Professional Documents
Culture Documents
Q
0 Q2 Q1
Change in TR in disequilibrium condition
04B10a
• At the outbreak of SARS, airlines did not reduce
air fares or the number of flights. As a result,
there were a lot of empty seats on planes flying
to Hong Kong.
• With the aid of a diagram, explain the above
economic phenomenon, and explain how the
total revenue of these airlines was affected.
(8 marks)
Solution
P D1 S
D2
ES Decrease in TR
P1
Q2 Q1 Q
Change in market equilibrium 03B10b
Q1 Q2 Q
Deflation and TR from exports 03B9a
• 97A2
• Workers in the manufacturing sector in Hong
Kong have an unemployment problem. With the
aid of a supply-demand diagram, explain ONE
situation under which the number of unemployed
manufacturing workers may decrease. (6 marks)
Determination of Price
• 98B9c
• Mr Wong employs some imported workers in the rest
aurant
1. With the aid of a diagram, explain the effect of import
ation of workers on the equilibrium wage rate of resta
urant workers in Hong Kong. (4 marks)
2. Use the same diagram to illustrate the effect of impor
tation of workers on the employment level of local re
staurant workers. (3 marks)
Determination of Price
• 99B10a
• There is a serious unemployment in Hong
Kong.
1. Given a fixed wage rate, explain why a
decrease in the profits tax rate may reduce
unemployment. (3 marks)
2. Draw a supply-demand diagram for the labour
market in (i) above. Explain, step by step, how
the diagram is drawn. (6 marks)
Determination of Price
• 02A2
• Suppose the Organization of Petroleum Exporting
countries cuts its oil production. At the same time, the
demand for automobiles increases.
• With the aid of a diagram, explain under what
condition the price of GASOLINE would increase.
(7 marks)
Effects on Revenue
• 97B9b
• Suppose the government builds a railway in
northwest New Territories. With the aid of a
diagram, explain the effect of this new railway on
the total revenue of mini-buses operating on the
same route. (6 marks)
Change in Demand/Supply and Revenue
• 02B11 (b)
• There are student places not yet filled in Miss Wong’s
tutorial school. The school decides to launch an
advertising campaign to recruit more students and to
keep the tuition fee unchanged.
• With the aid of diagram, explain how a successful
advertising campaign would fill all the places and
increase the total revenue of the school. (7 marks)
Determination of Price and effect on Revenue
• 98B11b
• Suppose Japanese Yen depreciates against the
Hong Kong dollar, and that Hong Kong people’s
demand for Japanese car is elastic.
• With the aid of a diagram, explain how these
factors would affect the sales revenue (in HK$)
of Japanese car in Hong Kong. (8 marks)
Substitutes and effect on Revenue
• 00B9b
• Some petroleum companies complained that
their business was affected because some
drivers bought gasoline from smugglers who
evaded import duties.
• With the aid of a diagram, explain how the
smuggling of gasoline would affect the sales
revenue of petroleum companies. (7 marks)
Determination of Price and effect on Revenue
• 02B12
• Mr Wong runs a bookstore in Hong Kong. He sells books
imported from Britain. Suppose the exchange rate betwe
en the US dollar and the British pound changes as follow
s: April : US$1 = ₤ 0.75 ; May : US$1 = ₤0.70
• Suppose the price of books imported from Britain remain
s unchanged in British pound and the demand for these
books is inelastic. With the aid of a diagram, explain how
Mr Wong’s sales revenue of these books in HK dollars w
ould change. (7 marks)
Elasticity and Total Revenue
• 01B9b
• Suppose the importing economy reduces the
effective quota on the quantity of garments
imported. With the aid of a diagram, explain
under what condition the total expenditure of this
economy on imported garments would decrease.
(9 marks)
Effect of Tariff
• 93’2(c)
• If the U.S.A. imposes a very high tariff on
garments imported from China, explain whether
1. the garment producers in South Korea, and
2. the banks in Hong Kong
• will gain or lose. (5
marks)
Effect of Per Unit Tax
P0
Q1 Q0 Q2
Government Intervention
170 6 14
Price ($) Qd (bottle/t) Qs (bottle/t) New price
Original Pe = $150
100 20 1 60 Original Qe = 10
110 18 2 70
New Pe = !30
120 16 4 80
New Qe =14
130 14 6 90 Therefore,