Joint School ECON Mock Paper 2 PDF

Name of school:
Name of student:
Class (Class no.):
JOINT SCHOOL ECONOMICS MOCK EXAMINATION 2020

Seat Number 0 0 0 0
ECONOMICS PAPER 2
(Section A)
Question-Answer Book
Marker’s
Use Only
Marker No.
Time allowed: 2 hours 30 minutes
This paper must be answered in English
Question
Marks
No.
INSTRUCTIONS 3
(1) After the announcement of the start of the examination, you 4

should first write your personal information and Seat
5
Number in the space provided on EACH Question-Answer
Book. 6
(2) This paper consists of TWO sections, A and B. Answer 7

ALL questions in sections A and B.
8
(3) Write your answers in the space provided in this
Question-Answer Book. Do not write in the margins. 9
Answers written in the margins will not be marked.
(4) Supplementary answer sheets will be supplied on request.

Write your seat number, mark the question number on each
sheet, and fasten them with string INSIDE this book.
(5) No extra time will be given to candidates for filling in the

question number boxes after the ‘Time is up’
announcement.
Total
Joint School Economics Mock Exam 2020 1

Section A (44 marks)
1. Some food delivery platforms charge a delivery fee for each order. Consumers need to pay more than dine-in
prices for the same food. Will the cost of ordering food on the food delivery platform be necessarily higher
than the cost of having the same food in the restaurant? Explain. (3 marks) (2 分)

2. Under Community Care Fund Assistance Programme, primary and secondary students who are in need can
apply for subsidies to purchase mobile computer devices for e-learning.
Explain how the programme can enhance equity in Hong Kong society. (3 marks)

Please stick the barcode label here.
3. The table below shows the year-on-year percentage change in the Composite Consumer Price Index from
2016 to 2019.
2016 2017 2018 2019

2.4% 1.5% 2.4% 2.9%
(Source: Census and Statistics Department, HKSAR Government)
Suppose people did not expect any change in the price level from 2016 to 2019. Explain whether each of the
following persons would gain or lose when the change in the price level in the above table occurred.
(a) In 2016, Wilson deposited a sum of money in a bank as a time deposit. (2 marks)
(b) In 2016, Mary purchased 3-year bonds of a Hong Kong company with a nominal rate of return of 5%
per year. (3 marks)

4. In January 2019, Evergrande Health Industry Group (stock code: 0708), an operator of hospitals and elderly
care homes, bought shares of Swedish electric car manufacturer NEVS. The Group acquired the remaining
shares of NEVS in June 2020.
(a) Explain what type of integration this is. (2 marks)
(b) List THREE possible motives for the above integration. (3 marks)

5. Study the following news excerpt.
The unemployment rate of Hong Kong stood at 6.1% in June-August 2020, which is
the same as that in May-July 2020. The number of unemployed population increased
by around 5,800 to 248,000.
(a) Explain why the unemployment rate remained unchanged in spite of an increase in the unemployed
population. (3 marks)
(b) Suggest TWO losses to society caused by unemployment. (2 marks)


6. Some people complain about the high price of private residential flats, which makes it hard for them to buy
flats. Recently, the price of private residential flats has been affected by the following events:
 The interest rate on mortgage loans decreased.

 The government announced that it would allocate more land sites for building public housing instead of
selling them to property developers.
Use ONE supply-demand diagram to illustrate the effect of the above two events on the price of private
residential flats. (3 marks)

7. Figure 1 shows the AS-AD diagram of an economy. Point E is the initial short run equilibrium of the
economy.
Figure 1
Price level
LRAS0
SRAS0
E
P0
AD0
0 Output level
Yf Y0
With the aid of Figure 1, explain how an adjustment of the required reserve ratio by the central bank can
lower the output level to Yf. (7 marks)

8. Suppose each unit of resources can be used to produce the following amount of rice and clothing in
Country A and Country B:
Rice (units) Clothing (units)

Country A 16 OR 4
Country B 15 OR 3
(a) Which good would Country A export according to its comparative advantage? Explain. (3 marks)
(b) Suppose Country A and Country B trade with each other. The rice-exporting country exports 27 units
of rice in exchange for 6 units of clothing. The transportation cost per unit of clothing traded is 0.2
units of rice and has to be shared equally by both countries. Calculate the total gain from trade for
Country A. Show your workings. (4 marks)

