Post-Mock Revision Set 4 - P1 - Question
Post-Mock Revision Set 4 - P1 - Question
ECONOMICS PAPER 1
Name: ____________________
Class: S6 _____ ( )
Duration: 1 hour
INSTRUCTIONS
p. 1
S6 Economics
There are 45 questions in this paper. Choose the BEST answer for each question.
1. Jenny has $4,000 and wants to spend it on a new smartphone. The following shows her preferred phones
and their prices.
1st choice Zoda MK2 $3,990
2nd choice Crystal J7 $3,650
3rd choice Lance HD $3,850
Which of the following will decrease Jenny’s opportunity cost of choosing the Zoda MK2?
2. ‘Tackling more economic problems by government command can reduce an economy’s Gini coefficient.’
This statement is a
A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)
4. Which of the following will decrease the labour supply in Hong Kong?
A. (1) only
B. (1) and (2) only
C. (2) and (3) only
D. (1), (2) and (3)
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S6 Economics
7. The following table shows the data of watch manufacturers in a certain district.
8. Consider a manufacturing firm in a perfectly competitive market. If the rent of the factory, which is a
fixed cost, increases by $10 000, while the marginal cost for each unit of the output decreases by $1.
The profit-maximizing output of the firm ________ and the profit of the firm ________.
Firm A Firm B
Number of owners 2 8
Transfer of ownership Needs the consent of other Needs the consent of other
owners owners
Legal status Not a legal entity Legal entity
(1) Firm A does not need to disclose its financial statement to the public while Firm B needs to.
(2) Firm A pays a lower profits tax rate in Hong Kong than Firm B.
(3) The owners of Firm A have unlimited liability while the owners of Firm B have limited liability.
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S6 Economics
11. Suppose a property management company takes over an insurance company. Which of the following is
the LEAST likely motive of the property management company?
A. When the quota on imported clothing increases, the consumption proportion of higher quality
clothing rises.
B. When drivers and passengers are required by law to wear seat belts, the number of traffic accidents
increases.
C. There are relatively less high quality fruit sold in rural markets than in urban markets which are
further away from the farms.
D. The unemployment rate decreases when the government cuts unemployment benefits.
14. An increase in the demand for ________ will lead to a decrease in the supply of ________.
A. oranges … apple seeds
B. fish … crabs
C. Adidas football boots … Adidas basketball shoes
D. chicken legs … chicken wings
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S6 Economics
15. The diagram below shows the supply curve of Blu-ray discs.
Which of the follow CANNOT explain the movement from point A to point B?
Answer questions 16 and 17 by referring to the following supply and demand schedules of a good.
Price ($) 11 12 13 14 15 16
Quantity supplied (units) 16 17 18 19 20 21
Quantity demanded (units) 22 20 18 16 14 12
17. Suppose the government provides a unit subsidy of $3 to producers of the good. Which of the following
are correct?
(1) The elasticity of demand for the good is larger than the elasticity of supply.
(2) Consumers’ total expenditure on the good will decrease.
(3) The total social surplus will decrease.
18. Because of the fear of nuclear radiation in Japan, both the price of and the total expenditure on of air
tickets to Japan has dropped. We can conclude that the demand for air tickets to Japan ________.
A. is inelastic
B. is unitarily elastic
C. is elastic
D. may be inelastic, unitarily elastic, or elastic
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S6 Economics
19. A decrease in the number of consumers of Good X results in a 10% and 5% change in its price and
quantity transacted respectively. Which of the following best explains the above changes?
20. When an effective price floor is raised to a higher level, which of the following will increase?
A. (2) only
B. (3) only
C. (1) and (2) only
D. (2) and (3) only
A. the shapes of the Lorenz curves of the two countries are the same.
B. the living standards of the two countries are the same.
C. the household income of the two countries are the same.
D. None of the above is correct.
23. To calculate the gross national income (GNI) of Hong Kong, which of the following items should be
deducted from Hong Kong’s gross domestic product (GDP)?
A. rental income earned by a Hong Kong resident from lending his car in the mainland of China
B. dividend received by a Japanese from shares bought in Hong Kong
C. donations from a Hong Kong resident to the mainland
D. salary earned by a native English teacher employed on a two-year contract by a secondary school
in Hong Kong
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S6 Economics
Suppose the GDP at factor cost is $1,700 million. The value of X is ________.
