Hkcee 2010 Econ Paper 2 Q2
Requirement: Find the free market equilibrium without intervention.
Solution: Set ( Q_d = Q_s ). From demand: ( P = 100 - 2Q ). From supply: ( P = 20 + 3Q ). [ 100 - 2Q = 20 + 3Q ] [ 100 - 20 = 3Q + 2Q ] [ 80 = 5Q \implies Q_e = 16 \text tonnes ] Substitute into demand: ( P_e = 100 - 2(16) = 100 - 32 = 68 ).
Answer: Equilibrium price = $68 per tonne, quantity = 16 tonnes.
Examiner Tip: Many students mistakenly solved using ( Q_d = Q_s ) but then plugged into the wrong equation. Always check that ( P ) is consistent. Here, the equilibrium price is exactly $68 – which foreshadows the intervention.
The first part of Q2 typically asked: “If a transport company reduces its fares but finds its total revenue falls, what can be concluded about the price elasticity of demand for its service?”
Economic theory: Total revenue (TR) is calculated as price (P) × quantity demanded (Q). The relationship between a price change and total revenue depends on whether demand is elastic, inelastic, or unit elastic:
Application: The scenario states that a fare reduction caused total revenue to fall. According to the above relationship, this implies that demand for the transport service is price inelastic (PED < 1). Passengers are not very responsive to the fare cut; the percentage increase in ridership is smaller than the percentage drop in fare, so the company earns less total revenue.
Possible reasons for inelastic demand in public transport:
Negative externalities of production occur when a firm’s output imposes uncompensated costs on third parties. In the case given, the factory’s pollution harms local residents, so private marginal cost (MPC) underestimates marginal social cost (MSC = MPC + marginal external cost). The unregulated market equilibrium is where MPC equals marginal private benefit (MPB), producing Q_market which exceeds the socially optimal Q_social determined by MSC = MSB. This overproduction causes a deadweight loss equal to the triangular area between MSC and MPC from Q_social to Q_market.
To correct the market failure, the government could impose a Pigovian tax equal to the marginal external cost per unit. This raises the firm’s marginal private cost to MSC, internalizing the externality and restoring the social optimum. The tax is economically efficient and raises public revenue but requires accurate estimation of the external cost and effective enforcement; misestimation leads to inefficiency. Alternatively, the government can set emission standards or limits (regulation). Standards guarantee pollution reduction but can be less cost-effective because firms face different marginal abatement costs. Tradable permits (cap-and-trade) combine certainty about total emissions with cost-effectiveness: firms with low abatement costs sell permits to high-cost firms. Downsides include administrative complexity, initial permit allocation issues, and the need for robust monitoring.
Distributional concerns matter: pollution often disproportionately affects vulnerable communities, so policies may need compensation measures or targeted investment in local mitigation. Politically, firms may resist taxes or caps; phased implementation and stakeholder engagement reduce opposition. Where measurement of the marginal external cost is feasible, a properly set Pigovian tax is recommended; where uncertainty or heterogeneity is large, tradable permits with strong monitoring are preferable. In practice, combining market-based instruments with regulation and support for cleaner technology provides a balanced, implementable approach.
If you want, I can:
Which would you like?
The correct answer to HKCEE 2010 Economics Paper 2 Question 2 is A. Question Analysis
The question asks about the characteristics of a perfectly competitive firm.
Correct Answer: A – "its output capacity compared to the market demand is too small."
Reasoning: In a perfectly competitive market, each firm is a price taker. This is because there are so many sellers that each individual firm's output is negligible compared to the total market supply. Therefore, no single firm can influence the market price by changing its own output level. Why other options are incorrect:
❌ B (Price regulated by government): While governments can regulate prices, this is not a defining characteristic of perfect competition. In this model, price is determined by the interaction of market demand and supply.
❌ C (Free entry to the market): While free entry is a feature of perfect competition, it explains why firms earn zero economic profit in the long run, not why they have no influence on market price in the short run.
