better than he expected.
C. resources with alternative uses are scarce.
D. Workers in London has been on strike for a week
D. money price is the only criterion of competition
which might cause him miss a return-flight to
for scarce goods.
Hong Kong.
2. An economy is considered as market-oriented when
8. Miss Chan runs a boutique but her monthly income
(1) most of the markets are perfectly competitive.
fell from $50,000 to $10,000 as affected by the
(2) most of the goods are economic goods.
economic downturn. She wants to rent out the shop at
(3) all of the resources are allocated by the price
$25,000 a month but fails to do so due to the poor
mechanism.
economic performance. The opportunity cost for
(4) there is no public goods in the economy.
Miss Chan to close down her boutique is
A. only (1) & (4) are correct
A. $50,000 a month.
B. only (2) & (3) are correct
B. $25,000 a month.
C. all statements are correct
C. $35,000 a month.
D. all statements are incorrect
D. $10,000 a month.
3. A good is a free good if
9. The diagram below shows the supply and demand
A. it is not rare or it can be found easily.
curves of housing units in Hong Kong. The original
B. it is free of charge.
equilibrium point is at E.
C. its availability is enough to satisfy people’s wants.
D. no one owns it.

4. Which of the following is a normative statement?

A. More students further their studies after the
implementation of free tertiary education.
B. The government should allocate more resources
to people in need.
C. More people apply for financial assistance when
the unemployment rate increases.
D. People buy less when the inflation rate rises.
5. Since Express Railway (XRL)- Hong Kong Session
is upon completion, some people have suggested to
adopt co-location for its operation (一地兩檢安排).
This suggestion is related to the _______ question(s)
in Economics.
A. 'what to produce‘
B. 'how to produce'
C. 'for whom to produce'
D. 'how and for whom to produce'
6. Hong Kong people can visit the Ocean Park for free
on their birthdays. The arrangement of the free visit
is a / an
A. economic good because people want to have
more opportunities for a free visit to the Park.
B. free good because the opportunity cost of visiting
the Park is zero.
C. economic good because visitors need to pay for
the transport fee for going to the Park.
D. free good because no payment is required for
visiting the Park.
The government has announced that more lands will
be available for residential units while people in
Hong Kong are still very optimistic about the
property market development. The new equilibrium
point will be at
A. W B. X C. Y D. Z
10. A great increase in the demand for hotel services will
lead to a rise in the wages of hotel employees. The
reason is that the demand for hotel employees is a
_____ of hotel services.
A. derived demand
B. competitive demand
C. complement
D. joint demand
11. Beef and butter are in joint supply. If the price of beef
decreases,
A. the demand curve of butter will shift leftward.
B. the supply curve of butter will shift rightward.
C. the quantity demanded of butter will fall.
D. the price of butter will fall.

16-21 Final Exam 10 F.4 Economics

12. A rise in the price for good X will lead to a rise in the 18. Suppose with the more popular use of smart phone,
price of good Y if the price of the traditional mobile phone has fallen by
(1) good X and good Y are substitutes. 50% and the quantity sold has changed by 70%.This
(2) good X and good Y are complements. This would indicate that within that price range, there
(3) good X and good Y are in competitive supply. was an for traditional mobile phone.
(4) good X and good Y are in joint supply. A. elastic supply
A. (1) and (3) only B. inelastic supply
B. (1) and (4) only C. elastic demand
C. (2) and (3) only D. inelastic demand
D. (2) and (4) only
19. Refer to the following supply-demand diagram for
13. An increase of a minimum wage legislation would the Cross-Harbour Tunnel.
increase
A. the bargaining power of unskilled workers.
B. the total income of unskilled workers.
C. the revenue of local firms.
D. the risk of unemployment of unskilled workers.

Study the following table and answer Question 14 and 15.

