2000 Economics (AL)Paper 1 B&C

Hong Kong Examinations AuthorityAll Rights Reserved 2000

2000-AL-ECON 1B&C–1

HONG KONG EXAMINATIONS AUTHORITY

HONG KONG ADVANCED LEVEL EXAMINATION 2000

ECONOMICS A-LEVEL PAPER 1

Question-Answer Book for Section B and Section C

This paper must be answered in English

Candidate Number

Centre Number

Seat Number

INSTRUCTIONS FOR CANDIDATES

1. Write your Candidate Number, Centre Number and Seat Number in the spaces provided on this cover.

2. Write your Candidate Number in the spaces provided on EACH answer sheet in this book.

3. Answer each question on the TWO pages provided for that particular question. NO marks will be given

for answers written on the wrong page.

4. There are FIVE questions in Section B and FOUR questions in Section C. Attempt ALL questions and

keep your answers SHORT.

5. If you have used any supplementary answer sheets, you should write your Candidate Number on every

supplementary answer sheet and fasten it with a white string to the page in this book where the relevant

question is.

2000-ALECON

PAPER 1B & C

2000-AL-ECON 1B&C–2

This is a blank page.

All Rights Reserved 2000

2000-AL-ECON 1B&C–3 – 1 –Go on to the next page

Marker No. Candidate No.

Examiner No. Paper/Section IB

Checker’s Initial Question No. 1

Explain one chief difference between diminishing marginal use value and diminishing marginal rate of substitution.

(8 marks)

[NOTE : Don’t use a supplementary answer sheet unless you have fully utilized this page and the next page.]

Marks


2000-AL-ECON 1B&C–4 – 2 –

Paper/Section IB

Question No. 1 (Continued)


2000-AL-ECON 1B&C–5 – 3 – Go on to the next page




‘Even under price control, markets always clear.’ Why ? (8 marks)


Marks


2000-AL-ECON 1B&C–6 – 4 –

Paper/Section IB







Consider a middleman who buys a good from a producer and resells it to a consumer. Does the contractual

relationship between the producer and the middleman constitute a firm ? (8 marks)


Marks


2000-AL-ECON 1B&C–8 – 6 –

Paper/Section IB







The completion of a construction project is postponed. Explain whether each of the following is a cost to the

developer :

(a) money already spent on the project plus interest

(b) the developer’s delayed receipt of the remaining portion of income from the project

(8 marks)


Marks


2000-AL-ECON 1B&C–10 – 8 –

Paper/Section IB







Consider agricultural production which requires only two inputs, labour and land. Suppose the law of diminishing

returns does not hold, so that the marginal product curve of labour is upward rising.

(a) How much land will be used for farming ?

(b) Can we determine the rental value of agricultural land ?

(8 marks)


Marks


2000-AL-ECON 1B&C–12 – 10 –

Paper/Section IB


END OF SECTION B




Examiner No. Paper/Section IC


Currently households pay rates to cover the disposal charge for their garbage (rubbish) and the rates

depend on the value of their flats. Will there be any change in the amount of garbage disposed of by each household

if the disposal charge is calculated according to

(a) the number of people per household instead ?

(b) the number of standard garbage bags used by each household instead ?

(8 marks)


Marks


2000-AL-ECON 1B&C–14 – 12 –

Paper/Section IC







Reputable stores with big names (i.e., anchor stores) often pay considerably lower rentals per square foot than other

stores in a large shopping mall. Is this a case of price discrimination ? Explain. Does a lower rental from an

anchor store reflect a lower income received by the landlord ? (10 marks)


Marks


2000-AL-ECON 1B&C–16 – 14 –

Paper/Section IC







When the news of China reaching agreement with the United States to enter the World Trade Organization was

announced, the stock prices of three industries in China finance, automobile, communication fell sharply.

These are state industries protected as monopolies, and the agreement essentially says this protection will be

gradually removed, or phased out, so that the three industries will be open for international competition.

(a) Who gains and who loses from this agreement ?

(b) Will China as a whole gain even with the sharp fall in the stock prices of the three industries ?

(10 marks)


Marks


2000-AL-ECON 1B&C–18 – 16 –

Paper/Section IC







At present, most medical practitioners (doctors) in Hong Kong provide consultation as well as medicine (drugs) to

patients and charge each patient a lump-sum payment. However, in many western countries, doctors usually

provide consultation alone; patients have to buy medicines from pharmacists or drugstores. It has been suggested

that Hong Kong should follow the practice of these western countries.

(a) If the western practice is adopted, will there be any difference in a patient’s total medical expense on both

doctor’s consultation and medicine

(i) if doctors are price-takers ?

(ii) if doctors are price-searchers ?

(b) How would you explain why most doctors in Hong Kong choose to provide both consultation and medicine ?

(You may suggest more than one reason.)

(12 marks)


Marks


2000-AL-ECON 1B&C–20 – 18 –

Paper/Section IC


END OF SECTION C


2000 Economics (AL)Paper 1 B&C

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