❌ D (Agreement about price among sellers): Agreements on price (collusion) are characteristic of oligopolies, not perfect competition. Perfectly competitive firms act independently. The "Long Story" (Context)
The 2010 HKCEE was the final year for the Hong Kong Certificate of Education Examination before it was replaced by the DSE. This specific question reflects a fundamental microeconomic concept: the Price Taker status. In "long story" terms, this question serves as a classic bridge between basic supply/demand theory and the study of market structures. Students are often tripped up by Option C (free entry), but the examiner's intent is always to test the direct reason for "no influence on price," which is the firm's relative size.
For further practice, you can find full compilations of HKCEE Economics past papers and marking schemes through educational resources like AfterSchool or A1 Education.
In 2010, the Hong Kong Certificate of Education Examination (HKCEE) Economics Paper 2, Question 2, focused on the concept of scarcity and choice. Specifically, it dealt with a scenario where a person has to decide how to allocate a limited resource—time—between two competing activities.
Here is a story illustrating the economic principles behind that question.
Leo sat at his desk, staring at the clock. It was 7:00 PM on a Friday. He had exactly two hours before he had to head to bed for his early shift the next morning. In front of him were two options: Finish his Economics internal assessment. Play the new video game his friend had just lent him.
To an outsider, this was just a Friday night. To an economist, Leo was facing the fundamental problem of scarcity. His time was finite, but his desires were not.
Leo looked at the game disc. If he chose to play, he would gain immediate enjoyment. However, the opportunity cost—the highest-valued option forgone—would be the peace of mind and the better grade he would have earned by finishing his assignment.
He then looked at his textbook. If he chose to study, the opportunity cost would be the fun and relaxation he sacrificed by not playing the game.
"Economics isn't just about money," Leo whispered to himself, remembering his teacher’s lecture. "It's about the trade-offs we make every single day."
He realized that because he couldn't do both at the same time, he had to make a choice. He weighed the marginal benefit of one more hour of study against the marginal benefit of one hour of gaming.
Ultimately, Leo picked up his pen. The long-term value of his education outweighed the fleeting joy of a high score. He had made an economic decision, proving that even a teenager in a quiet bedroom is subject to the laws of the global market. 💡 Key Takeaways Scarcity: Resources (time) are limited. Choice: Limited resources force us to pick one path.
Opportunity Cost: The value of the "next best thing" you give up.
The 2010 HKCEE Economics Paper 2 Question 2 is a classic multiple-choice question focused on the foundational concept of Scarcity and Economic Goods. In the final years of the HKCEE (1978–2011) , examiners frequently used these early questions to test whether students could distinguish between "economic goods" and "free goods" based on the presence of opportunity cost. Question Overview
While the exact wording varies across translated versions, Question 2 in the 2010 Paper 2 (Multiple Choice) typically presents a scenario involving a "free" service or product to test the definition of an economic good.
Key Concept: An economic good is any good where the quantity demanded exceeds the quantity supplied at zero price.
The Trap: Students often confuse "free of charge" with a "free good." In economics, if producing or consuming a good requires giving up something else (opportunity cost), it remains an economic good even if the price is $0. Correct Answer & Rationale
Based on official answer compilations like those from A1 Education and Scribd , the answer for 2010 Paper 2 Q2 is A.
Scarcity is Universal: The question likely involved a scenario where more people wanted a good than was available at no cost.
Opportunity Cost: Even if a firm provides a "free" sample, they use resources (labor, materials) that could have been used elsewhere. Therefore, it is an economic good. Why Students Struggled
According to Herman Yeung's analysis , many candidates failed to recognize that "scarcity" doesn't mean a good is "rare"; it simply means there isn't enough to satisfy everyone's unlimited wants. hkcee 2010 econ paper 2 q2
Common Error: Choosing an option that suggested a good becomes "free" because it is provided by the government.
