Hkcee 2010 Econ Paper 2 Q2 ^hot^ [ Cross-Platform FREE ]

: It is the value of the highest-valued option forgone (the next-best alternative).

, in the context of multiple-choice questions in the HKCEE, if the question implies a "typical" market outcome or does not specify magnitudes, the answer options often test if you know that price is indeterminate.

| Price ($) | Quantity Demanded (units) | Quantity Supplied (units) | |-----------|--------------------------|---------------------------| | 10 | 100 | 40 | | 20 | 90 | 60 | | 30 | 80 | 80 | | 40 | 70 | 100 | | 50 | 60 | 120 | hkcee 2010 econ paper 2 q2

Since Qd > Qs → Shortage = Qd – Qs = 90 – 60 = 30 units

Similarly, supply: at Q=40, P=$10; Q=60, P=$20; Q=80, P=$30; Q=100, P=$40; Q=120, P=$50. : It is the value of the highest-valued

From the table: At Price = $30 → Qd = 80, Qs = 80.

The tests timeless concepts:

When a price ceiling creates a shortage, price cannot rise to clear the market. Non-price rationing mechanisms emerge spontaneously.

Compare the total social surplus under the price ceiling of $20 versus the free market equilibrium. (4 marks) From the table: At Price = $30 → Qd = 80, Qs = 80

Before analyzing the solution, it is crucial to understand how the question was presented. In the 2010 Paper 2 (Multiple-choice section), typically focused on the core mechanism of price determination.

In the context of the 2010 exam, Question 2 typically presented a situation where an individual had to choose between different ways to spend their time or money. For instance, if the scenario involved a person choosing to attend a concert over working a shift at a part-time job, the opportunity cost would be the wages they would have earned. If the hourly wage of that job were to increase, the opportunity cost of attending the concert would also increase, because the value of the foregone alternative has risen. Conversely, if the ticket price for the concert increased, this represents an increase in the explicit cost, but it does not necessarily change the opportunity cost unless it changes the person's ranking of preferences or their ability to afford other alternatives.