A. -40 million
B. -45 million
C. -50 million
D. -55 million
Percentage change
(relative to the previous year)
Per capita real GDP -3.5%
Real GDP -2.7%
General price level 3.2%
It can be concluded from the above data that the nominal GDP ________ and the population size
________ in the above period.
A. increased … increased
B. increased … decreased
C. decreased … increased
D. decreased … decreased
26. Suppose the underemployment rate of an economy is 2% and 60,000 people are underemployed. If the
unemployment rate is 4%, the unemployed population is ________.
A. 120,000
B. 125,000
C. 3,000,000
D. 3,125,000
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S6 Economics
27. The following table shows the financial statement of an electrical shop in a particular year.
$ $
Sales revenue of electric appliances 480,000
Less: Rental payment 50,000
Wages 40,000
Electricity and water charges 10,000
Imported electric appliances 120,000
Profits tax 39,000 259,000
Net profit 221,000
A. $260,000
B. $261,000
C. $300,000
D. $310,000
Which of the following economic phenomena would most likely be observed when the economy is in
point X?
A. stamp duty
B. property tax
C. general rates
D. betting duty
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S6 Economics
30. The table below shows the changes in the salaries tax system of an economy.
Which of the following is a most likely result of the above changes in the tax system?
31. Mr Wong withdraws HK$50,000 cash from his savings account in a bank in Hong Kong. Then he remits
half of the amount to overseas and put the rest as demand deposits in the same bank. Hong Kong’s
money supply _________ will increase by HK$25,000 and _________ will decrease by HK$25,000.
A. M1 … M3
B. M2 … M1
C. M3 … M2
D. M3 … M1
32. Which of the following is correct according to the quantity theory of money?
A. An increase in real output causes an equal percentage increase in the nominal money supply in
the long run.
B. A change in the money supply causes the same percentage change in nominal national income.
C. A change in the money supply causes the same percentage change in real national income.
D. The velocity of circulation of money never changes.
A. $3.75 billion
B. $5.25 billion
C. $9 billion
D. $15 billion
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S6 Economics
Suppose the banking system has $100 excess reserves. If someone deposits $50 cash into the banking
system, the maximum increase in money supply will be ________.
A. $75
B. $125
C. $400
D. $450
35. Aaron did not expect any change in the price level. He made an investment and expected a nominal rate
of return of 10%. The nominal rate of return of the investment turned out to be 12% and the inflation
rate was 4%. Which of the following is correct?
36. Refer to the following long run aggregate supply (LRAS) curve of an economy.
When the economy moves from point A to point B, which of the following will remain unchanged?
A. (1) only
B. (1) and (2) only
C. (1) and (3) only
D. (2) and (3) only
37. Which of the following events may lead to a decrease in the price level and an increase in the aggregate
output in the short run?
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S6 Economics
38. Suppose the government increases the Low-income Working Family Allowance. The aggregate demand
will ________ because ________.
39. Which of the following diagrams illustrate the adjustment to long-run equilibrium by the market forces
when the economy is in an inflationary gap.
40. Suppose the fiscal balance and trade balance in an open economy are both zero. If the construction of
infrastructure in the economy decreases sharply, the economy will have a ________ and a ________.
41. Country X is a small economy. If the government abolishes the unit tariff on imported paper, which of
the following statements is INCORRECT?
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S6 Economics
42. The following table shows the amount of resources required to produce one unit of clocks and donuts in
Country X and Country Y.
The cost of transporting 1 unit of donuts is 0.1 units of clocks, which is paid by the importing country.
Which of the following terms of trade enables mutually beneficial trade?
The opportunity cost of producing 1 unit of bowls is ________ units of cups. The terms of trade is 1 unit
of cups in exchange for ________ units of bowls.
A. 7/12 … 6/5
B. 7/12 … 5/6
C. 12/7 … 6/5
D. 12/7 … 5/6
44. In 2016, the British pound depreciated sharply against the US dollar. Which of the following is a possible
effect of the depreciation of the British pound on Hong Kong under the linked exchange rate system?
A. The value of British’s assets held by Hong Kong people (in terms of the Hong Kong dollar)
increases.
B. The cost of travelling in Hong Kong (in terms of the British pound) for British citizens decreases.
C. The value of goods exported from Britain to Hong Kong (in terms of the British pound) increases.
D. The number of Hong Kong students studying in Britain decreases.
45. Which of the following transactions would NOT affect the current account of Hong Kong?
A. The Hong Kong Monetary Authority sold the US dollar to the market.
B. The Hong Kong government donated money to the mainland.
C. A Hong Kong resident received dividend from a listed company in the US.
D. A Hong Kong travel agency bought tickets from a Japanese airline.
END OF PAPER
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