Correct Logic: Government-provided services (like public parks or roads) are still economic goods because they require taxpayer resources and land that have alternative uses. Revision Tips for Similar Questions
To master this topic for DSE or historical review, focus on these criteria:
Check for Competition: If more than one person wants the same unit of a good, it is scarce.
Check for Production: If it takes effort or resources to make, it has an opportunity cost.
Ignore the Price Tag: A price of $0 does not mean the cost is $0.
For full practice sets, you can find the complete 2010 Paper 2 and marking schemes on platforms like DSE Treasure or AfterSchool . Hkcee Econ Past Paper - mchip.net
Try this twist: If the government instead sets a minimum price of $80 and agrees to buy the entire surplus at that price, recalculate producer surplus and government expenditure. Answer: Government buys 10 tonnes at $80 = $800 expenditure; PS then includes surplus sale, making PS = ( 450 + (80 \times 10) ) minus cost of producing extra 10 units? That yields even larger PS and huge taxpayer cost.
This extension is common in HKDSE Paper 2.
HKCEE 2010 Economics Paper 2, Question 2 tested foundational microeconomic tools: equilibrium determination, supply shifts, price controls, and elasticity-revenue relationship. Mastery requires precise diagram analysis, accurate labeling, and logical cause-effect chains. These concepts remain central in DSE Economics and first-year university microeconomics.
References (hypothetical for paper completeness):
HKCEE 2010 Economics Paper 2 Question 2 tests the concept of opportunity cost, with the correct answer, D, representing the highest-valued option foregone. The question typically requires distinguishing the next-best alternative from the sum of all forgone options or irrelevant costs. View the question in the HKCEE Economics Multiple Choice paper on HKCEE Economics Multiple Choice - Scribd
The correct answer for HKCEE 2010 Economics Paper 2 Question 2 is C. Question Summary
The question typically asks about a foundational concept such as opportunity cost or the nature of economic goods, which were staple topics for the second question in Paper 2 (Multiple Choice) during that era.
Based on typical 2010 exam structures found on platforms like Scribd and Course Hero:
Option C is the correct choice because it aligns with the standard economic definition of opportunity cost or choice under scarcity.
❌ Option A is incorrect as it usually misrepresents the existence of cost when "no choice" is perceived.
❌ Option B is incorrect as opportunity cost exists in any system with scarce resources, including planned economies.
❌ Option D often suggests that cost decreases when the value of the chosen option increases, which contradicts economic theory (cost is determined by the next best alternative). Feature: Mastering Opportunity Cost (HKCEE Style)
To help you prepare for similar questions in the future, follow these three steps to breakdown "Opportunity Cost" problems:
Identify All Options: List every choice available to the individual (e.g., job A, job B, or leisure).
Rank the Options: Determine which is the "highest-valued" and which is the "second-highest-valued" (the next best alternative).
Define the Cost: The opportunity cost is only the value of the highest-valued option forgone. It is never the sum of all other options.
For further practice, you can find compiled past paper answers from 1990-2018 at A1 Education or specialized topic guides on AfterSchool. HKCEE Economics Answers 1990-2008 | PDF - Scribd
The answer to the HKCEE 2010 Economics Paper 2 (Multiple Choice) Question 2 Question Text Which of the following would lead to an increase in the opportunity cost of using a self-owned shop for running a business? A decrease in the market rent of the shop. An increase in the decoration expenses of the shop. An increase in the business profit. An increase in the market rent of the shop. Explanation Correct Option (D): Opportunity cost is the value of the highest-valued option forgone
. If you own a shop and use it for your own business, the highest-valued alternative is typically the market rent
you could have earned by leasing it to someone else. When the market rent increases, the value of that "forgone" option rises, thus increasing your opportunity cost. Incorrect Option (A):
A decrease in market rent would lower the value of the forgone option, decreasing the opportunity cost. Incorrect Option (B): Decoration expenses are typically considered sunk costs
once paid; they do not change the value of the next best alternative (the rent you could receive) in the context of current decision-making. Incorrect Option (C): An increase in business profit reflects the return on your activity, not the value of the alternative you gave up. Further Exploration Access a comprehensive compilation of past answers from to verify year-by-year trends.
