Define-itely Not Boring
Define "substitute goods"
Goods that can be used in place of each other to satisfy the same need or want. When the price of one increases, demand for the other increases.
Draw what happens to the demand curve for Coca-Cola when the price of Pepsi (a substitute) increases.
Demand curve for Coca-Cola shifts RIGHT (D1 → D2). Must show: Price (vertical axis), Quantity (horizontal axis), rightward shift showing increased demand.
Analyze how an increase in the price of a substitute good affects demand for the original product.
Price of substitute rises → substitute becomes more expensive → consumers switch to original product → demand for original increases → demand curve shifts right → higher quantity demanded at every price.
Evaluate whether tariffs are always effective in protecting domestic industries.
FOR: Tariffs make imports expensive → domestic goods more competitive → production increases, jobs protected. AGAINST: Retaliation/trade wars → higher consumer prices → protects inefficient industries → reduces choice → deadweight loss.
Give ONE example of substitute goods commonly found in Hong Kong.
Accept: Uber/taxis, ParknShop/Wellcome, MTR/buses, Gong Cha/Heytea, McDonald's/KFC, 3HK/CSL/SmarTone telecoms.
What is the difference between absolute poverty and relative poverty?
Absolute poverty: When people cannot afford basic necessities for survival. Relative poverty: When people's income is significantly below the average income in their society.
Draw a supply and demand diagram showing the effect of a price ceiling set BELOW equilibrium price.
S and D curves intersecting. Horizontal price ceiling line below equilibrium. Show shortage: Qs < Qd. Label the shortage gap.
Analyze ONE way direct government management could reduce overuse of ocean fishing stocks.
Government sets fishing quotas → reduces total catch → allows fish populations to recover → prevents depletion → ensures sustainable fishing long-term.
Evaluate the view that economic growth ALWAYS harms the environment.
SUPPORTS: Growth → more production → pollution, resource depletion, climate change. AGAINST: Growth funds green technology → renewable energy → Denmark, Costa Rica show sustainable growth → Environmental Kuznets Curve → depends on TYPE of growth.
Hong Kong has extreme wealth inequality with luxury apartments and "cage homes." Is this absolute or relative poverty? Explain briefly.
Primarily relative poverty. Most HK residents can afford basic necessities, but many live far below median income in expensive housing.
Define "common pool resources" and give ONE characteristic.
Natural resources that are rivalrous but non-excludable. Characteristic: prone to overuse/depletion. Examples: ocean fish, clean air, grazing land.
Draw a diagram showing negative externalities of production (e.g., pollution from factories).
MSC curve above MPC. MSB = MPB. Market equilibrium at Qmarket (MPC = MSB). Social optimum at Qoptimum (MSC = MSB). Welfare loss triangle. Label: overproduction.
Analyze how economic growth might lead to environmental damage.
Economic growth → increased production and consumption → more factories, vehicles, energy use → higher CO₂ emissions and pollutants → air/water pollution, climate change → environmental degradation, health problems, biodiversity loss.
Evaluate direct government management versus market-based solutions for common pool resources.
DIRECT (quotas, bans): Clear limits, enforceable, works quickly. BUT expensive to monitor, inflexible, enforcement challenges. MARKET (permits, taxes): Efficient, flexible, generates revenue. BUT hard to set right price, may not work if inelastic demand.
Victoria Harbour and Hong Kong's air quality are common pool resources. Explain why they face overuse problems.
Non-excludable (can't prevent use) + rivalrous (pollution reduces quality for others) → no individual incentive to limit use → tragedy of commons → overuse leads to pollution → negative externalities affect everyone.
Explain what a "composite indicator" is and give ONE example.
A measure of development that combines multiple indicators into a single index. Example: Human Development Index (HDI) - combines life expectancy, education, and income.
Draw a diagram showing the impact of a tariff on imported goods in a domestic market.
Domestic S and D curves. World supply (Sw) horizontal line. Tariff shifts Sw UP to Sw+tariff. Show: domestic production increases, imports decrease, government revenue rectangle, deadweight loss triangles.
Analyze how using GDP per capita alone might give a misleading picture of a country's development.
GDP per capita only measures average income → doesn't show inequality → doesn't capture health, education, freedom → country could have high GDP but poor healthcare, low literacy → composite indicators like HDI give more complete picture.
Evaluate the effectiveness of composite indicators (HDI) compared to single indicators (GDP per capita) for measuring development.
COMPOSITE: Captures health, education, income → complete picture → shows quality of life. SINGLE: Easier to measure → less subjective → widely available → composite may hide weaknesses → weighting can be arbitrary.
Hong Kong has experienced significant economic growth over 50 years. Give ONE example of environmental damage AND ONE improvement.
DAMAGE: Air pollution from vehicles/shipping, land reclamation destroying habitats, construction waste, light pollution. IMPROVEMENT: MTR investment reduces cars, waste reduction programs, country parks protection, cleaner fuel standards.
Define "interdependence" in the context of oligopolies.
When firms in an oligopoly must consider the likely reactions of rival firms before making pricing, output, or strategic decisions. Each firm's actions affect and are affected by competitors.
Draw a simple game theory payoff matrix for two firms in an oligopoly choosing between high price and low price strategies.
2x2 matrix. Firm A (rows): High/Low Price. Firm B (columns): High/Low Price. Payoffs showing: (High, High) = both profit well; (Low, Low) = both profit poorly; mixed = one gains at other's expense.
Analyze how the crowding-out effect might occur when government increases spending.
Government increases spending → needs to borrow → issues bonds, increases demand for loanable funds → interest rates rise → private investment becomes expensive → firms reduce investment → private investment "crowded out" → may reduce long-term growth.
Evaluate whether collusive oligopolies always lead to worse outcomes than non-collusive oligopolies.
WORSE: Collusion → act like monopoly → restrict output, raise prices → lower consumer surplus → less innovation. BETTER/MIXED: Stabilizes prices → avoids price wars → can invest in R&D → cartels unstable (incentive to cheat) → illegal so enforcement reduces harm.
Hong Kong is a free port with no tariffs. Analyze ONE advantage and ONE disadvantage of this policy.
ADVANTAGE: Low consumer prices → high purchasing power → attracts trade → HK becomes trading hub → growth, employment. DISADVANTAGE: No protection for local industries → hard to compete → reliance on imports → vulnerable to supply shocks → limited tariff revenue.