HKCEE ECONOMICS | 1.1 Scarcity | P.

1. 1991/II/1
Owing to the problem of scarcity in a society, we have to
(1) impose price controls.
(2) make choices.
(3) adopt a planned economic system.
(4) compete against one another.
A. (1) and (3) only B. (1) and (4) only C. (2) and (3) only D. (2) and (4) only

2. 1991/II/55
Scarcity of commodity X will NOT occur when
A. there is a great supply of it. B. nobody wants it.
C. it is free of charge. D. only one person wants it.

3. 1992/II/1
A scarce resource has the following characteristic
A. its supply is fixed B. it is difficult to find
C. it is in great demand D. it has a price on the market

4. 1994/II/1
Even though Japan is one of the richest economies in the world, it still has to face the problem of scarcity.
This statement is
A. false, because scarcity only exists in developing countries.
B. false, because Japan has a high gross national product (GNP).
C. true, because what the Japanese have cannot satisfy all their wants.
D. true, because Japan’s income is unevenly distributed.

5. 1995/II/1
It was reported that many people queued for two days in order to get the monthly parking ticket for certain
car park. This phenomenon implies
(1) scarcity in parking spaces.
(2) the existence of competition.
(3) shortage of parking spaces.
A. (1) and (2) only B. (1) and (3) only C. (2) and (3) only D. (1), (2) and (3)

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 HKCEE ECONOMICS | 1.1 Scarcity | P.2

6. 1995/II/2
Scarcity exists
A. because there is more than one person in the world.
B. if at least one person’s wants are not fully satisfied.
C. because resources are not evenly distributed.
D. if the market price is kept below the equilibrium level

7. 1997/II/1
Which of the following statements about scarcity is true?
A. Once a choice is made, the problem of scarcity is solved
B. A good is scarce if not everyone has it
C. Scarcity means unlimited human wants
D. Both rich and poor people face the problem of scarcity

8. 1999/II/1
The existence of scarcity implies that
A. the economy is planned economy.
B. there is competition for the good.
C. effective price control is imposed on that good.
D. wealth is not evenly distributed.

9. 2004/II/1
The existence of scarcity implies that
A. resources will be allocated by the price mechanism.
B. all markets are perfectly competitive.
C. the quantity supplied of all goods is fixed.
D. people need to pay for what they want.

10. 2005/II/1
The existence of scarcity implies that
A. there is no such thing as free goods
B. human wants are unlimited
C. each and every economic good has a positive money price
D. there is a cost in obtaining some goods

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 HKCEE ECONOMICS | 1.2 Choice and opportunity cost | P.2

7. 1995/II/5
Fanny can choose among three different jobs. Her choice of preference is as follows:
First priority : being a teacher at School X
Second priority : being a secretary in Company Y
Third priority : being a sales representative in Firm Z
Assuming her choice of preference remains unchanged, which of the following will increase her opportunity
cost of being a teacher in School X?
A. The students in School X are becoming more naughty
B. Company Y requires its secretaries to work longer hours
C. Company Y decides to increase the salaries of its secretaries
D. Firm Z decides to increase the bonuses for its sale representative

8. 1996/II/1
John live in his own apartment which is worth $1million. He can sell the apartment and put the money in a
bank at an interest rate of 5% per year. He can also rent out the apartment at $5000 per month. What is the
opportunity cost to John if he decides to live in the apartment?
A. $1 million
B. $5000 a year
C. $5000 a month
D. There is no opportunity cost because he lives in his own apartment

Answer Question 9 and 10 by referring to the following information:

Max Department Store has launched a promotion campaign. For every purchase of $1000, customers are
given a coupon to exchange for the following gifts:

Number of coupon Gifts

10 1 camera
20 1 TV set
30 1 air ticket
9. 1997/II/2
John has accumulated 30 coupons. What is the opportunity cost to John if he uses them to exchange for one
air ticket?
A. a TV set B. $30000 C. a camera and a TV set D. a camera, a TV set and $30000

