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1994 1 Even though Japan is one of the richest economies in the world, it still has to face the problem of scarcity. This statement is A. B. C. D. false, because scarcity only exists in developing countries. false, because Japan has a high gross national product (GNP). true, because what the Japanese have cannot satisfy all their wants. true, because Japans income is unevenly distributed.

1994 2 In a lottery, Peter wins a transferable air ticket to Japan. Which of the following statements is correct ? A. B. C. D. The ticket is a free good. Peter will not lose anything if he loses the ticket. The opportunity cost to Peter of using the ticket is zero. The opportunity cost to Peter of using the ticket increases if the price of the ticket increases.

1994 3 Mr Lee owns a photographic studio. Previously he received $30 000 per month by letting it out. He now does not let out the studio, but, instead he uses the premises for his own business. He also employs a model at $10 000 per month. What is Mr Lees opportunity cost of using the studio by himself ? A. B. C. D. $10 000 per month $20 000 per month $30 000 per month $40 000 per month

1994 4 In the New Territories, an indigenous female resident () cannot inherit her fathers property if her father dies without leaving a will. This is an example of resource allocation by A. B. C. D. government rationing. market mechanism. violence. social custom.

1994 5 Hong Kong is considered to be a market economy because (1) (2) (3) (4) it has a high per capita real gross domestic product (GDP) price is used as a means to allocate resources in Hong Kong. it has a system of low taxes. most of its resources are privately owned. A. B. C. D. (1) and (2) only (1) and (3) only (2) and (4) only (3) and (4) only

1994 14 Mrs Wong retired last year. Since then she has been helping to do the housework in her daughters house and receiving no money in payment for it. The daughter works as an accountant in her own accounting firm. Which of the following statements is correct ? A. Although Mrs Wong receives no money in payment, her service is counted in the

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national income. B. As Mrs Wong receives no money in payment, she is not classified as a producer. C. To the daughter, the opportunity cost of working as an accountant is lower than that of staying at home just doing her housework. D. To avoid double counting, the daughters profits from her firm are not counted in the national income. 7 1995 3 To society, used paper for recycling is ____________ because ____________. A. B. C. D. 8 a free good, it is free of charge a free good, it has no alternative uses an economic good, more than one people want it an economic good, people prefer to have more of it

1995 5 Fanny can choose among three different jobs. Her choice of preference is as follows: First priority : being a teacher in School X Second priority : being a secretary in Company Y Third priority : being a sales representative in Firm Z Assuming her choice of preference remains unchanged, which of the following will increase Fannys opportunity cost of being a teacher in School X? A. B. C. D. The students in School X are becoming more naughty. Company Y requires its secretaries to work longer hours. Company Y decides to increase the salaries of its secretaries. Firm Z decides to increase the bonuses for its sales representatives.

1995 14 Electric fans installed in classrooms are classified as (1) consumer goods. (2) capital goods. (3) economic goods. A. B. C. D. (1) only (2) only (1) and (3) only (2) and (3) only

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1995 20 The Housing Authority is considering whether it should raise the income limits of families for the application of public housing. What basic economic problem(s) is/are involved in this consideration? A. B. C. D. What to produce? How to produce? For whom to produce? What and for whom to produce?

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1996 1 John lives in his own apartment which is worth $1 million. He can sell the apartment and put the money in a bank at an interest rate of 5% per year. He can also rent out the apartment at $5,000 a month. What is the opportunity cost to John if he decides to live in the apartment ? A. B. C. D. $1 million $50 000 a year $5 000 a month There is no opportunity cost because he lives in his own apartment.

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1996 2 A department store reduced the price of its television sets but there was still unsold stock. These television sets are A. B. C. D. free goods because the quantity supplied is greater than the quantity demanded. consumer goods because they are sold at a department store. capital goods because they are man-made. economic goods because people have to pay a price for them.

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1996 3 Hong Kong can be described as a capitalist economy because A. B. C. D. all the problems of resource allocation are solved by the price mechanism. income is unevenly distributed. not all the public utilities are owned by the government. most resources are privately-owned.

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1996 55 Which of the following is NOT true about a free good ? A. B. C. D. Nobody wants to have more of it. Its price is zero. It is unlimited in supply. It has use value.

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1997 1 Which of the following statements about scarcity is true ? A. B. C. D. Once a choice is made, the problem of scarcity is solved. A good is scarce if not everyone has it. Scarcity means unlimited human wants. Both rich people and poor people face the problem of scarcity.

Answer Questions 97-2 and 97-3 by referring to the following information : Max Department Store has launched a promotion campaign. For every purchase of $1 000, customers are given a coupon to exchange for the following gifts : Number of Coupons 10 20 30 16 Gifts 1 camera 1 TV set 1 air ticket

1997 2 John has accumulated 30 coupons. What is the opportunity cost to John if he uses them to exchange for one air ticket ? A. a TV set

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B. $30 000 C. a camera and a TV set D. a camera, a TV set and $30 000 17 1997 3 Later, John finds that he has to queue up to exchange his coupons for gifts. The queue shows that A. these gifts are truly free of charge. B. there is a shortage of gifts for all the customers. C. the promotion campaign is successful and there is an increase in the demand for the companys products. D. customers has an extra cost to obtain the gifts. 18 1997 4 Which of the following about market economy is correct ? A. B. C. D. 19 There is no non-price competition. Competition is perfect throughout the country. The pattern of production reflects the preferences of customers. All resources are privately owned and controlled.

