頁二第張五第 日六初月七年子甲歷夏 WAH KIU YAT PO-
1984
中學會考試題預習專欄
經濟及公共事務
解答建議
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(a) Goods which are in competitive demand
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are said to be
substitute goods for each other. An increase in demand for one of them will reduce the demand for the others. For. example, beef and pork are substitute. goods because both of them are meat of same nature in
yielding satisfaction to consumers in general,
Goods are said to be complementary goeds when they must be used together for the satisfaction of a want. For example, ink and fountain pen are complementary goods because they must be used together for the writing purpose.
The equilibrium price and quantity in the Brand A video. cassette recorder. market are
respectively $3,000 and 3,000 unita per month.
Q, Qe
Brand A video
cassette recorders. If a new method of producing Brand A video cassette recorders is introduced which greatly reduces the cost, the supply of it will increase in the market. The
supply curve of Brand A will shift to the right from SS to $3 $353. Consequently, the equilibrium price of it will fall
from Pe to P3 and the equilibrium quantity will increase from (iv)Qe to Q3.
Qe Qi
D4
If there is a fall in the rental charges for video cassette: tapes, there will be
more consumers
willing to rent them. Therefore, the demand for video cassette recorders, including: those of Brand A, will increase in the market. The demand curve of Brand A will shift upwards to the. right from DD to. D4D4. Consequently, the equilibrium price will increase from Pe to P4 and the equilibrium quantity will increase from Qe to Qà.
Assuming a constant: production cost, the When there is a fall in the price of Brand B video cassette recorders, the demand for "Brand A video cassette recorders will fall since both
Brands A and B are substitute goods. The
A will shift down- wards to the left from DD to D1D1.
Consequently, the
equilibrium price
will fall from Pe to
P1 and the equilibri- um quantity will fall (ii) from Qe to Q1.
Pe
P1
Ar Qe:
When there is a fall
in the real income of Hong Kong people, the demand for Brand A video cassette recorders will fall. The demand curve of Brand A will shift.. downwards to the left from DD to D2D2. Consequently, the equilibrium price will fall from Pe to P2 and the equilibri- um quantity will fall from Qe to Q2.
Que Q3 opportunity cost of producing a chair in this factory is 1/4 table.
(ii) with the factory's
given resources, it can produce a maximum of 1,500 tables or 6,000 chairs per month, In other words, the production possibility frontier of the factory per month is 1,500 tables, or
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(iii)
demand curve of Brand (
chaira, 0x4000
combination of both. Therefore, it is impossible for the factory to produce both 1,500 tables and 10 chairs per month because production combination lies outside the
production
this
possibility frontier
of the factory. The word "limited' implies that the liability of each shareholder for the company's debts is
limited to the values
of shares he has
invested in the
company only,
The Lo & Lam
Furniture Company
Limited is a private limited company.
The lialíbility of owners of a private limited company is limited while the liability of owner of a sole
proprietorship is. unlimited,
A private limited company enjoys. perpetual
continuity of existence provided that its owners approve the
transfer of shares while a sole proprietorship comes to an end when its owns dies
or withdraws from the business. The transfer of ownership of shares of a private limited company requires the approval of all the shareholders of the company, while the transfer of owner- ship of a sole proprietorship is slow and'
inefficient.
The setting up of own shop to sell direct
報日僑華
A
to the public by Mr. Lo and Mr. Lam is a forward vertical integration. Its possible gạins can be summarized as follows: Firstly, the firm can ensure channel of distribu- tion of its own products through its own retailing shop. This can better the implementation of the firm's own marketing policy. Secondly, a better understanding of consumer preference can be achieved since there will be a closer and more direct contact between the firm and customers. Thirdly, if the shop is run efficiently, the firm's producte can be made known to the public more effectively. Consequently, the firm's cost of distribution can be reduced and its profits can be increased.
In order to raise capital for expansion, Mr. Lo. and Mr. Lam can
issue new shares and debentures for public
subscription on stock market; borrow money from banks;
combine with other firms;
require its share- holders to contribute
additional capital subject to the
· company's approval. Mr. Chan's farm is in a short-run situation because some factors: of production, land and capital, are fixed inputs, vhile labour is a variable input.
(ii) The marginal product
of the third worker 18 (5,200-4,000)/ (3-2)-1,200 kg
The marginal product of the fifth worker is (7,800-6,600)/ (5-4)=1,200 kg
The marginal product of each additional worker will diminish as more and more workers are employed on the farm.
(iv) The economic
principle illustrated by the trend of change of the marginal product
called in (iii) is Law of Diminishing Returns. It states that as more and more units of an input is applied to production, while other inputs" being held constant, the marginal product of each additional input will tend to diminish.
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With reference to the figures shown in the table, the two. problems faced by Kong Kong workers during the period March 1982-March 1983 are as follows: Firstly, there was an increase in unemploy- ment rate of Hong Kong workers from 3.3% to 5.1% during the period. Secondly, the real average daily wage rates dropped from an index of 100 to an iudex of 97, implying that the real income of them had dropped by 3%. Their purchasing power decreased
consequently.