10. 1997/II/3
Later, John finds that he has to queue up to exchange his coupons for gifts. The queue show that
A. these gifts are truly free of charge
B. there is a shortage of gifts for all customers
C. the promotion campaign is successfully and there is an increase in the demand for the company’s products
D. customers has an extra cost to obtain the gifts

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 HKCEE ECONOMICS | 1.2 Choice and opportunity cost | P.3

11. 1997/II/49
Before the sale of a big residential estate, many elderly people queued up outside the site office for potential
buyers. This implies that
A. the value of the flats to these elderly people was higher than to younger people
B. the price of the flats was above the equilibrium level because there was a shortage
C. the opportunity cost of the queuing time of theses elderly people was lower than that of the potential buyers
D. the opportunity cost of the queuing time of theses elderly people was zero because they did not have a job

12. 1998/II/50
May is considering accepting one of the following job offers:
(1) a clerk in an import-export firm
(2) a salesgirl in a department store
Which of the following changes will NOT affect her opportunity cost of choosing to work as a clerk?
A. The import-export firm increases its staff’s welfare
B. The department store offers a higher salary
C. There is a third offer paying a higher salary than the original two offers
D. The department store announces that their business will terminate one year later

13. 1998/II/54
Which of the following about choice is INCORRECT?
A. People have to choose in order to avoid competition B. People have to choose if there is scarcity
C. People choose to option with the least cost D. People choose the most preferred option

14. 1999/II/50
Peter invites Jason to play tennis in afternoon. Jason will NOT have opportunity cost if
A. Peter pays the fee for him B. He has nothing more worthwhile to do in the afternoon
C. He likes to play tennis with Peter D. None of the above is a correct answer

15. 2000/II/2
Chan and Wong take a journey to City X separately. They can go there either by plane or by train. The plane
takes 2 hours while the train takes 10 hours. The air ticket costs $1000 while the train fare is $200. During the
journey to City X, the foregone earning of Chan is $200 per hour and that of Wong is $80 per hour.
For the journey to City X, Chan would take the ___________and Wong would take the ______________
A. train ... train B. train ... plane C. plane ... train D. plane ... plane

16. 2000/II/53
Which of the following is NOT an opportunity cost of constructing Disneyland in Hong Kong ?
A. the alternative use of the site B. the amount of capital invested
C. the pollution created by the construction work D. the entrance fee of Disneyland

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 HKCEE ECONOMICS | 1.2 Choice and opportunity cost | P.4

17. 2001/II/1
Which of the following will change the cost to an individual of attending a concert?
A. He is an hour late for the concert due to traffic congestion.
B. His view is blocked by the audience in front of him.
C. The singer performs badly.
D. The concert overruns by an hour.

18. 2002/II/3
Mr Lee lives in his own house. He bears an opportunity cost from living in that house because
(1) he could earn rental income from letting the house to others.
(2) he has to pay property tax to the government.
(3) he has paid a sum of money to buy the house.
A. (1) only B. (1) and (2) only C. (1) and (3) only D. (2) and (3) only

19. 2002/II/4
Which of the following would affect the cost of constructing the West Rail ?
A. an increase in the damage to the natural environment along the railway caused by the construction
B. an increase in the wages of the maintenance staff for the operation of the train service
C. a decrease in the profit from providing the train service
D. a decrease in the revenue of the bus company operating a bus service along the railway

20. 2003/II/2
Peter is an F.5 graduate who could not get a study place in F.6. Which of the following may lower the cost of
repeating F.5 for Peter?
A. The tuition fee for studying F.5 increases B. The tuition fee for studying F.6 decreases
C. The wage rate for F.5 graduates decreases D. Peter’s new F.5 English teacher teaches badly

21. 2003/II/3
Medical doctors seldom change their occupation. Which of the following can explain this phenomenon?
A. They have spent much time and effort in getting their professional license
B. They have incurred high costs in accumulating the skills and knowledge required for the profession
C. For medical doctors, changing occupation has a high cost.
D. Being medical doctors has a high cost.

