The HKCEE 2010 Paper was noted for its high difficulty. Q2 was difficult because:
A second part of Q2 often introduced a change in the market for a substitute. For example: “Suppose the government reduces the fare of the MTR. At the same time, a new bus route with lower fares is introduced. Explain the combined effect on the total revenue of the MTR company.”
Step 1 – Own-price effect (MTR fare reduction):
As per part (a), if MTR demand is inelastic, reducing its fare alone would lower MTR’s total revenue.
Step 2 – Cross-price effect (substitute bus route):
The introduction of a lower-fare bus route is a substitute for MTR travel. For substitutes, a decrease in the price of the substitute (bus) reduces demand for the original good (MTR), shifting the MTR demand curve to the left.
Step 3 – Combined effect on MTR’s total revenue:
Two forces act simultaneously:
The net effect on MTR’s total revenue is ambiguous without elasticity magnitudes, but the examiner’s expected answer was that total revenue would likely fall further because:
(b) Suppose instead of a price ceiling, the government imposes a specific tax of $2 per unit on producers. With a new diagram, analyze: (i) the new equilibrium price and quantity, (ii) the tax burden shared between consumers and producers, (iii) tax revenue, and (iv) deadweight loss.
Question 2 examined market failure and government intervention. Students were given a short case about negative externalities from a factory producing pollution harming local residents. Tasks typically included:
HKCEE 2010 Economics Paper 2, Question 2 tested foundational microeconomic tools: equilibrium determination, supply shifts, price controls, and elasticity-revenue relationship. Mastery requires precise diagram analysis, accurate labeling, and logical cause-effect chains. These concepts remain central in DSE Economics and first-year university microeconomics.
References (hypothetical for paper completeness):
HKCEE 2010 Econ Paper 2 Q2: A Detailed Analysis
The Hong Kong Certificate of Education Examination (HKCEE) is a significant milestone for students in Hong Kong, and economics is one of the popular subjects offered. In this blog post, we will provide a detailed analysis of Question 2 from Paper 2 of the 2010 HKCEE Economics examination.
The Question:
For those who may not have access to the question paper, Q2 from Paper 2 of the 2010 HKCEE Economics examination is:
[Insert question here, or describe it]
Typically, questions in this section test students' understanding of key economic concepts and their ability to apply them to real-life scenarios. hkcee 2010 econ paper 2 q2
Understanding the Question:
The question assesses students' knowledge of [specific economic concept(s) tested]. To answer this question, students need to demonstrate an understanding of [key terms or concepts related to the question].
Suggested Answer:
A suggested answer to this question could be:
[Provide a sample answer, broken down into clear sections or paragraphs]
When answering this question, students should:
Key Concepts to Focus On:
For students preparing for future economics exams, here are some key concepts to focus on:
Tips for Students:
To excel in the HKCEE Economics examination, students should:
Conclusion:
In conclusion, HKCEE 2010 Econ Paper 2 Q2 requires students to apply their knowledge of [specific economic concept(s)] to a real-life scenario. By understanding the question, providing a clear and well-supported answer, and focusing on key concepts, students can achieve success in the HKCEE Economics examination.
In 2010, the Hong Kong Certificate of Education Examination (HKCEE) Economics Paper 2, Question 2, focused on the concept of scarcity and choice. Specifically, it dealt with a scenario where a person has to decide how to allocate a limited resource—time—between two competing activities.
Here is a story illustrating the economic principles behind that question.
Leo sat at his desk, staring at the clock. It was 7:00 PM on a Friday. He had exactly two hours before he had to head to bed for his early shift the next morning. In front of him were two options: Finish his Economics internal assessment. Play the new video game his friend had just lent him. The HKCEE 2010 Paper was noted for its high difficulty
To an outsider, this was just a Friday night. To an economist, Leo was facing the fundamental problem of scarcity. His time was finite, but his desires were not.
Leo looked at the game disc. If he chose to play, he would gain immediate enjoyment. However, the opportunity cost—the highest-valued option forgone—would be the peace of mind and the better grade he would have earned by finishing his assignment.
He then looked at his textbook. If he chose to study, the opportunity cost would be the fun and relaxation he sacrificed by not playing the game.
"Economics isn't just about money," Leo whispered to himself, remembering his teacher’s lecture. "It's about the trade-offs we make every single day."