9. A country is in recession. Some politicians suggest that the government should lower the income tax rate to
cope with economic recession. Evaluate the suggestion in terms of the effects on aggregate output and fiscal
balance. (6 marks)
END OF SECTION A

Name of school:
Name of student:
Class (Class no.):
JOINT SCHOOL ECONOMICS MOCK EXAMINATION 2020

Seat Number 0 0 0 0
ECONOMICS PAPER 2
(Section B)
Question-Answer Book
Marker’s
Use Only
Marker No.
Time allowed: 2 hours 30 minutes
This paper must be answered in English
Question
Marks
No.
10
11
INSTRUCTIONS 12
(6) After the announcement of the start of the examination, you

should first write your personal information and Seat
Number in the space provided on EACH Question-Answer
Book.
(7) This paper consists of TWO sections, A and B. Answer

ALL questions in sections A and B.
(8) Write your answers in the space provided in this

Question-Answer Book. Do not write in the margins.
(9) Supplementary answer sheets will be supplied on request.

Write your seat number, mark the question number on each
sheet, and fasten them with string INSIDE this book.
(10) No extra time will be given to candidates for filling in the

question number boxes after the ‘Time is up’
announcement.
Total

Section B (60 marks)
10. The government of Country A provides subsidies to their firms that own production plants in Country B.
The measure is to encourage these firms to relocate their production lines back to Country A.
(a) With the aid of an AS-AD diagram, explain under what condition the provision of subsidies by the
government of Country A would cause the price level of Country A to increase in the short run.
(9 marks)
(b) After Country A’s firms have received subsidies and relocated back to Country A, consumers in
Country B need to pay a higher transportation cost for their goods. How would this affect the current
account in the balance of payments of Country A? (2 marks)
(c) ‘The government providing a per-unit subsidy to producers would worsen efficiency.’ Do you agree?
Explain your answer with the aid of a diagram. (6 marks)



11. The financial condition of Hong Kong Disneyland has raised public concerns.
Source A: Financial results of Hong Kong Disneyland from 2008 to 2019


(Source: Hong Kong Disneyland)
Source B: A news report on Hong Kong Disneyland

The Hong Kong government owns 53% of shares in Hong Kong International Theme Parks
Ltd, and the Walt Disney Company holds the remaining 47%. According to the data provided
by the Hong Kong Tourism Board, in the fiscal year 2019, visitors to Disneyland brought Hong
Kong an extra (i.e. over and above what would have been spent in the absence of Disneyland)
$15.7 billion in consumption.
(Source: Update on Hong Kong Disneyland Resort, Panel on Economic Development,
Legislative Council, HKSAR Government)
(a) According to Source A, briefly describe the profit and loss situation of Hong Kong Disneyland from
2008 to 2019. (1 mark)
(b) According to Source B, explain how the operation of Hong Kong Disneyland may involve externality.
(3 marks)
(c) Hong Kong Disneyland hires different people for operation, e.g. performers, engineers, kitchen staff,
management staff, etc. What economic principle is illustrated by this practice? Suggest THREE
reasons why the application of this principle can increase labour productivity. (4 marks)
(d) Hong Kong Disneyland once offered ‘Buy 2 get 1 Free’ for its tickets. With the aid of a diagram,
explain under what condition the total ticket revenue of Hong Kong Disneyland will increase because
of this promotion. (5 marks)
(e) Some politicians suggest that the government should sell the shares of Hong Kong Disneyland so that
the park would be operated by private enterpeises. Refer to Sources A and B, discuss the suggestion by
giving ONE argument FOR and ONE argument AGAINST it. (4 marks)


Joint School Economics Mock Exam 2020

14
12. Developing human capital is important to economic development. The Hong Kong government has adopted
various policies to increase human capital to cope with the increase in its demand.
Source A: Median monthly wage of employees analysed by educational attainment in May and June of
2015 - 2019
2015 2016 2017 2018 2019
Primary and below $10,600 $11,000 $11,500 $12,000 $12,600
Secondary 1 to 3 $12,200 $12,800 $13,300 $13,800 $14,500
Secondary 4 to 7 $14,800 $15,400 $16,000 $16,500 $17,000
Tertiary education $24,800 $25,600 $26,400 $27,200 $27,800
Source B: Government budget on education for various financial years
1400
1200
1000
($100 million)
800
600

400
200
0
2015/16 2016/17 2017/18 2018/19 2019/20
Financial year
(Source: The Budget, HKSAR Government)
Source C: Projections of manpower supply and demand in Hong Kong in 2027