Good X Quantity demanded in Quantity supplied
(unit price) the market(unit) in the market(unit)
$6 60 40
$9 55 45 The government proposed to raise the toll for the
$12 50 50 Cross-Harbour Tunnel so as to lessen the traffic
$15 45 55 congestion during rush hours. Suppose the maximum
$18 40 60 vehicular volume of the tunnel is fixed. Which of the
following statements are correct?
(1) The demand for the service of the Cross-Harbour
14. If the government fixes the production quota of Good
Tunnel will decrease.
X at 40 units, the total expenditure on Good X will be
(2) The total revenue of the Cross-Harbour Tunnel
A. $360 B. $495 C. $600 D. $720
will increase.
(3) The total revenue of Western-Harbour Tunnel
15. The government uses a unit tax instead to fix the
will increase.
output of Good X at 40 units, the unit tax imposed on
(4) The opportunity cost of the drivers using the
Good X will be
Cross-Harbour Tunnel will increase.
A. $6 B. $9 C. $12 D. $15
A. (1) and (2) only
B. (2) and (3) only
16. Which of the following will lead to a surplus?
C. (1), (3) and (4) only
A. Imposing an effective price floor.
D. (2), (3) and (4) only
B. Imposing an effective price ceiling.
C. Imposing a per-unit tax.
D. A big increase in demand. 20. The table below shows the situation of Good X.
Price Quantity demanded Quantity supplied
17. The table below shows the relationship between the ($) (units/ month) (units/ month)
price of Good X and its total sales revenue. 10 7 11
Price ($) 10 15 20 9 8 10
Total sales revenue 100 100 100 8 9 9
7 10 8
Within the above price range, the elasticity of demand 6 11 7
of Good X is
A. equal to zero If the government grants a unit subsidy of $2 to the
B. greater than zero and smaller than one producers of Good X,
C. equal to one A. the total amount of subsidy is10.
D. greater than one B. the producers’ subsidy benefit is$20.
C. the consumers’ subsidy benefit is $10.
D. the price will fall by $2.

16-21 Final Exam 11 F.4 Economics

21. If a partnership is turned into a private limited
company,
(1) the company will become an independent legal
entity.
(2) the company will be at a higher risk of being
taken over.
(3) the company will pay a higher profits tax rate.
(4) the number of owners will increase.
A. (1) and (3) only
B. (1) and (4) only
C. (2) and (3) only
D. (2) and (4) only
22. Which of the following will NOT increase the
geographical mobility of labour?
A. A stricter immigration policy
B. The government increases the quotas on
imported foreign labour
C. The completion of the MTR West Island Line
D. Fewer cultural differences between two countries
23. Which of the following can raise the average
productivity of labour?
(1) The government relaxes the restrictions on the
import of foreign labour.
(2) The government allocates more resources on
improving public health.
(3) The government increases the funding for tertiary
education.
(4) The government decides to build more public
housing units so that more job positions could be
created.
A. (1) and (3) only
B. (1) and (4) only
C. (2) and (3) only
D. (2) and (4) only
24. Which of the following is NOT correct?
A. Division of labour does not exist in a one-man
economy.
B. Division of labour is cost-effective to all types of
industry.
C. In general, division of labour raises the
productivity of labour.
D. Division of labour is suitable to industries
producing standardized products.
25. Capital differs from land in that
A. the return of the former is higher.
B. using capital incurs cost but land does not.
C. the former is an economic good whereas the latter
is a free good.
D. the former is a man-made resource while the
latter is a natural resource.
16-21 Final Exam
26. Which of the following are possible reasons for a firm
to expand its scale of production?
(1) It can benefit from external economies of scale.
(2) It can lower the risks by diversifying its products.
(3) It can enjoy lower total cost of production.
A. (1) and (2) only
B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)
27. Which of the following is the advantage of the
privatization of a listed company?
A. Expanding the sources for raising capital.
B. Reducing the chance of being taken over.
C. Enlarging its market share.
D. Saving cost as it does not need to pay interest.
