Outliers DSE Econ Mock Exam 2017 Paper 1

Outliers DSE Econ Mock exam 2017 Paper 1

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本試卷的最後更新日期：2017 年 4 月 23 日

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Outliers DSE Econ Mock Exam 2017 Paper 1
1. Which of the following statements about economic good are INCORRECT?

(1) People would compete for economics good only.

(2) There is no competition when the price of an economic good is equal to the equilibrium
price.
(3) Everything in the world can be classified as either economic good or free good.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

2. Which of the following statements are INCORRECT?

(1) Whenever there is shortage, the market price must be positive.

(2) Non-price competition will not arise when there is excess supply.
(3) When there is excess supply and the market price is positive, the quantity transacted is
greater than the efficient level.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

3. Which of the following statement is correct?

A. The return of entrepreneurship cannot be negative.

B. The occupational mobility of labour will decrease in times of recession.
C. The average labour productivity will decrease when a firm employ more machinery.
D. The cost of monitoring the quality of output increases when the method of payment shifts
from piece rate to time rate.

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Outliers DSE Econ Mock Exam 2017 Paper 1
4. Which of the following statements about capital are INCORRECT?

(1) The level of capital stock would not change if there is no investment.
(2) Knowledge is a kind of capital.
(3) Capital is a fixed factor in short run production.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

5. Towngas (Hong Kong stock code: 0003) is the only firm supplying coal gas in Hong Kong. Some
restaurants in Hong Kong use coal gas for cooking. Which of the following is/are correct?

(1) Towngas is a monopolist because it possesses a franchise to run the business.

(2) If Towngas is liquidated, its employees have a higher priority to claim back their salaries
before debenture holders can claim back the money they loaned to the company.
(3) Coal gas used in restaurants is a kind of variable cost as the amount of coal gas used
increases with the number of customers.
(4) Coal gas used in restaurants is classified as land in economics because it is produced from
coal, which is a kind of natural resources.

A. (1) only
B. (2) only
C. (1) and (3) only
D. (2) and (4) only

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Outliers DSE Econ Mock Exam 2017 Paper 1
6.
Machine (Unit) Labour (Unit) Average product (Unit)
5 1 8
5 2 10
5 3 12
5 4 12
5 5 13.6
5 6 X
5 7 15

Suppose the law of diminishing marginal returns applies when labour increases from 5 units to 6
units, the maximum value of X is _________________.

A. 11.333
B. 13.6
C. 13.5
D. 14.5

7. The schedule below shows the marginal cost of a firm in a perfectly competitive market.
Output (units) 1 2 3 4 5
Marginal cost ($) 2 3 4 5 6

Suppose the total fixed cost is $2 and the market price is $4. After the marginal cost for each unit
of output is reduced by $1, the total cost of the profit-maximising firm _______________ while the
profit of the firm _____________.

A. increases … .increases
B. increases … may increase or decrease
C. decreases … increases
D. decrease … may increase or decrease

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Outliers DSE Econ Mock Exam 2017 Paper 1
8. Which of the following statements are INCORRECT?
(1) A monopolist faces no competition as it has no close substitute.
(2) Compared to diamond, gold comes closer to a product sold in a price-takers' market.
(3) A price taker cannot raise the price without losing all customers, but it can earn a higher
profit by lowering the price.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

*9. The schedule below shows the relationship between output and profit of a firm in a perfectly
competitive market.
Output (units) 0 1 2 3 4 5
Profit ($) -5 15 25 25 15 -5

When the output is 5 units, the marginal cost is $50. What is the total variable cost at the profit
maximising output level?
(Hint: Profit = Total revenue – Total variable cost – Total fixed cost)

A. 20
B. 40
C. 60
D. 80

10. The amount of total tax revenue from a per-tax depends on

(1) the amount of the tax per unit

(2) the price elasticity of demand
(3) whether the per-unit tax is imposed on buyer or seller

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

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Outliers DSE Econ Mock Exam 2017 Paper 1
11. Read the following diagram.

If the government imposes a per unit tax of $3 on the good, the quantity transacted of the goods
would be ___________.