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 HKCEE ECONOMICS | 1.2 Choice and opportunity cost | P.5

22. 2004/II/2
Which of the following statements about the concept of opportunity cost is correct?
A. Opportunity cost still exists even when there are no choices.
B. Opportunity cost does not exist in a planned economy.
C. When the value of an option decreases, the opportunity cost of choosing that option does not change.
D. When the value of the highest-valued option increases, the opportunity cost of choosing that option will
decrease.

23. 2004/II/13
When the Real Madrid football team visited Hong Kong, many people queued up for days for the tickets to
watch the game. Some people complained that they were unable to buy a ticket even they were willing to
pay the official ticket price. This implies that
(1) there was only price competition for the ticket.
(2) the official ticket price was set below the market clearing level.
(3) the opportunity cost of obtaining a ticket was higher that its official selling price.
A. (1) and (2) only B. (1) and (3) only C. (2) and (3) only D. (1), (2) and (3)

24. 2005/II/3
David is choosing between two ways of spending his summer vacation : to take a summer job or join an
exchange programme of the United Kingdom. Which of the following will increase his opportunity cost of
taking the summer job?
A. The fee for the exchange programme increases B. The summer job pays a higher salary
C. A valuable course is added to the exchange programme D. Less training for the summer job is provided

25. 2007/II/2
A resident of Mainland China is choosing between a tour to HK and a tour to Macau organized by a travel agent.
His opportunity cost of choosing to visit HK will increase if
A. the food provided during his trip in HK is poorer than expected
B. he is abandoned on the streets in HK by the tour guide
C. newly developed tourist attractions in Macau make it more enjoyable to visit Macau
D. the rental of the hotel accommodation in Macau increases

26. 2008/II/2
Which of the following would raise the cost of drug abuse?
A. The price of drugs increases
B. The government imposes heavier punishment on drug abuse
C. Drug abuse causes greater damage to one’s health
D. All of the above are correct

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 HKCEE ECONOMICS | 8.1 Circular flow of income | P.1

1. 1990/II/35
Real flow
Money flow

Firms
(X) Households

(Y)
X and Y in the above circular flow of economic activities should be labeled respectively as
A. sales revenue, factor services.
B. sales revenue, goods and services.
C. factor income, goods and services.
D. factor income, factor services.

2. 1991/II/5

The above diagram shows the interdependence among the three stages of production. The flows of ‘X’ and ‘Y’
should be labeled respectively as
A. natural resources and consumer goods.
B. natural resources and capital goods.
C. services and consumer goods.
D. services and capital goods.

3. 1991/II/47

When economist calculate a country’s national income by the income approach, they measure _____ in the above
chart.
A. Flow A B. Flow B C. Flow C D. Flow D

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 HKCEE ECONOMICS | 8.1 Circular flow of economic activities | P.2

4.1993/II/37

The diagram above shows the circular flow of economic activities. The economy’s expenditure and income
are show in Flow _______ and Flow _______ respectively.
A. (1);(2)
B. (1);(4)
C. (2);(3)
D. (3);(4)

5. 1994/II/31

What does the above diagram show?

A. Economic activities take place in an open economy.
B. There is government intervention in the economy.
C. National income equals national expenditure.
D. Households conduct transactions in the goods market only.

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6. 2002/II/24

Refer to the above circular flows. Which of the following statements is correct ?
A. Flows A and D are flows of households’ expenditure and firms’ payment to factor owners respectively.
B. All value-added totals contributed by the firms equal the market value of all final goods and services.
C. The market value of Flow B equals the market value of all final goods and services plus the market value
of unsold goods.
D. The flow of final goods and services includes self-provided services.

7. 2003/II/25

Which of the following is included in Flow X?

A. household expenditure on final goods and services
B. factor income such as rent and wages
C. value of intermediate goods
D. market value of all final goods and services.

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