28. Refer to the following table:
Firm A Firm B
Number of
5 10
owners
Transfer of Needs the consent Needs the consent
ownership of other owners. of other owners.
Owners bear Owners bear
Liability
limited liabilities. unlimited liabilities.
The types of ownership of Firm A and Firm B are
_______ and _______ respectively.
A. partnership … private limited company
B. private limited company … partnership
C. public limited company … partnership
D. public limited company … private limited
company
29. A computer accessories shop enlarges its scale by
opening a computer accessories manufacturing firm
and merges with another computer accessories shop.
The former is an example of _____ integration and
the latter is _____ integration.
A. forward … horizontal
B. backward … horizontal
C. lateral … lateral
D. backward … lateral
30. In Hong Kong, the market for urban taxi services
_______ perfectly competitive because __________.
A. is; urban taxis provide homogeneous services
B. is; passengers know the fares clearly
C. is not; entry to the market for urban taxi services
is restricted
D. is not; taxi fare is regulated by the government
12 F.4 Economics
Final Exam 2016-17 6. David is planning to travel to either France or Canada
during summer. Which of the following would reduce
1. Suppose the government only allows school canteens
his cost of travelling in France?
to sell healthy food and prohibits the sales of such
A. There is heavy rainstorm when he visits France.
food as potato chips. This is an example of using
B. David’s friends allow him to stay at their home
_____ to solve the problem of _____.
when he visits France.
A. government command; ‘what to produce’
C. Prices of Canadian products keep on decreasing.
B. government command; ‘how to produce’
D. David has been offered an internship in a local
C. market command; ‘what to produce’
accounting firm during summer.
D. market command; ‘how to produce’
7. A concert organizer plans to invite two superstars to
2. Suppose a person has the following options in
hold their concerts together. Tickets will be available
spending his leisure time:
1st option : watching a film through URBTIX (城市售票網) or internet outlet.
2nd option : playing games with his friends Moreover, there will be early bird discounts as well.
3rd option : revising books The economic questions involved are
If finally, he chooses to play games with his friends, (1) What to produce.
the opportunity cost will be (2) How to produce.
A. revising books. (3) For whom to produce.
B. watching a film. A. (1) & (2) only
C. both watching a film and revising books. B. (1) & (3) only
D. uncertain as wants are ever changing. C. (2) & (3) only
D. All of the above.
3. Which of the following about the price of a product
is correct? 8. Which of the following will result in a change in the
A. Price of a product can only be expressed in terms quantity demanded?
of money. A. The number of consumers increases.
B. Ceteris paribus is unimportant in the determining B. Income of households increases.
market price of a product. C. The production cost decreases.
C. Without scarcity, price does not exist. D. The price of substitutes decreases.
D. Price of a product will still fluctuate even if the
market is at equilibrium. 9. The following diagram shows the market of second-
hand housing units, with E0 as the equilibrium.
4. Which of the following statements about the P
‘Circular Flow’ model are correct? D1 S1
(1) Money flow is a once and for all process. D0 E1 S0
(2) The sales of products by firms is an example of S2
real flow. D2
E0 E4
(3) Firms are formed by households.
A. (1) & (2) only E3
B. (1) & (3) only
E2
C. (2) & (3) only
D. All of the above.
0 Q
5. Trees in a tropical rainforest are regarded as
(1) ‘land’ when used to assist production. Suppose it is becoming more difficult to borrow
(2) free goods as they grow naturally. mortgage loans and some owners of housing units are
(3) private goods as they are rival in consumption. reluctant to sell their properties in the second-hand
(4) consumer goods as they are used by factories to market for the time being. Thus, the new equilibrium
satisfy human wants. will be
A. (1) & (3) only A. E1
B. (1) & (4) only B. E2
C. (2) & (3) only C. E3
D. (2) & (4) only D. E4