A. fewer than 10 units

B. equal to 10 units
C. between 10 units and 15 units
D. more than 15 units

12. Which of the following statement is correct?

(1) TamJai SamGor Mixian (譚仔三哥米線) and TamJai Mixian (譚仔雲南米線) are substitutes.
(2) TamJai SamGor Mixian (譚仔三哥米線) and McDonald are NOT substitutes.
(3) When TamJai Mixian (譚仔雲南米線) raises its price, the total sales revenue of TamJai
SamGor Mixian (譚仔三哥米線) will increase only if the demand for it is inelastic.

A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)

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Outliers DSE Econ Mock Exam 2017 Paper 1
13. Outliers is considering to eat McDonalds or KFC. Which of the following would reduce his
opportunity cost of eating McDonalds?

(1) McDonalds becomes more expensive.

(2) KFC becomes more expensive.
(3) The McDonalds meal becomes more delicious.
(4) The KFC meal becomes less delicious.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (2) and (4) only

14. Which of the following are positive statements?

(1) The answer of this question is A.

(2) Most students cannot finish this mock exam paper within an hour.
(3) You should not spend too much time on this mock exam paper before HKDSE Examination.
(4) There are solutions (of a few questions) of this mock exam paper on the YouTube channel of
Outliers.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (4) only
D. (1), (2) and (4) only

*15. When there is no market intervention, the total revenue of seller is of good X is $1 000.

After the government imposed a per-unit tax on good X, the price of good X increased from $4 to
$5, the quantity demanded of good X decreased by 50 units and the total revenue of seller (net of
tax) decreased by $400.

What is the amount of the per-unit tax imposed?

A. $1
B. $2
C. $3
D. $4

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Outliers DSE Econ Mock Exam 2017 Paper 1
16. Which of the following pair of items have the same unit?
(1) Total variable cost (TVC) and total revenue (TR)
(2) Average product (AP) and average labour productivity
(3) Marginal social cost (MSC) and marginal external cost (MEC)

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

*17. After the government imposed a per-unit tax on a good, its market price raised from $16 to $18.
The producer’s tax burden is a double of the consumers’.

Suppose the total tax revenue of the government is $600, the sellers’ revenue net of tax is
__________.

A. $1 200
B. $1 600
C. $1 800
D. $2 000

18. Which of the following is assumed to be constant when the market supply curve of a good is
derived?

(1) expected price level

(2) price of substitute of the good
(3) statutory minimum wage

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

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Outliers DSE Econ Mock Exam 2017 Paper 1
19. People are willing to pay for a price for

(1) A house
(2) Earlier availability of a house
(3) A promise to obtain a house in the future

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

20. Adrian is an ordinary shareholder of a listed company.

(1) He receives dividend from the company every year.
(2) The company has more directors that a private limited company.
(3) He has voting rights in the Annual General Meeting.
(4) He has to pay stamp duty when he sells the shares.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (4) only
D. (3) and (4) only

21. The demand for private property would decrease when

(1) The maximum income limit of Home Ownership Scheme is raised.

(2) The government has raised the stamp duty of property transactions.
(3) The Hong Kong Monetary Authority lowers the maximum loan-to-value (LTV) ratio for
property mortgage loans.
(Hint: Loan-to-value ratio is the ratio of the money borrowed to the market value of property)

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

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Outliers DSE Econ Mock Exam 2017 Paper 1
*22. In 2016, the changes in the national income components are as shown below:
Private consumption expenditure +300
Net domestic fixed capital formation -270
Depreciation +10
Government consumption expenditure +0
Total exports of goods +80
Domestic exports of goods +100
Re-exports -20
Exports of services +30
Total imports -60
GDP at market price +110

The actual amounts of inventory in 2014-2016 are as shown below:

2014 2015 2016
The amount of inventory 100 200 ?

What is the amount of inventory in 2016?

A. 140
B. 160
C. 200
D. 220

23. In order to calculate the Gross Domestic Product (GDP) of Hong Kong, which of the following
items should be deducted from Hong Kong’s Gross National Product (GNP) figure?

(1) The salary of a Hong Kong citizen who is working in a farm in Australia.
(2) The salary of a Hong Kong citizen who is working in a farm in Hong Kong.
(3) The interest received by a Hong Kong resident from his savings deposit in a bank in China.
(4) The dividend earned by a foreign investor who lives in Europe from shares distributed by a
Hong Kong Company.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (4) only
D. (3) and (4) only

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Outliers DSE Econ Mock Exam 2017 Paper 1
24. The following diagram shows the production chain of a good.