四期星 ®
ii) The increase in
XXX-
employment rate and decrease in real wage rate both made more workers become unemployed and also their real incomes" less than before. These two effects both made the living standard of the workers lower than before.
The possible cause a of increase in un- employment rate are as follows:
There might have been a fall in the value of domestic exports. There might have been a fall in economic activities in
Hong Kong
There might have been an increase in labour productivity in Hong Kong. There- fore the demand for workers. decreased.
There might have been a greater use of modern machinery and equipment in production. Therefore the demand for workers decreased. The main cause decrease in real daily wage rates is as follows:
There had been an increase in: general price level in Hong Kong. Its rate of increase was greater than that of nominal average daily wage rates. Protectionism' (a) refers to the
policies of trade restrictions of a country imposed on its imports and exports. The policies may include tariffs, quote, exchange control, embargo, and aurcharge.
(11) Hong Kong's major
exports, such as textiles and quartz watches, are subject to trade
restrictions, mainly quotas. As a
consequence, the volume of exports vill be restricted, and its growth will be limited. As the Hong Kong economy is mainly export- oriented,
protectionism will greatly produce adverse effects on our economy. There- fore, it is necessary for Hong Kong to fight protectionism,
In order to fight protectionism, Hong Kong can adopt the following measures: Firstly, Hong Kong industries can increase thë production of high- value products for exports. This can avoid the adverse- effect of quotas imposed by overseas countries. Export values can still increase even at the presence of protectionism.
Secondly, Hong Kong industries should develop new lines of products for exports. This can diversify the exports to more new markets.
Hong Kong imports were mainly of raw
日二月八年四八九一歷公年三十七國民華中育教僑華
materials, food-
stuffs, machinery,
fuels and parts,
whereas domestic
exports were mainly
of textiles, clothing, electronics, plastics, and watches. Since Hong Kong has to depend largely on imported foodstuffs for daily consumption, and raw materials and. machinery for production, it had long been that the value of Hong Kong's imports exceeded that of exports. (ii) Hong Kong can have earnings from invisible trade with other countries to finance its imports. These include net earnings from tourism, banking and finance, transportation and communication, and other services provided to foreigners.
Other sources of funds include reserves of the Government and the outflow of local capital.
Salaries tax in Hong Kong is progressive as long as the tax is less than 15% of the taxable income However, when the tax is greater than 15% of the taxable income, the taxpayer can pay only 15% of the taxable income. In this case, salaries tax is proportional.
(ii) Profits tax in Hong
Kong is proportional since only a fixed percentage of profits will be given as tax to the government, regard- less of the amount of profits,
In order to reduce the deficit for the financial year 1983– 84, the Government increased. the tax rates of cigarettees, first registration of car, and licence fees.
By September 1983. the extra revenue
from taxes was found to be smaller than expected. This was possibly due to the fact that consumption expenditures on cigarettees and cars had not increased at the rate as
expected. Also, the slow down of economic activities during the year had reduced the increase of revenue of licence fee.
(iii) If the Government
used past fiscal surpluses to finance the current deficit, the advantages would be as follows: Firstly, there would be smaller increase of tax rates and the economy,in particular the taxpayers, would be less affected. Secondly, the government expenditure would not have to be cat down and the government projects would not be interrupted due to current deficit, Employment level can thus be. stimulated.
On the other hand,
such measure would have disadvantages
as follows: Firstly, a deficit financed by past fiscal surpluses would lead to a greater money supply circulating in the economy and this would produce inflationary pressure on the economy, Prices would increase in general,
Secondly, the growth of govern- ment expenditure would not be
checked and the expansion of public sector in the economy may be too fast.
There are two types of people in the stock market: people who forecast that the stock prices would rise in future; and people who forecast that the stock prices would fall in future.
ld
of the
(ii) If most of
people in the stock. market forecast that the stock prices would rise in future, there would be a tendency for the prices of stocks to rise. On the contrary, the prices of stocks would fall.
(b) Both the local Stock
Exchange and Commodities Exchange provide information to the buyers as much as possible. The goods sold in both markets are
homogeneous in nature. Also, there ere a- large number of buyers in both markets. Entry into both markets is free. However, the goods traded in both. markets differ in nature. Shares and debentures traded in the stock market are investments in business, while commodities traded in the commodity
exchange are used mainly as rav materials in production or for immediate
consumption. The
stock market channels small savings of public into busineas firms in need of capital for expansion. The commodities exchange protects the firms against the risk of rising costs of raw materials for production.
(c) People buy shares
order to channel their own savings. into the most profitable business so that they can make a greatest profit return to their own capital
People buy future contracts in order to fix their cost of buying some
commodities at a constant level so
that they can keep their production costs under control and good estimation regardless of fluctuation of commodity prices due
to some unpredictable factors such as climate conditions.