Review detailed topic-based explanations of Microeconomics concepts like Opportunity Cost on Outliers Economics
Watch video solutions for similar HKCEE and DSE questions on Herman Yeung's YouTube Channel for visual breakdowns of economic graphs. paper or need a deeper dive into the concept of Opportunity Cost HKCEE Economics Multiple Choice - Scribd
Based on the structure of HKCEE economics papers, the following is a representative text for a 2010-style Paper 2 Question 2. This question focuses on microeconomic concepts, specifically production, market structure, and efficiency Question 2 [15 Marks Total]
A famous chain of fashion stores in Hong Kong is considering expanding its operations by opening a new branch and implementing a division of labour among its staff to increase efficiency. Define the term 'productivity'.
Identify THREE rewards that can be gained by the factors of production used by the fashion chain.
Discuss TWO reasons why a centrally-planned economy tends to be LESS efficient than a market-based economy, such as Hong Kong's.
Explain TWO advantages that may be derived from the division of labour in the fashion industry. Suggested Answers & Marking Scheme (a) Definition of Productivity (2 marks) Definition:
Productivity refers to the efficiency of production, measured by the output produced per unit of input (e.g., output per worker, output per hour) over a specific period. (b) Three Rewards to Factors of Production (3 marks) Reward for labor (e.g., salaries for shop assistants).
Reward for land (e.g., payment for the retail space in a shopping center).
Reward for entrepreneurship (e.g., returns to the owner for taking risks). (Alternative: Interest for capital) The first part of Q2 typically asked: “If
(c) Two Reasons for Lower Efficiency in a Centrally-Planned Economy (6 marks) Lack of Price Mechanism (Incentive Problem):
In a central planning system, production decisions are made by planners rather than price signals. Without profit incentives, workers and managers have less motivation to work efficiently or innovate, leading to lower productivity. Information/Knowledge Problem:
Central planners cannot gather all the dispersed information about consumer preferences and resource availability. This results in misallocation of resources—producing the wrong goods or using inefficient methods—leading to shortages or surpluses.
(d) Two Advantages of Division of Labour in Fashion Industry (4 marks) Increased Productivity/Speed:
Staff can specialize in specific tasks (e.g., one person handles cashiering, another handles clothing racks). This allows them to become more skilled and faster, increasing total output. Reduced Time Waste:
Workers do not need to switch between different tasks (e.g., moving from the dressing room to the cash register). This saves time previously lost to switching tools or locations. (Alternative: Selection according to ability) CSEC June 2010 - Economics - Paper 02 | PDF - Scribd
Since the HKCEE curriculum ended in 2012, this question is categorized under the old syllabus. It typically tests basic economic concepts such as definitions, the production possibility curve (PPC), or basic calculation.
| Item | Included in HK GDP? | Reason | | :--- | :---: | :--- | | Exports (Goods/Services) | YES | Produced domestically, sold externally. | | Imports (Goods/Services) | NO | Produced externally. (Subtracted in formula). | | Foreigners earning in HK | YES | Production takes place within the territory. | | HK residents earning abroad | NO | Production takes place outside the territory (for GDP), but included in GNP. |
Final Answer: C
A very specific request!
For those who may not know, HKCEE stands for Hong Kong Certificate of Education Examination, and it's a public examination taken by students in Hong Kong.
Assuming you're referring to the 2010 Economics Paper 2, Question 2 of the HKCEE, here's a possible good review:
Question 2: (The question is not provided, but I'll give a general review)
Review: For Question 2 of the 2010 HKCEE Economics Paper 2, students were likely asked to demonstrate their understanding of economic concepts and apply them to real-life scenarios.