$60 Consumer
in China
Raw
$50 Factory $80 Retailer
materials
in China in China $90
from Russia
Retailer $100 Consumer
in Japan in Japan

What is the contribution of the above production chain to China's GDP at market prices?

A. $100
B. $110
C. $230
D. $330

25.
2015 2016
Consumer Price Index (CPI) 105 110.25
GDP deflator 103 112.27

Suppose the growth rate of real GDP is 2% and the population decreased by 8%.
What is the growth rate of per capita nominal GDP?

A. -1%
B. 3%
C. 15%
D. 19%

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Outliers DSE Econ Mock Exam 2017 Paper 1
26. The Composite Consumer Price Index (CCPI) of Country A in 2016 equals to 100. Which of the
following CANNOT be concluded?

(1) the real GDP in 2016 is equal to the nominal GDP.

(2) there is no inflation in 2016.
(3) 2016 is the base year.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

27. Study the following figures of an economy:

Population
Aged 15 or above 10,000
Employed 4,940
Under-employed 300

Suppose the unemployment rate of the economy is 5%. What is the number of unemployed in the
economy?

A. 200
B. 300
C. 260
D. 500

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Outliers DSE Econ Mock Exam 2017 Paper 1
28.
Country A Country B
GDP deflator Inflation rate (%)

0 Year 0 Year

Which of the following about Country A and Country B are correct?

(1) The inflation rate of Country A is positive.
(2) The inflation rate of Country A is decreasing.
(3) The general price level of Country B is decreasing.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3) only

*29. The money supply of an economy is $4,000 and the banks never hold excess reserve. After the
central bank raises the required reserve ratio, the maximum banking multiplier reduced by 0.5.
After the process of deposit contraction, the money supply is $3,500.

The amount of reserves is _____________.

A. $500
B. $800
C. $1,000
D. There is not enough information to calculate the answer.

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Outliers DSE Econ Mock Exam 2017 Paper 1

30. The Balance Of Payments Account of Country A is as shown below:

$ million
Current Account 13 000
Goods –6 000
Service 10 000
Factor income 25 000
Current transfers –16 000
Capital and Financial Account –15 000
Net capital inflow 1 000
Foreign exchange and reserves assets –16 000
Net errors and omissions 2 000
Total sum = 0

According to the above data,

(1) There is capital and financial account surplus.

(2) The balance of payments account is in balance.
(3) The reserve assets of Country A have increased.

A. (1) only
B. (3) only
C. (2) and (3) only
D. (1),(2) and (3)

31. Which of the following are INCORRECT?

(1) The realized real rate of return of holding cash is zero.
(2) The realized real rate of return of holding bonds is nominal interest rate.
(3) The cost of holding money is the nominal rate of return of holding bonds.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

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Outliers DSE Econ Mock Exam 2017 Paper 1
32. Outliers withdraws HK$300 000 from his time deposit with a deposit-taking company. Then he
deposits HK$100 000 as a saving deposit with licensed bank and keeps the remainder in a safe at
home.

Yuki deposits HK$20,000 cash into her time deposit account with a restricted licensed bank and
remits HK$80 000 cash overseas.

What will be the immediate effect of the above actions on the Hong Kong dollar money supply?

(1) M1 will increase by HK$100 000.

(2) M2 will increase by $200 000.
(3) M3 will decrease by $80 000.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

33. Which of the following statements about direct tax and indirect tax are INCORRECT?

(1) Imposing a direct tax will result in a more even income distribution while imposing an
indirect tax will result in a more uneven income distribution.
(2) A decrease in income tax rate will result in a rightward shift in aggregate demand curve
while short run aggregate supply curve is not affected.
(3) Whenever the government imposes an indirect tax, producers would shift the tax burden to
consumers by raising the market price.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

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Outliers DSE Econ Mock Exam 2017 Paper 1
34. Refer to the following information about annual income level of a single person at which salaries
tax payers enter the standard rate zone (單身人士按標準稅率繳稅所需達到的每年入息水平):
2017/18 2016/17 2015/16
$1,797,000 $1,722,000 $1,620,000
Source: https://www.gov.hk/en/residents/taxes/taxfiling/taxrates/salariesrates.htm

Theoretically, which of the following are the possible explanations for the change in the above
figure?

(1) a decrease in tax allowance

(2) the tax bands have widened
(3) an increase in marginal tax rates
(4) an increase in standard tax rate

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (2) and (4) only

35. Suppose there are only three countries in the world, Country A, Country B and Country C. Their
currencies are called Currency A, Currency B and Currency C respectively.