16-21 Final Exam 13 F.4 Economics

10. Following a fall in the market price of a product by
40%, the total revenue of the seller rises by 10%.
Thus, the seller faces an _____ demand and the
demand curve is _____.
A. elastic; downward sloping
B. inelastic; downward sloping
C. elastic; horizontal line.
D. inelastic; vertical line.
11. The price elasticity of demand is affected by
(1) the cost of production of the good.
(2) the proportion of income spent on the good.
(3) the degree of necessity of the good.
(4) the durability of the good.
A. (1), (2) & (3) only
B. (1), (2) & (4) only
C. (1), (3) & (4) only
D. (2), (3) & (4) only
12. When the price rises by 20%, the quantity supplied
increases by 40%. Thus,
A. the supply is inelastic.
B. the supplier may have excess capacity not being
utilized in the past.
C. the supplier is not so flexible in production.
D. the production cost may be rising quickly.
Refer to the following table and answer Q.13 – 15:
[Treat them all as independent cases]
Price ($) 24 20 16 12 8 4
Qd (units) 2 4 6 8 10 12
Qs (units) 10 8 6 4 2 0 B. (1) & (3) only
(Qd: Quantity demanded; Qs: Quantity supplied)
13. What is the consequence of a price ceiling of $12
introduced by the government?
A. Sellers’ total revenue will drop by 50%.
B. All consumers will be satisfied.
C. The problem of scarcity can be eliminated.
D. Firms will not be able to gain any profits.
14. What is the consequence of a price floor of $20
introduced by the government?
A. Quality of the good may be improved over the
long run.
B. The demand for the good will decrease.
C. Government can obtain more revenue.
D. There is a shortage in the market.
15. What is the consequence of a quota of 8 units
introduced by the government?
A. The supply will still be upward sloping.
B. Sellers’ total revenue will be $96.
C. The market price will increase.
D. The market is becoming monopolistic.
16-21 Final Exam
16. A private limited company can raise capital by
(1) selling new shares in the stock market.
(2) making use of its retained profits.
(3) borrowing money from banks.
(4) refusing to pay interest to bondholders.
A. (1) & (2) only
B. (2) & (3) only
C. (3) & (4) only
D. (1) & (4) only
17. If a company decides to issue shares to raise capital,
which of the following is most likely correct?
A. Existing shareholders’ control over the company
will weakened.
B. It will be more difficult to borrow extra sum of
loans from banks.
C. The risk of being taken over will be reduced.
D. It is more difficult to practise division of labour.
18. _____ is an example of primary production.
A. Logistics industry
B. Crude oil refinery
C. Keeping fish in fish ponds
D. Lumbering
19. David is the owner of a farm in the New Territories.
He also organizes Eco-tourism (生 態 旅 遊) and
prepares food for visitors. Thus, he is engaged in the
(1) Primary production
(2) Secondary production
(3) Tertiary production
A. (1) & (2) only
C. (2) & (3) only
D. All of the above.
20. Which of the following will reduce the labour supply
in Hong Kong?
A. Large international enterprises begin to invest
more intensively in Hong Kong.
B. The official retirement age has been increased.
C. The 4th day of Lunar New Year becomes a public
holiday.
D. More primary school leavers go to study abroad.
21. Labour productivity will be increased if
(1) workers are asked to work for long hours.
(2) the government provides more training.
(3) more advanced machines are being installed.
(4) hygienic conditions of work place have been
improved.
A. (1), (2) & (3) only
B. (1), (2) & (4) only
C. (1), (3) & (4) only
D. (2), (3) & (4) only
14 F.4 Economics
Refer to the information below and answer Q.22 – 23. 27. Refer to the following input-output relationship
Peter John 2016 2017
Career: Salesman Career: Accountant Number of workers 20 25
Finished HKDSE Exam University degree holder Average working hours
Commission: $20/unit Monthly Salary 10 9
per worker per day
Total output 1100 1125
22. What are the reasons for the difference in the wage Based on the above information, the firm experiences
payment arrangement? a _____ in the labour supply and a _____ in the
(1) It is difficult to measure John’s contribution. average labour productivity.
(2) It can raise Peter’s productivity. A. rise; rise
(3) It is more difficult to control the quality of B. rise; fall
services provided by Peter. C. fall; fall
(4) It is simpler to calculate John’s salary. D. fall; rise
A. (1), (2) & (3) only
B. (1), (2) & (4) only 28. The Hong Kong Electric Co. is
C. (1), (3) & (4) only (1) a monopoly
D. (2), (3) & (4) only (2) a public limited company
(3) engaged in primary and secondary production.
23. Which statement about the two persons is correct? A. (1) & (2) only
A. Peter’s geographical mobility is lower as his B. (2) & (3) only
salary tends to be lower. C. (1) & (3) only
B. John’s geographical mobility is lower as the D. All of the above
demand for accountant in other countries is low.
C. Peter’s occupational mobility is higher as his cost 29. When a casual wear manufacturer combines with a
of changing occupation is lower. factory producing luxury clothes, it is an example of
D. John’s occupational mobility is higher as the A. horizontal integration.
supply of accounts is decreasing. B. vertical backward integration.
C. lateral integration.
24. Suppose the tap water in a city is contaminated by D. conglomerate integration.
heavy metals. Which of the following is correct?
A. The supply of catering services will become more 30. A ‘natural monopoly’ exists because it
elastic. A. has obtained a franchise from the government.
B. The supply of underground water will become B. controls important resources which are not
more inelastic. available to other producers.
C. The demand for water filters will become more C. faces huge costs of production.
elastic. D. is owned by the government.
D. The demand for distilled water will become more
inelastic.

25. In Hong Kong, some restaurants begin to use robots

to perform some duties of waiters. Consequently, the
number of customers served increases. This will
A. increase the labour supply of restaurants.
B. increase labour productivity of restaurants.
C. increase the employment rate of Hong Kong.
D. increase occupational mobility of labour.

26. Which of the following is an example of internal

economies of scale?
A. As more and more variable factors are added to
the constant amount of fixed factors, marginal
cost will decrease.
B. More trained workers will be available.
C. The government may assist the industry.
D. Discount will be given when buying in bulk.

16-21 Final Exam 15 F.4 Economics