1997 12 Read the following advertisement: HOTEL ABC FREE BUFFET BINNER Buy two buffet dinners and get one free ! (From Monday to Thursday) $200 for one person $400 for two persons plus a friend The buffet dinner is A. a free good because the quantity supplied is greater than the quantity demanded. B. a free good because it is free of charge. C. an economic good because more of food is preferred to less of it. D. an economic good because non-price competition is involved. 1997 49 Before the sale of a big residential estate, many elderly people queued up outside the site office for potential buyers. This implies that A. the value of the flats to these elderly people was higher than to young people. B. the price of the flats was above the equilibrium level because there was a shortage. C. the opportunity cost of the queuing time of these elderly people was lower than that of the potential buyers. D. the opportunity cost of the queuing time for these elderly people was zero because they did not have a job.

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1998 1 If a good is scarce, A. B. C. D. only a small quantity is available. its price will increase. its quantity supplied is smaller than its quantity demanded at all prices. more of it is prefered.

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1998 2 Which of the following statements about goods are correct ? (1) (2) (3) (4) Free goods are free of charge. Natural resources are free goods. Inputs are economic goods. Outputs are economic goods. A. B. C. D. (1) and (2) only (1) and (4) only (2) and (3) only (3) and (4) only

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1998 3 As compared to a market economy, a planned economy A. B. C. D. has a less even income distribution. must have a lower inflation rate. must have a lower unemployment rate. has a smaller proportion of privately-owned resources.

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1998 50 May is considering accepting one of the following job offers : (1) a clerk in an import-export firm, and (2) a salesgirl in a department store. Which of the following changes will NOT affect her opportunity cost of choosing to work as a clerk ? A. B. C. D. The import-export firm increases its staffs welfare. The department store offers a higher salary. There is a third offer paying a higher salary than the original two offers. The department store announces that their business will terminate one year later.

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1998 54 Which of the following about choice is INCORRECT ? A. B. C. D. People have to choose in order to avoid competition. People have to choose if there is scarcity. People choose the option with the least cost. People choose the most preferred option.

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1999 1 The existence of scarcity implies that A. B. C. D. The economy is a planned economy. There is competition for the good. Effective price control is imposed on the good. Wealth is not evenly distributed.

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1999 2 Jenny won a cooking competition and was awarded a famous brand microwave oven. This microwave oven is A. B. C. D. A free good because Jenny does not need to pay for it. A consumer good because it is a prize in the competition. An economic good because other competitors want to have it. A capital good because it has a market value.

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1999 3 In a market-oriented economy, A. B. C. D. The living standard is higher than in a command economy. The unemployment rate is lower than in a command economy. Resources are mostly allocated according to price signals. All infrastructure is privately owned.

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1999 50 Peter invites Jason to play tennis in the afternoon. Jason will NOT have opportunity cost if A. B. C. D. Peter pays the fee for him. He has nothing more worthwhile to do in the afternoon. He likes playing tennis with Peter. None of the above is a correct answer.

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2000 1 Good X is a free good when A. There is no opportunity cost involved in using it. B. Its quantity supplied is greater than what consumers are willing to purchase in the market. C. Nobody wants more of it. D. Its supply is so abundant that consumers place no value on it.

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2000 2 Chan and Wong take a journey to city X separately. They can go there either by plane or by train. The plane takes 2 hours while the train takes 10 hours. The air ticket costs $1 000 while the train fare is $200. During the journey to City X, the foregone earning of Chan is $200 per hour and that of Wong is $80 per hour. For the journey to City X, Chan would take the _____ and Wong would take the _____. A. B. C. D. Train .. train Train .. plane Plane .. train Plane .. plane

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2000 4 Which of the following markets in Hong Kong rely heavily on price mechanism to solve the three basic economic problems ? (1) (2) (3) (4) Medical service Education Bank loans Electrical appliances A. B. C. D. (1) and (2) only (1) and (4) only (2) and (3) only (3) and (4) only

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2000 53 Which of the following is NOT an opportunity cost of constructing Disneyland in Hong Kong ?

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A. B. C. D. 34 2001 1

The alternative use of the site The amount of capital invested The pollution created by the construction work The entrance fee of Disneyland

Which of the following will change the cost to an individual of attending a concert ? A. B. C. D. 35 2001 2 Which of the following statements about a market economy is correct ? A. All markets in the economy are perfectly competitive. B. Most resources in the economy are owned and controlled by individuals and private firms. C. Income is less evenly distributed in a market economy than in a command economy. D. The unemployment rate is higher in a market economy than in a command economy. 36 2001 47 Which of the following is NOT classified as economic good ? A. B. C. D. a companys stock whose price has been falling for two months the votes for the candidates in a Legislative Council election stray and homeless dogs in the streets used paper collected for recycling He is an hour late for the concert due to traffic congestion. His view is blocked by the audience in front of him. The singer performs badly. The concert overruns by an hour.