BHMH2002 Introduction To Economics (S1, 2021) Take Home Test - Question Paper

HONG KONG COMMUNITY COLLEGE
BHMH2002 Introduction to Economics (S1, 2021)

Take Home Test – Question Paper
(Version B)
Submission Deadline : Lecture Group Due Date and Time

A06-A14 2:45pm on 8 Nov 2020 (Sunday)
Program Learning Outcomes : This assessment is designed to measure S-ILO-3 Critical Thinking
⎯ Analyse and evaluate information, ideas, arguments and
issues critically, and make decisions that are informed by
evidence in their chosen areas of specialism.
Subject Expected Learning : (a) explain the issues involved in the allocation of scarce
Outcomes: resources for individual economic agents and the
economy as a whole
(b) apply relevant economic knowledge to conduct economic
analysis of the behaviour of firms and markets, and the
effectiveness of government economic policy
(c) apply relevant economic knowledge to enhance their
understanding of other business subjects
Format and requirements : Students should refer to the “Instructions of Take Home Test”
for the format and requirements. Answer ALL questions on the
standard answer sheet provided.
Declaration of Original Work Plagiarism is a serious misconduct. No part of students’

submission should be taken from other people’s work without
giving them credit. All references must be clearly cited. Any
plagiarism found in students’ completed assessment can lead
to disciplinary actions such as mark deduction, disqualification
or even expulsion by the College.
This test paper has a total of THREE (3) pages (including this covering page).
Page 1 of 3
Question 1
The following information reveals the market condition of organic shampoo:
Qd = 600 –2P, where Qd is the quantity demanded in number of bottles and P is the price of a
bottle of organic shampoo
Qs = 120 + P, where Qs is the quantity supplied in number of bottles
(a) State the equilibrium condition. Calculate the equilibrium price and equilibrium quantity of
organic shampoo. Draw a well-labelled demand-and-supply diagram for the market for
organic shampoo with all relevant figures. (8 marks)
(b) Calculate the consumer surplus, producer surplus, total surplus and total benefit of the
market for organic shampoo. Show your workings. (5 marks)
(c) Suppose a news report reveals the effectiveness of the organic shampoo is very high.
(i) Use a demand and supply analysis to explain the effect(s) on the equilibrium price and
equilibrium quantity of organic shampoo. Indicate this market change in the same
diagram of part (a). (3 marks)
(ii) With the aids of your diagram in part (a) and (c)(i), describe the change of the total
surplus. (2 marks)
(iii) In view of this market change, could the market of organic shampoo be considered as
efficient under the new market equilibrium condition? Explain. (2 marks)
(Total: 20 marks)
Page 2 of 3
Question 2
Owing to the outbreaks of COVID-19 in December 2019, people believe wearing medical mask
can protect them from getting infected, as well as can prevent those who have symptoms from
spreading the virus.
(a) Suppose the table below shows the demand-and-supply schedule of ABC Factory medical
mask in a small country in January 2020.
Price ($) Quantity demanded Quantity supplied

(boxes of medical mask) (boxes of medical mask)
60 5,500 2,900
80 4,800 3,300
100 4,500 4,500
120 4,000 5,300
140 3,500 6,100
160 2,500 6,900
(i) Between the price range of $120 and $160, calculate the price elasticity of demand and
the price elasticity of supply for the market of ABC Factory medical mask in January
2020. Use mid-point method in your calculation and show your workings. Round your
answers to 2 decimal places. (7 marks)
(ii) Identify and justify the type of price elasticity of supply for the market of ABC Factory
medical mask in this small country in January 2020. (3 marks)
(b) In December 2019, Andy and his girl-friend, Amy, were shopping for a box of medical mask
but it is out of stock almost in all shops. Finally, they found medical mask is available in a
supermarket at a low price. Amy argues that the supermarket should increase the selling
price, so that its revenues could increase.
(i) Base on the above information, what has Amy assumed about the price elasticity of
demand of medical mask? Why her assumption is likely to be correct? Explain.
(3 marks)
(ii) Describe how the price adjustment suggested by Amy could increase the revenue of
the medical mask sellers. Explain with a diagram. (7 marks)
(Total: 20 marks)
- END OF PAPER -
Page 3 of 3

BHMH2002 Introduction To Economics (S1, 2021) Take Home Test - Question Paper

Uploaded by

Copyright:

Available Formats

BHMH2002 Introduction To Economics (S1, 2021) Take Home Test - Question Paper

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BHMH2002 Introduction To Economics (S1, 2021) Take Home Test - Question Paper

Uploaded by

Copyright:

Available Formats

HONG KONG COMMUNITY COLLEGE

BHMH2002 Introduction to Economics (S1, 2021)

Submission Deadline : Lecture Group Due Date and Time

Declaration of Original Work Plagiarism is a serious misconduct. No part of students’

The following information reveals the market condition of organic shampoo:

Price ($) Quantity demanded Quantity supplied

You might also like