When Currency A appreciates against the Currency B and Currency A depreciates against
Currency C,

(1) total export value of Country A (in terms of Currency B) to Country B would increase if the
Country B’s demand for imports is inelastic.
(2) total import value of Country A (in terms of Currency A) from Country C would decrease.
(3) total export value of Country B (in terms of Currency B) to Country C would increase.
(4) total export value of Country C (in terms of Currency A) to Country A would increase if
Country A’s demand for imports is elastic.

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (4) only
D. (3) and (4) only

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Outliers DSE Econ Mock Exam 2017 Paper 1
36. According to the Quantity Theory of Money,

(1) When the money supply increased by $10 billion, the real GDP would also increases by $10
billion.
(2) When the real GDP increased by $10 billion, the money supply would also increases by $10
billion.
(3) When the money supply increased by $10 billion, it is possible for the nominal GDP to
increase by more than $10 billion.

A. (1) only
B. (3) only
C. (1) and (2) only
D. (1) and (3) only

*37. The following table shows the number of man-hours required by Country A and Country B in the
production of Good X and Good Y.

1 unit of Good X 1 unit of Good Y

Country A 20 man-hour 100 man-hour
Country B 3 man-hour 9 man-hour

The transportation cost for 1 unit of Good Y is _____________ units of Good X. One-third of the
transportation cost are borne by the importing country. The remainder is borne by the exporting
country.

Suppose the terms of trade is 1 unit of Good Y = _____________ units of Good X. After 5 units of Good
Y are traded, the sum of net gain of Country A and Country B are 8.5 units of Good X.

In addition, the net gain of both countries are the same.

A. 0.3 … 4.05
B. 0.6 … 4
C. 0.9 … 3
D. 1.2 … 4.1

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Outliers DSE Econ Mock Exam 2017 Paper 1
38. The diagram below shows the aggregate demand (AD) curve, the short run aggregate supply
(SRAS) curve and the long run aggregate supply (LRAS) curve of an economy.

Compared to using ______________ monetary policy to achieve the potential output level, restoring
the long-run equilibrium by market force will result in a ______________ price level.

A. expansionary … higher
B. expansionary … lower
C. contractionary … higher
D. contractionary … lower

39. Suppose there is an increase in risk of holding bonds, the government can stabilize both output
and interest rate by

A. increasing the government consumption expenditure

B. lowering the income tax rate
C. an open market purchase of government bonds
D. an open market sales of government bonds

40. Which of the following is both a demand-side factor and a supply-side factor affecting national
income?
A. An increase in salaries tax rate
B. An increase in statutory minimum wage
C. An increase in property tax rate
D. An increase in demand for baby product in Hong Kong

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Outliers DSE Econ Mock Exam 2017 Paper 1
41. When there is a financial crisis, the prices of shares and bonds drop sharply. The government can
stabilize the output and price level by ______________.

(1) reducing the discount rate

(2) distributing consumer vouchers to citizen
(3) reducing the general sales tax rate
(4) reducing the subsidies provided to firms

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (4) only
D. (3) and (4) only

42. The government can ________________ to eliminate both budget deficit and trade deficit at the same
time.

A. reduce the discount rate

B. reduce the expenditure on social welfare
C. increase the government expenditure
D. raise the required reserve ratio

43. The nominal GDP is greater than the real GDP in the same year when

A. There is disinflation.
B. The inflation rate is positive.
C. The general price level is increasing.
D. The general price level is greater than that in base year.

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Outliers DSE Econ Mock Exam 2017 Paper 1
44. Country A has comparative advantage over Country B in producing Good X when
A. The amount resources required to producing 1 unit of Good X is smaller in Country A.
B. The opportunity cost of producing 1 unit of Good X in Country A is lower than the
opportunity cost of producing 1 unit of Good Y in Country B.
C. The marginal cost of producing Good X is lower for Country A than for Country B.
D. One unit of Good X can be exchanged for more units of Good Y in Country A than in Country
B.
45. Which of the following CANNOT be negative?

(1) Nominal interest rate

(2) Consumer Price Index (CPI)
(3) Velocity of circulation of money

A. (1) and (2) only

B. (1) and (3) only
C. (2) and (3) only
D. (1), (2) and (3)

END OF PAPER

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