Hkcee 2010 Econ Paper 2 Q2

Candidates were expected to draw a clear demand and supply diagram (or demand shift diagram). For part (a): A downward-sloping demand curve, with P1→P2 (fall), Q1→Q2 (small increase), and two rectangles representing TR1 (P1×Q1) and TR2 (P2×Q2). TR2 should be visibly smaller, demonstrating inelastic demand.

For part (b): A diagram showing:

| Item | Included in HK GDP? | Reason | | :--- | :---: | :--- | | Exports (Goods/Services) | YES | Produced domestically, sold externally. | | Imports (Goods/Services) | NO | Produced externally. (Subtracted in formula). | | Foreigners earning in HK | YES | Production takes place within the territory. | | HK residents earning abroad | NO | Production takes place outside the territory (for GDP), but included in GNP. | hkcee 2010 econ paper 2 q2

Final Answer: C

Answer:
Equilibrium price is the price at which quantity demanded equals quantity supplied. There is no tendency to change. Candidates were expected to draw a clear demand

Marking notes: