Hkcee 2010 Econ Paper 2 Q2 -

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.

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:

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

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 hkcee 2010 econ paper 2 q2

, 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

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.

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. Requirement: Explain whether a price floor at $68

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

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.

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 question asks about Gross Domestic Product (GDP).

The hkcee 2010 econ paper 2 q2 is a masterpiece of microeconomic testing. It forces students to integrate algebra, geometry, and policy analysis. Mastery of this single question equips you to handle price controls, elasticity, and welfare economics in any exam. Practice drawing the graph step by step, label all surpluses, and always double-check which quantity determines actual market outcome. For HKDSE candidates, this question remains highly recommended revision material. A second part of Q2 often introduced a

Have questions or want to see a graphical illustration? Leave a comment below or email your economics tutor. Happy studying!

The HKCEE 2010 Economics Paper 2, Question 2 focuses on the core concept of opportunity cost in the context of investment choices. Answer Key

(i) Opportunity Cost Increase: The opportunity cost of choosing to invest in shares increases if the expected return or value of the alternative (investing in property) increases. For example, if property prices are expected to rise significantly, the cost of "forgoing" that gain becomes higher.

(ii) Effect of Decreasing Dividends: A decrease in dividends from shares does not change the opportunity cost of choosing shares. Opportunity cost is defined as the value of the next best alternative forgone, which in this case is the investment in property. Since the return on property remains unchanged, the opportunity cost remains the same. Step-by-Step Review 1. Define Opportunity Cost

To solve any problem involving this concept, remember that opportunity cost is the highest value of the alternative(s) that must be sacrificed when a choice is made.

Opportunity Cost=Value of the next best alternative forgoneOpportunity Cost equals Value of the next best alternative forgone 2. Identify the Alternative in (i)

The question specifies that investors choose between shares and property. Choice: Investment in shares.

Next Best Alternative: Investment in property.If the return on property (e.g., rental income or capital gains) increases, the sacrifice made to hold shares is greater. Thus, the opportunity cost of holding shares rises. 3. Analyse the Internal Change in (ii)

Part (ii) is a common "trap" in HKCEE/DSE exams. It asks if a change in the chosen option (shares) affects its own opportunity cost.

A decrease in dividends makes shares less attractive, but it does not change what you gave up to get them.

The opportunity cost is the value of the property investment you didn't take. Since nothing changed regarding the property market, the opportunity cost remains constant. 4. Critical Exam Tip

Students often confuse "cost" with "net gain." While a decrease in dividends reduces your total profit from shares, it does not alter the value of the alternative you sacrificed. Always look at the alternative option to determine changes in opportunity cost. Final Restatement

The opportunity cost of investing in shares increases only if the value of the alternative (property) increases. It does not change if the return on shares (dividends) decreases, because the value of the forgone alternative remains the same.

The HKCEE Economics examination, though replaced by the HKDSE, remains a goldmine of rigorous microeconomic problems. Among the most instructive is 2010 ECON Paper 2 Question 2. This question is a classic case study of government market intervention—specifically a price floor (minimum price) in a hypothetical agricultural market. It tests students on demand and supply analysis, elasticity, consumer surplus, producer surplus, and deadweight loss.

For candidates revisiting this paper, Q2 offers a perfect storm of calculations, graphical analysis, and welfare implications. Below, we dissect every sub-part of the question (a, b, c, d, e) as they appeared in the original exam, followed by common pitfalls and examiner insights.

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.