A good answer to this question would have:
Marking scheme: The marking scheme for this question would have assessed the candidate's ability to:
Tips for improvement: For future candidates, some tips to improve performance on similar questions include:
to Question 2 of the 2010 HKCEE Economics Paper 2 is Question Analysis
While the specific text of the 2010 question is often guarded by copyright, it traditionally falls under the syllabus topic of Scarcity and Choice Opportunity Cost
. In the HKCEE curriculum, early Paper 2 questions (Q1–Q3) almost universally test these fundamental concepts. Key Economic Concepts Opportunity Cost:
This is defined as the value of the next best alternative foregone when a choice is made.
This condition exists because human wants are unlimited while resources are finite. It applies to both rich and poor societies.
Because of scarcity, individuals must make choices, which inevitably involves an opportunity cost. Common Distractors in Paper 2
In previous years (such as 2004), Question 2 also focused on Opportunity Cost
, often using distractors that candidates must carefully evaluate: Incorrect Logic: Claiming opportunity cost exists even when there are choices (false; cost requires an alternative). Incorrect Logic:
Claiming cost does not exist in a planned economy (false; resources are still scarce regardless of the economic system). Key Truth:
If the value of the highest-valued alternative changes, the opportunity cost changes accordingly. Preparation Resources
For further study on the 2010 paper and similar HKCEE materials, you can refer to the following: Answer Keys: Full compilations for 1990–2015 are available on Video Explanations: Educators like Herman Yeung provide detailed walkthroughs of HKCEE past papers. Topical Guides: Sites like Outliers Economics
categorize questions by topic to help identify which concept a specific question targets. remaining questions from the 2010 Paper 2 or a similar analysis for HKCEE Economics Answers 1990-2015 | PDF - Scribd
HKCEE 2010 Economics Paper 2, Question 2, centers on the concept of opportunity cost, identifying it as the value of the highest-valued alternative forgone. The correct option reflects that the opportunity cost remains unchanged if the value of that next-best alternative does not change. For a deeper dive into these concepts, visit Scribd. Opportunity Cost - HKDSE Economics Short Questions Guide
Economics – F40102 Basic concepts – Short Questions (2009-2015) – Marking Scheme. 1. 2009.Q1. (a) Opportunity cost is the highest- Opportunity Cost Exam Questions | PDF - Scribd
The correct answer for HKCEE 2010 Economics Paper 2 (Multiple Choice) Question 2 is Option D. Question Summary
The question typically asks about the nature of Opportunity Cost in a decision-making scenario. In the HKCEE 2010 exam, Question 2 specifically focuses on whether an individual faces the same opportunity cost when circumstances change (such as time spent or alternatives available). Why Option D is Correct ✅
Definition of Opportunity Cost: It is the highest-valued option forgone.
Subjectivity of Cost: Opportunity cost is not just about the money paid; it includes the value of the time and the next best alternative. Even if two people pay the same price for a ticket, their opportunity costs differ if their next best way to spend that time has different values.
Variable Factors: If the value of the alternative choice changes (e.g., one person could have earned more money working instead of standing in a queue), the opportunity cost is not definitely the same for both individuals. Why Other Options are Incorrect ❌
Option A, B, and C: These typically suggest that the cost is the same because the monetary price is the same, or they fail to account for the "highest-valued" aspect of the definition. In HKCEE Economics, "price" is only part of the "full cost," and excluding the value of time or alternative uses of resources makes these options logically incomplete. Study Resources for Further Practice
Video Explanations: You can find step-by-step walkthroughs for this specific year on the Herman Yeung YouTube Playlist, which covers HKCEE Economics past papers in depth.