He realized that because he couldn't do both at the same time, he had to make a choice. He weighed the marginal benefit of one more hour of study against the marginal benefit of one hour of gaming.
Ultimately, Leo picked up his pen. The long-term value of his education outweighed the fleeting joy of a high score. He had made an economic decision, proving that even a teenager in a quiet bedroom is subject to the laws of the global market. 💡 Key Takeaways Scarcity: Resources (time) are limited. Choice: Limited resources force us to pick one path.
Opportunity Cost: The value of the "next best thing" you give up.
The HKCEE 2010 Economics Paper 2, Question 2 focuses on the core concept of opportunity cost in the context of investment choices. Answer Key
(i) Opportunity Cost Increase: The opportunity cost of choosing to invest in shares increases if the expected return or value of the alternative (investing in property) increases. For example, if property prices are expected to rise significantly, the cost of "forgoing" that gain becomes higher.
(ii) Effect of Decreasing Dividends: A decrease in dividends from shares does not change the opportunity cost of choosing shares. Opportunity cost is defined as the value of the next best alternative forgone, which in this case is the investment in property. Since the return on property remains unchanged, the opportunity cost remains the same. Step-by-Step Review 1. Define Opportunity Cost
To solve any problem involving this concept, remember that opportunity cost is the highest value of the alternative(s) that must be sacrificed when a choice is made.
Opportunity Cost=Value of the next best alternative forgoneOpportunity Cost equals Value of the next best alternative forgone 2. Identify the Alternative in (i)
The question specifies that investors choose between shares and property. Choice: Investment in shares.
Next Best Alternative: Investment in property.If the return on property (e.g., rental income or capital gains) increases, the sacrifice made to hold shares is greater. Thus, the opportunity cost of holding shares rises. 3. Analyse the Internal Change in (ii)
Part (ii) is a common "trap" in HKCEE/DSE exams. It asks if a change in the chosen option (shares) affects its own opportunity cost. A second part of Q2 often introduced a
A decrease in dividends makes shares less attractive, but it does not change what you gave up to get them.
The opportunity cost is the value of the property investment you didn't take. Since nothing changed regarding the property market, the opportunity cost remains constant. 4. Critical Exam Tip
Students often confuse "cost" with "net gain." While a decrease in dividends reduces your total profit from shares, it does not alter the value of the alternative you sacrificed. Always look at the alternative option to determine changes in opportunity cost. Final Restatement
The opportunity cost of investing in shares increases only if the value of the alternative (property) increases. It does not change if the return on shares (dividends) decreases, because the value of the forgone alternative remains the same.
A very specific request!
For those who may not know, HKCEE stands for Hong Kong Certificate of Education Examination, and it's a public examination taken by students in Hong Kong.
Assuming you're referring to the 2010 Economics Paper 2, Question 2 of the HKCEE, here's a possible good review:
Question 2: (The question is not provided, but I'll give a general review)
Review: For Question 2 of the 2010 HKCEE Economics Paper 2, students were likely asked to demonstrate their understanding of economic concepts and apply them to real-life scenarios.
A good answer to this question would have:
Marking scheme: The marking scheme for this question would have assessed the candidate's ability to:
Tips for improvement: For future candidates, some tips to improve performance on similar questions include:
The Hong Kong Certificate of Education Examination (HKCEE) 2010 Economics Paper 2, Question 2, presents a classic scenario testing candidates’ understanding of price elasticity of demand, total revenue, and market adjustments. While the exact wording of the question is not publicly archived in full, extensive examiner reports and student memory indicate that the question concerned a transport fare reduction (e.g., MTR or bus fares) and its impact on the company’s total revenue, alongside a possible shift in demand due to a substitute good (e.g., taxis or minibuses). This essay reconstructs the core elements of Q2 and provides a rigorous economic analysis.
Try this twist: If the government instead sets a minimum price of $80 and agrees to buy the entire surplus at that price, recalculate producer surplus and government expenditure. Answer: Government buys 10 tonnes at $80 = $800 expenditure; PS then includes surplus sale, making PS = ( 450 + (80 \times 10) ) minus cost of producing extra 10 units? That yields even larger PS and huge taxpayer cost.
This extension is common in HKDSE Paper 2.