HKCE 2000

ECONOMICS

Paper 1 Section A Question No. 1 2 3 4 5 6 7 8 Q.1 Performance in General Good Good Very good Satisfactory Good Satisfactory Satisfactory Good

Weaker candidates merely gave examples but could not use the concepts of free good and economic good to explain their answer. Most candidates were able to distinguish the differences between the change in demand and change in quantity demanded. The performance on this question was very good. The first part of this question was well-answered. Most candidates were able to define the law of diminishing marginal returns clearly. However, the performance on the second part of the question was only fair. Some weaker candidates failed to notice that the data given in the question was the average output rather than the marginal output of labour. Despite the fact that some candidates failed to mention the essential feature of general acceptability in defining money, the performance on this question was generally good. Most candidates were able to explain how money can help to solve the problem of double coincidence of wants in barter trade.

Q.2

Q.3 Q.4

Q.5

2000-CE-ECON

Q.6

(a) The performance on this part was satisfactory. Most candidates were able to identify that the data illustrated a recession of the business cycle. However, some candidates wrongly concluded from the data that the inflation rate and the growth rate of GDP were decreasing. (b) The performance on this part was generally good. Most candidates were able to explain why real income would increase when the general price level decreased.

Q.7

Only some better candidates were able to compare the relative change of labour force and the relative change of the number of unemployed. Some weaker candidates merely compared the absolute change in labour force and the number of unemployed. Only a few candidates failed to recognize that the tax rebate would widen the wealth gap between the low income group and the high income group. Some better candidates were able to elaborate the answer systematically.

Q.8

Section B (A choice of 2 out of 3) Question No. 9 10 11 Q.9 Popularity (%) 73 56 71 Performance in General Good Good Fair

(a) (i) The performance on this part was satisfactory. However, in defining regressive tax, some weaker candidates stated that tax payment would decrease when taxable income increases. They had a wrong concept of regressive tax. Moreover, some candidates wrongly identified gasoline tax as a proportional tax. (ii) This part was well-answered. (b) (i) The performance was generally good. Most candidates were able to point out that the smuggling of gasoline would reduce the demand for gasoline supplied by legal petroleum companies. (ii) The performance was good. Most candidates were able to point out that GDP would decrease with the decrease in the sales revenue of petroleum companies. Only some weaker

2000-CE-ECON

candidates failed to mention that smuggled gasoline has no official record in the GDP figures. (c) This part was well-answered. Q.10 (a) (i) The performance on this part was good. However, some weaker candidates failed to point out that there was a deposit contraction rather than a deposit creation. (ii) The performance on this part was also good. However, some candidates merely provide numerical answers without giving an explanation. (b) (i) Most candidates were able to identify that it was a horizontal integration. However, some candidates overlooked that the second part of the question was about the economies of scales associated with the takeover, not the motives of the takeover. (ii) The performance on this part was good. However, some weaker candidates had the misconception that the cost of takeover would increase with a huge amount of hidden debt. They failed to recognize that the hidden debt would only reduce the value but not the cost of the takeover. (iii) This part was well-answered. Q.11 (a) The performance on this part was poor. Most candidates overlooked an important assumption of the question that each country only employed 40% resources to produce wine and the other 60% to produce clothing. This reveals that they have a vague concept of the calculation of opportunity cost. (b) The performance on this part was good. However, some candidates could not explain the concept of inelastic demand clearly. (c) The performance on this part was good. However, some weaker candidates failed to point out that average labour productivity was in terms of man-hour.

2000-CE-ECON

Paper 2 Those candidates attempting the English Version performed better than those taking the Chinese Version. Several noteworthy points are listed below : Q.7 Quite a number of candidates did not realize that when the Japanese Yen appreciates against the Hong Kong dollar, the Japan tour organizers who faced a higher production cost would decrease the supply or shift to the supply of alternative tours in other countries. Therefore the equilibrium point will further shift to Eb from Ea.

Q.18 Many candidates were not able to apply the given data in calculation. This shows that they did not truely understand the principle of multiples. Q.29 Many candidates could not distinguish between actual reserve ratio and legal reserve ratio.

Candidates common weaknesses 1. lack of skills in interpreting numerical data, e.g. data about GDP and composite consumer price index lack of thorough understanding of basic economic concepts and principles and the inability to apply them to hypothetical situations, e.g. calculation of opportunity cost inability to provide a thorough explanation for answers

2.

3.

General recommendations 1. Candidates are strongly advised to read the questions carefully before answering them. They should devote special attention to assumptions and conditions laid down in the questions in order to avoid giving incorrect answers. They should explain their answers precisely. They should equip themselves with skills in interpreting numerical data and in graphical representation. They should make more effort to grasp basic economic concepts and principles.

2. 3.

4.

2000-CE-ECON