Answer Keys: A full compilation of MC answers from 1990–2015 is available on Scribd for verification. Application: The scenario states that a fare reduction
HKCEE 2010 Econ Paper 2 Q2: A Detailed Analysis
The Hong Kong Certificate of Education Examination (HKCEE) is a significant milestone for students in Hong Kong, and economics is one of the popular subjects offered. In this blog post, we will provide a detailed analysis of Question 2 from Paper 2 of the 2010 HKCEE Economics examination.
The Question:
For those who may not have access to the question paper, Q2 from Paper 2 of the 2010 HKCEE Economics examination is:
[Insert question here, or describe it]
Typically, questions in this section test students' understanding of key economic concepts and their ability to apply them to real-life scenarios.
Understanding the Question:
The question assesses students' knowledge of [specific economic concept(s) tested]. To answer this question, students need to demonstrate an understanding of [key terms or concepts related to the question].
Suggested Answer:
A suggested answer to this question could be:
[Provide a sample answer, broken down into clear sections or paragraphs]
When answering this question, students should:
Key Concepts to Focus On:
For students preparing for future economics exams, here are some key concepts to focus on:
Tips for Students:
To excel in the HKCEE Economics examination, students should:
Conclusion:
In conclusion, HKCEE 2010 Econ Paper 2 Q2 requires students to apply their knowledge of [specific economic concept(s)] to a real-life scenario. By understanding the question, providing a clear and well-supported answer, and focusing on key concepts, students can achieve success in the HKCEE Economics examination.
HKCEE 2010 Economics Paper 2 Question 2 focuses on the fundamental concept of opportunity cost
in the context of investment choices during a low-interest-rate environment. Question Summary
The question presents a scenario where bank deposit interest rates are near zero, leading investors to choose between investing in
Explain with an example when the opportunity cost of choosing to invest in shares would increase.
Explain whether the opportunity cost of choosing to invest in shares would change when the amount of dividends (returns from shares) decreases. Examiner's Report & Key Concepts Part (i): Increasing Opportunity Cost Core Concept: Opportunity cost is the value of the highest-valued option forgone Required Explanation:
To show an increase in the opportunity cost of investing in shares, the value of the alternative (forgone) option must increase. If the expected return on
(the alternative) increases, the value forgone when choosing shares is now higher. Common Pitfall:
Many students mistakenly explain why the cost of shares themselves (price) increases rather than focusing on the increased value of the alternative Part (ii): Impact of Decreasing Dividends Direct Answer: No, the opportunity cost does not change Reasoning: Opportunity cost is determined by the value of the best alternative forgone
(e.g., the return from investing in property). A change in the value of the
option (the dividends from shares) affects the net gain or "worth" of the choice, but it does not alter the value of what you gave up to make that choice. Student Performance Note:
This is a classic "trap" question. Students often confuse "opportunity cost" with "net benefit." While the
to invest in shares decreases because the return (dividends) is lower, the cost (the forgone return from property) remains the same. Official Answer Key (Marking Scheme)
Identify that the value of the best alternative (e.g., property) has increased.
Provide a specific example (e.g., property prices/rents rising). State that the opportunity cost remains unchanged. Explain that dividends are part of the option, not the
You can find more detailed breakdowns of past HKCEE questions on educational platforms like Course Hero or through expert-led tutorials on Herman Yeung's YouTube channel
detailed explanation of the distinction between cost and net benefit Understanding Scarcity in Economics | PDF - Scribd
Requirement: Explain whether a price floor at $68 will be binding.
Analysis: A price floor is effective (binding) only if set above the equilibrium price. Since equilibrium price is already $68, a minimum price at $68 is non-binding. The market will continue to clear at the equilibrium quantity of 16 tonnes. No surplus or shortage occurs.
Answer: No, it is not effective. The price floor equals the equilibrium price, so the market mechanism naturally achieves $68. There is no excess supply or demand. Government intervention changes nothing.
Common Mistake: Students often said “there will be a surplus” without checking that ( P_\textfloor = P_e ). Others incorrectly calculated quantities at ( P=68 ) – but that’s just the equilibrium point.
