Hkcee 2010 Econ Paper: 2 Q2

HKCEE 2010 Economics Paper 2 Question 2 tests the concept of opportunity cost, with the correct answer, D, representing the highest-valued option foregone. The question typically requires distinguishing the next-best alternative from the sum of all forgone options or irrelevant costs. View the question in the HKCEE Economics Multiple Choice paper on HKCEE Economics Multiple Choice - Scribd

• At ceiling price P_c < P₁, quantity demanded (Qd) > quantity supplied (Qs).
• Shortage = Qd – Qs.
• Non-price rationing emerges (queuing, black markets, favoritism).

Part (a): Calculate Equilibrium Price and Quantity (2 marks)

• If demand is elastic (PED > 1), %ΔQd > %ΔP → total revenue (P × Q) decreases.
• If demand is inelastic (PED < 1), %ΔQd < %ΔP → total revenue increases.
• If unit elastic (PED = 1), total revenue unchanged.

This condition exists because human wants are unlimited while resources are finite. It applies to both rich and poor societies. hkcee 2010 econ paper 2 q2

Answer:

Quantity demanded = 10 tonnes, quantity supplied = 20 tonnes. This creates an excess supply (surplus) of 10 tonnes. HKCEE 2010 Economics Paper 2 Question 2 tests

Part (b): Government Imposes a Minimum Price of $68 – Is it Effective? (4 marks)