Projected manpower supply Projected manpower demand
(number) (number)
Primary and below 605,500 682,100
Upper secondary 1,189,300 1,231,900
Tertiary education 1,775,100 1,825,500
(Source: Report on Manpower Projection to 2027, HKSAR Government)
Source D: Introduction to Quality Migrant Admission Scheme

The scheme seeks to attract highly skilled or talented persons to settle in Hong Kong.
Generally speaking, the higher the qualifications of applicants, the higher the chances of
success application. Meanwhile, the Hong Kong Government has issued the Talent List,
which comprises professions for which talents are needed most in Hong Kong. Some of the
professions under the list are waste treatment specialists, actuaries, data scientists and cyber
security specialists. Professionals from these industries also have higher chances of making
successful applications to the scheme.
(Source: Immigration Department, HKSAR Government)

Source E: Opinions on the government’s effort on increasing human capital
A continuous increase in expenditure on education
will increase the financial burden of the
government.
A government official
Receiving more education will increase my future
income, which in turns allows me to buy more
goods and services and enjoy a better quality of life.

A university student
I have hired some cyber security specialist from
Britain, who settled in Hong Kong through the
Quality Migrant Admission Scheme. The scheme
helps introduce much-needed labour to Hong Kong
and allows me to carry out my investment plan.
The owner of a cyber

security company
(a) Refer to Source A. Give ONE reason for the existence of income inequality in Hong Kong. (2 marks)
(b) According to Source B, explain how the change in government expenditure on education would affect
the aggregate output of Hong Kong in the long run. (3 marks)
(c) According to Source C, explain whether the wage rate of Hong Kong would have an upward or
downward trend after 2027. (2 marks)
(d) According to Source E, explain if the income of the cyber security specialists would be counted in
Hong Kong’s gross domestic product (GDP). (3 marks)
(e) According to Source E, explain whether the view of the government official is a positive statement.
(2 marks)

For part (f), candidates are required to present their answer in essay form. Criteria for marking will
include use of sources and economic theories, relevant content, logical presentation and clarity of
expression.
(f) Suppose there are two proposals for increasing human capital in Hong Kong:
Proposal I Increasing subsidised university places
Proposal II Increasing the quota of the Quality Migrant Admission Scheme
Referring to the above sources and applying your economics knowledge, discuss the effects of the
above proposals on Hong Kong, including:
- aggregate output,
- wage rate of local labour,
- government expenditure and/or revenue, and
- other economic variable(s).
(14 marks)



18

19
END OF PAPER

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Name of school:

Class (Class no.):

JOINT SCHOOL ECONOMICS MOCK EXAMINATION 2020

(1) After the announcement of the start of the examination, you 4

(2) This paper consists of TWO sections, A and B. Answer 7

(4) Supplementary answer sheets will be supplied on request.

(5) No extra time will be given to candidates for filling in the

Joint School Economics Mock Exam 2020 1

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 2

2016 2017 2018 2019

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 3

(a) Explain what type of integration this is. (2 marks)

Answers written in the margins will not be marked.

(b) Suggest TWO losses to society caused by unemployment. (2 marks)

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 4

Answers written in the margins will not be marked.

 The interest rate on mortgage loans decreased.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 5

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 6

Rice (units) Clothing (units)

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 7

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 8

Class (Class no.):

JOINT SCHOOL ECONOMICS MOCK EXAMINATION 2020

(6) After the announcement of the start of the examination, you

(7) This paper consists of TWO sections, A and B. Answer

(8) Write your answers in the space provided in this

(9) Supplementary answer sheets will be supplied on request.

(10) No extra time will be given to candidates for filling in the

Joint School Economics Mock Exam 2020 9

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 10

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 11

Source A: Financial results of Hong Kong Disneyland from 2008 to 2019

Answers written in the margins will not be marked.

Source B: A news report on Hong Kong Disneyland

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 12

Answers written in the margins will not be marked.

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 13

Joint School Economics Mock Exam 2020

Source B: Government budget on education for various financial years

Answers written in the margins will not be marked.

(Source: The Budget, HKSAR Government)

Source C: Projections of manpower supply and demand in Hong Kong in 2027

Source D: Introduction to Quality Migrant Admission Scheme

Answers written in the margins will not be marked.

Joint School Economics Mock Exam 2020 15