Books of Form 4's chapter

Question 0

Student A: “The HKSAR Government should give $6000 to all Hong Kong citizens in cash.”
Student B: “Paying cash to all Hong Kong citizens will stimulate consumption and hence the GDP of HK will increase”
Explain whether these statement is a positive or normative statement.
(4 marks)

Answer 0

Student A is a normative statement
because it contains value judgment(I.e. what the government should do)
Student B is a positive statement
because it describe and predicts the effect of a policy.

Question 1

State the Law of diminishing marginal returns.

3 marks

Answer 1

• > When more and more units of (workers) are continuously added to a given quantity of (machinery),
• > other things being constant
• > marginal products decreases when the (5th) / after the (4th) (worker) is employed

Question 2

“All HK citizens were allowed to use public sports facilities free of charge from July to September.”
Explain whether those sports facilities free goods to the society.
(4 marks)

Answer 2

No. The quantity is insufficient to satisfy all our wants(I.e. more if it is preferred)
The resource used to produce then have alternative uses
There is a cost to society if producing them

Question 3

Please state the Geographical and Occupational mobility.

Answer 3

Geographical mobility: the EASE at which the factor of production can change from one location to another.
Occupational mobility: the EASE at which the factor of production can change from one job to another.

Question 4

(a) computer at home
(b) computer at school
Explain EACH of the following goods is a consumer good or capital good.
(4 marks)

Answer 4

->The computer at home is a 
    consumer good
->because it is for direct consumption
->The computer at school is a capital 
    good
->because it is for production of 
    services.

Question 5

Cyrus Wong is running a bookstore. He plans to expand his business by opening a café beside his bookstore.

Explain what type of expansion it belongs to.
(2 marks)

Answer 5

Conglomerate expansion

bookstore and café are different types of production.

Question 6

Explain how Cyrus Wong’s opportunity cost of choosing to invest in corporate bonds (HKD or RMB) would change when the amount of bond interest increase.
(2 marks)

Answer 6

The opportunity cost remains unchanged
because the highest-valued option forgone(i.e. the return from investment in RMB time deposits) remain unchanged. It only increase the value of investing in corporate bonds.

Question 7

Cyrus Wong is running a bookstore. He plans to expand his business by opening a café beside his bookstore.
Give TWO possible motives for such type of expansion.
(4 marks)

Answer 7

He can diversify products and reduce his risk of running business.
He can promote and build up the brand name and good reputation from one product to another product.

Question 8

Is it true that “when the income inequality ⬆️worse, living standard will become⬆️worse”?

Answer 8

No
the use of percentage of income
can only tell the nominal income/GDP
CANNOT reflect the real situation/the poverty in society