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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
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. hkcee 2010 econ paper 2 q2
Opportunity Cost: The value of the "next best thing" you give up.
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) HKCEE 2010 Economics Paper 2 Question 2 tests
(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
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
This question typically deals with the concept of demand and supply, price elasticity, and market intervention (e.g., tax or subsidy). The question usually presents a market equilibrium and
While the specific image of the graph is required to solve it, Q2 in the 2010 Paper is famously known for testing the concept of Market Intervention (specifically Price Ceilings or Quotas) and their effect on Total Revenue and Market Efficiency.
Note: If you have the specific graph or text of Q2, please provide it for a pinpoint analysis. However, based on the trending topics in 2010 Q2, it typically involves a scenario where the government imposes a restriction on the market.
Hypothetical/Typical 2010 Q2 Scenario:
The question usually presents a market equilibrium and then introduces a government policy (e.g., a price ceiling below equilibrium or a production quota). It asks candidates to determine the change in Total Revenue and Consumer Surplus.
Let's analyze the standard concepts tested in this slot:
A second part of Q2 often introduced a change in the market for a substitute. For example: “Suppose the government reduces the fare of the MTR. At the same time, a new bus route with lower fares is introduced. Explain the combined effect on the total revenue of the MTR company.”
Step 1 – Own-price effect (MTR fare reduction):
As per part (a), if MTR demand is inelastic, reducing its fare alone would lower MTR’s total revenue.
Step 2 – Cross-price effect (substitute bus route):
The introduction of a lower-fare bus route is a substitute for MTR travel. For substitutes, a decrease in the price of the substitute (bus) reduces demand for the original good (MTR), shifting the MTR demand curve to the left.
Step 3 – Combined effect on MTR’s total revenue:
Two forces act simultaneously:
The net effect on MTR’s total revenue is ambiguous without elasticity magnitudes, but the examiner’s expected answer was that total revenue would likely fall further because: