F5.

Economics – 1st Term Uniform Test 2022-23 Time Allowed: 35 minutes

Name: ( ) Class: 5_____ Marks: /35

Section A (10 marks) – mark your answers by shading the appropriate box on page 2.

1. When a watch factory decides to _____, it is an D. Firms are often eager to produce it.
example of ‘What to produce?’ 7. Refer to the following information.
A. produce toys Quantity (units) 1 2 3 4 5
B. give discount to buyers buying more than 1 unit Marginal benefit ($) 20 18 16 14 12
C. use machines to replace workers Marginal cost ($) 8 10 12 14 16
D. carry out research to improve its technology Which of the following are correct?
(1) At equilibrium, seller’s total revenue is $56.
2. Which of the following is not a result of scarcity? (2) With a quota of 2 units, the Deadweight Loss
A. People need to make choice. will be $4.
B. People need to engage in competition. (3) With a price ceiling of $12, there will be a
C. People need to sacrifice some of their options. shortage of 2 units.
D. People need to consume less free goods. A. (1) and (2) only
B. (2) and (3) only
3. Which of the following will result in an increase in C. (1) and (3) only
seller’s total revenue? D. All of the above
(1) The cost of production has increased and the
demand is inelastic. 8. Refer to the following information of a factory.
(2) Income of consumers has increased and the Total Output (units) 10 21 33 X
commodity is a normal good. Quantity of worker 1 2 3 4
(3) The supply is elastic and the market price has Quantity of machines 5 5 5 5
decreased. Which of the following are correct?
(4) The market price of the good has decreased and (1) The factory is engaged in the short run.
the demand is elastic. (2) The factory enjoys economies of scale.
A. (1), (2) and (3) only (3) If the factory suffers from diminishing returns
B. (1), (2) and (4) only after the 3rd unit of worker, X cannot be greater
C. (1), (3) and (4) only than 45.
D. (2), (3) and (4) only (4) Factory workers should be paid time rate.
A. (1) and (2) only
4. Which of the following will result in a more elastic B. (2) and (3) only
supply? C. (1) and (3) only
(1) Consumers can easily change their habit. D. (2) and (4) only
(2) Factor inputs are highly mobile.
(3) Firms maintain excess capacity. 9. Which of the following cannot be found in a price
(4) Production process is highly flexible. taking market?
A. (1), (2) and (3) only A. Products are homogeneous.
B. (1), (2) and (4) only B. Firms usually engage in non-price competition.
C. (1), (3) and (4) only C. Information flow is perfect.
D. (2), (3) and (4) only D. Firms often aim at profit maximization.
5. If an investor buys shares instead of bonds, he is 10. Which of the following is not an example of
looking for division of labour?
A. safety in planning his investment. A. Country A produces only cars and Country B
B. possibility of gaining business experience. produces only watch.
C. higher priority in getting back compensation. B. Peter works as an actor and Sherman works as
D. fixed rate of returns. an office clerk.
C. During leisure time, Howard reads Chinese
6. Which of the following about a public good is fictions and Loraine reads detective stories.
correct? D. Within the school there are teachers, janitors
A. Concurrent consumption is possible. and security guards.
B. It is free from market failure.
C. It can only be provided free of charge.

End of Section A
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Section A (10 marks)

Question 1 2 3 4 5 6 7 8 9 10
Answer

Section B (25 marks) – Write your answers in the space provided.

1. Refer to the following information.

Lawmaker urges relax ‘spicy measures’ and policies to ease labour shortage

“Measures used to suppress property prices have become outdated and should be reviewed.”
A lawmaker said. Concurrently, the measures have discouraged transactions in the second-
hand property market, as buyers and sellers are not willing to pay extra stamp duty. He also
mentioned that the government should take initiatives to hire teenagers and senior employees,
to ease the shortage of manpower.

a. “Measures used to suppress property prices have become outdated and should be reviewed.” To which type of
economic statement does it belong? Explain your answer. (2 marks)
b. Explain how sellers can shift the tax burden of a ‘Stamp Duty to consumer. (3 marks)
c. Explain why the ‘Stamp Duty’ may result in welfare loss to the society. (4 marks)
d. As buyers are not willing to pay extra stamp duty, does it imply that their wants of buying housing units have
decreased? Explain your answer. (3 marks)
e. Explain how the hiring of teenagers and senior employees may affect the labour supply. (3 marks)

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2. Refer to the following information.

Travelling agents and travellers

Cathay Pacific (Stock code: 00293) completed its acquisition of Hong Kong Express Airways
(HK Express) in 2021.

As Tokyo allows non-guided package tours from all countries, the number of Hong Kong visitors
to Japan has surged 30 percent and doubled the daily number of tourists to 50,000.
Representative from HK Express said that flights to Japan were “very full”. Another
representative from a local travel agent said that he needs to employ more tour guides to satisfy
the increase in demand.

a. To which specific type of private enterprise does Cathay Pacific belong? Explain your answer. (2 marks)
b. When Cathay Pacific acquires HK Express, explain to which type of integration it belongs. (2 marks)
c. Explain how the upsurge of visitors to Japan may affect the total revenue of shops in Japan. (4 marks)
d. To which type of production does a travel agent belong? Explain your answer. (2 marks)

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End of Paper

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