ECONOMICS

Paper I

Kevin Ko

Kevin Ko - 英皇教育首席經濟科名師
於香港大學修讀經濟科時，已自資開辦補習社教授
CE 及 AL Economics，可見其經驗之豐富。
不單揉合了電腦技術於經濟學之中，更將抽象的經濟
學概念漫畫化，深受同學們歡迎。
其編製的《漫畫經濟一日通》初版(微觀經濟篇)及(宏
觀經濟篇)獲重慶大學出版社購入版權作全國發行。
香港公共圖書館於04年購入多套《漫畫經濟一日通》
並放置於全港各公共圖書館中以供借閱。
近年應多個媒體邀請作經濟科之主講嘉賓(有線電視
YMC台、新城997等)；亦曾為多個大型講座擔任經
濟科之主講嘉賓，例如03至05年學友社會考分析講
座，與及99至05年英皇教育會考及高考分析講座。
05年會考經濟科超過150名Ko Sir學生考獲A級成
績，再次創下驕人紀錄！
05年高考經濟科有超過300名Ko Sir學生考獲A、B 或
C級成績，近60名更考獲A級，過百名考獲B級；重
考而獲升級的學生更是多不勝數(由D/C跳升至A，或
D/E跳升至B級，甚至由U變為合格。
早在02年已於www.CaptureA.com推出全港首創的網
上「Live Chat」(視像教室)。

Prepared by Kevin Ko
2006-CE
ECON
PAPER I

KING’S GLORY EDUCATIONAL CENTRE

CE MOCK EXAMINATION 2006

ECONOMICS PAPER I

(One and a half hours)

K E V I N K O

INSTRUCTIONS

This paper consists of two sections, A and B. Attempt ALL questions in both sections.

1. Section A contains eight questions. The whole section carries 38 marks for content and 2
marks for effective communication.

2. Section B contains four questions. The total mark is 46 and the total mark for effective
communication is 4.

Prepared by Kevin Ko
King’s Glory Educational Centre
All Rights Reserved 2006
2006-CE-ECON I-1

(非賣品，免費派發予 Kevin Ko Economics Team 之學生。)

SECTION A (40 marks)

1. College teachers frequently receive funds from the administration department for
research purposes. These are not granted in take-home cash, but are funds for specific
usage such as making Xerox copies of research materials. In terms of opportunity cost,
explain whether there is a cost in using the funds to make Xerox copies from the point of
view of the college teachers. (4 marks)

2. Explain whether a sales tax on food is regarded as regressive and indirect tax. (6 marks)

3. State the law of comparative advantage. (2 marks)

4. To obtain public medical services, just like obtaining other below-market-price public
services, a patient has to wait in line for a long time before getting served. Suppose the
government increases the price on public medical services, explain whether there is still
a shortage in Hong Kong? (5 marks)

© by Kevin Ko Economics Team 2006-CE-ECON I-2

5. The following diagram shows the supply and demand curves of cigarettes:

$/Q
S

P1

PE

P0

D
0 Q
Q0 QE Q1

Suppose the demand for cigarettes is elastic and the government initially imposes a price
floor at P1, but later the officials changed their minds and fixed the price at P0. Explain
what will be the effect on consumers’ total expenditure on cigarettes. (6 marks)

6. Kevin Ko is the owner of a farm. He finds that if he employs more workers and
machines, without changing the amount of land, the total output of vegetables would
increase as follows:

Input Output
No. of machines No. of workers Total product (units)
2 3 540
3 4 660
4 5 790
5 6 930

(a) State the economic principle illustrated. (1 mark)

(b) Explain briefly with TWO reasons why the productivity of the farm could be
improved by applying this principle. (4 marks)

© by Kevin Ko Economics Team 2006-CE-ECON I-3

7. Suppose Kevin Ko deposits $1,250 cash in Bank A. Later on the same day, Bank A
grants a loan of $2,500 to Miss Lee. What will be the immediate effect of the money
supply? (5 marks)

8. The following table shows the output that countries A and B can achieve with one unit of
input:

Country Good X (units) Good Y (units)

A 20 or 10
B 2 or 4

Which country has a comparative advantage in producing good X? For the importing
country, how much the country has to give up in order to get 2 units of good X with the
exporting country. (5 marks)

END OF SECTION A

© by Kevin Ko Economics Team 2006-CE-ECON I-4

SECTION B (50 marks)

9. The following table shows the production conditions of two firms producing identical
dolls in Hong Kong:

Firm A Firm B
Total weekly output (with five working days) 100 000 110 000
No. of workers employed 40 35
No. of hours worked per man per day 7 10

(a) Calculate the number of man-hours worked per day for Firms A and B,
respectively. (2 marks)

(b) Which firm has a higher average labour productivity? Show your working.
(3 marks)

(c) Suggest TWO reasons why specialization can raise the average labour
productivity of a firm. (4 marks)

10. (a) Define direct tax and indirect tax. Name a local example of each. (6 marks)

(b) In the jail, prisoners use cigarettes as a bet on the gambling.

‘There is no money in the jail.’ Explain whether you agree with this statement or
not. (4 marks)

(c) Explain and illustrate with TWO examples why the GNP figures of a country are
always smaller than the total market value of all transactions made in the same
year. (4 marks)

© by Kevin Ko Economics Team 2006-CE-ECON I-5

11. (a) The following diagram shows the percentage increase in the nominal wages of
workers in the manufacturing and the service sectors of an economy:

%
20

15 Manufacturing sector

10
Service sector
5

Year
93 94 95 96 97 98 99

The above diagram shows that in the period 1993-1999, if there was inflation,
then what would be the change in the real wages of workers in both sectors?
(6 marks)

(b) Mr. Kevin Ko thinks that the price of private housing in Hong Kong will increase
due to the combined effects of the provision of subsidies to the Home Starter (首
次置業人士) and the reduction in the sale of housing under the Home Ownership
Scheme. With the aid of a supply-demand diagram, explain under which
circumstance Mr. Kevin Ko would be right. (7 marks)

12. (a) ‘Maxims Restaurant’ is a restaurant selling dim-sum and serving customers.
Name and explain the type(s) of production that the restaurant is engaged in.
(4 marks)

(b) The tutorial industry of Hong Kong can be classified as monopolistic competition.
Give TWO characteristics of the industry which match this classification.
(6 marks)

END OF PAPER

© by Kevin Ko Economics Team 2006-CE-ECON I-6