Hkcee 2010 Econ Paper 2 Q2 [patched]

The correct answer to HKCEE 2010 Economics Paper 2 Question 2 is A. Question Analysis

Scenario: The market for a certain agricultural product has the following demand and supply functions (with quantity in tonnes, price in $ per tonne): hkcee 2010 econ paper 2 q2

(1) The value of exports of services. (2) The value of imports of goods. (3) The income earned by foreign residents working in Hong Kong. The correct answer to HKCEE 2010 Economics Paper

The correct answer for HKCEE 2010 Economics Paper 2 Question 2 is C. Question Summary Supply curve shifts upward by the tax amount

• Supply curve shifts upward by the tax amount.
• Price buyers pay increases, Price sellers receive decreases.
• Tax Burden: Shared between buyers and sellers depending on elasticity.
• Deadweight Loss: Occurs because the quantity traded is less than the equilibrium quantity.

3. Diagram (description)

• Horizontal axis: quantity (Q). Vertical axis: price/cost (P).
• Downward-sloping demand = MPB = MSB (assuming no consumption externalities).
• Upward-sloping supply = MPC.
• MSC curve lies above MPC by the vertical distance of the marginal external cost.
• Market equilibrium at intersection of MPC and MPB: Q_market, P_market.
• Socially optimal equilibrium at intersection of MSC and MSB: Q_social, P_social (lower Q, higher P).
• Deadweight loss: triangular area between MSC and MPC from Q_social to Q_market.

to invest in shares decreases because the return (dividends) is lower, the cost (the forgone return from property) remains the same. Official Answer Key (Marking Scheme)