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Exam Kit (Sample)

A. HKDSE Exam Format

Paper 1 Paper 2School-based Assessment

(Deferred to 2019)(i.e., S.4 in 2016/17)

Question types

Multiple-choice Short questions and structured/essay-

type questions

1. News commentary

2. Essay/reports

Coverage

Compulsory Part Part 1:

Compulsory Part

Part 2:

Elective Part

Section A Section B Section C

No. of questions

45 8-10 short

questions

3-4

structured/

essay-type

questions

A choice of

one out of

two electives

Complete 2 tasks during S5

and S6

Mark allocation

All questions

carry equal

marks

50 marks 54 marks 16 marks Each task carries equal

marks

Duration 1 hour 2 hours and 15 minutes

Weighting*

25% 60% 15%

(*Starting from the 2019 year of examination, school-based assessment will constitute 15% of

the final subject mark. Before that, the public exam result constitutes 100%, i.e., 30% from

Paper 1 and 70% from Paper 2, of the final results.)

B. Revision strategies

1. Set your own revision scheduleYou should start revising as early as possible. To make your revision effective, a

revision schedule is a must.

In setting a revision schedule, you should pay attention to the following: The time allocated to each topic depends on the importance of the topic and your

understanding of the topic.

NSS Exploring Economics (2nd edition) 1 © Pearson Education Asia Limited 2014Exam Kit (Sample)

Allocate time for rest between revision sections. Be realistic and make adjustments for unexpected events, e.g., sickness or important

social functions.


2. Revise all topics Since Paper 1 and Part 1 of Paper 2 cover every topic in the Compulsory Part of the

syllabus, you should revise all topics in the Compulsory Part. If there is not enough time, concentrate on key concepts (e.g., those which are

frequently tested on public exams) first.

3. Memorise key definitions and formulaeSome definitions (e.g., opportunity cost, the law of demand, the law of diminishing

returns) and formulae (e.g., MP, AP and TP; unemployment rate) are frequently asked in

public exams. You may be asked to give the definitions or formulae for these concepts. You may need them to support the answers to questions requiring explanation and

evaluation.

Therefore, you should memorise the key definitions and formulae.

4. Learn to illustrate In public exams, candidates are often asked to explain or illustrate their answers by

supplying diagrams, data, examples, etc. Therefore, during your revision, you

should learn how to illustrate your ideas, in particular, how to draw a well-labelled

diagram. For example, you should be careful with the labelling of axes, areas and curves in

supply-demand diagrams. This set of skills can be practised when you prepare your

own set of notes (see Point 8 below).

5. Practise applying what you have learned Since a number of questions are based on the application of economic theories to the

real world, you should learn how to apply economic theories in your daily life. Therefore, you should pay attention to current issues in local and international

economic issues, e.g., the Budget, national income and employment statistics as

well as other important social events. Before applying theories, you should understand them thoroughly (assumptions,

conclusions and limitations, etc).

6. Follow the trends You should practise doing past exam questions to familiarise yourself with the

format and style of public exam questions. (You may check ‘Exam Trends’ in each

chapter to see related past exam questions for each section.)


7. Learn from mistakesWhen studying past exam questions, you should check your answers against the suggested answers provided by the Hong Kong

Examinations and Assessment Authority (HKEAA). read the annual reports published by the HKEAA for common errors committed by

other candidates. This helps you avoid these mistakes.

8. Prepare your own notes You may prepare your own set of revision notes. The notes should be written in a way which is easy to read and memorise, e.g.,

point-form notes, flow charts, concept map, etc.

9. Lead a healthy lifeYou should maintain a balanced diet, get enough rest and exercise regularly. This is very

important as your health affects the effectiveness of revision.

10. RelaxPanicking does not help. If you feel emotionally overwhelmed during the revision, stop

for a while and seek help from parents, teachers and friends.

C . Answering techniques

Paper 1 (Multiple choice questions)1. Study the question carefully

Before choosing their answers, candidates should study the questions carefully. They

should pay attention to key words by underlining or circling them (see the table in Point

3 of Paper 2).

2. Choose the best answersCandidates should read all the options carefully before they choose. It is possible that

more than one option makes economic sense. In this case, candidates should choose the

best answer, not just correct answers.

3. Allocate your time wiselyRemember each question carries an equal mark. If a question is difficult or time-

consuming, candidates can skip it and go to the other questions. But candidates should

make sure they remember to go back to the skipped questions by marking reminders on

the answer sheet with a pencil.


4. Guess wiselyEven if candidates are unable to select the best answer in a question, they should not

leave the question unanswered. Instead, they should make an educated guess. For

example, they can eliminate the wrong options to improve their chance of arriving at the

correct answer.

Paper 2 (Short questions and structured / essay questions)1. Survey the questions

Candidates should read through questions quickly to get some idea of the level of

difficulty for each question. After this, they can plan the order in which they will answer

questions, beginning with the easiest question. Answering questions sequentially is not

necessary.

2. Allocate your time wiselyBy looking at the mark allocation, candidates can plan the amount of time allocated to

each question. The amount of time should be proportional to the marks allocated.

Moreover, candidates should leave some time for checking their final answers.

3. Study the question carefullyBefore writing down their answers, candidates should study the questions carefully.

They should pay attention to key words by underlining or circling them. They should

answer the question according to what it requires. Refer to the following table for details.

Key word Requirement Example(s)

State/Give/ List/Define

Write down the terms,

definitions, factors, etc,

asked in the question

a. Define opportunity cost.

b. List TWO causes of income inequality in an economy.

Compare Point out the similarities

and differences between

different things (e.g.,

concepts, situations, etc.)

Compare the return of a shareholder with that of a

bondholder.

Explain Make something clear

(e.g., concepts, statements,

etc.)

a. Explain TWO advantages of a public limited company over

a private limited company.

b. Explain how an increase in a country’s private

consumption expenditure would affect its visible trade

balance.




Illustrate Make something clear,

usually with data,

diagrams, examples, etc

a. The following table shows a factory’s production data :

Number of workers absent from work

Decrease in output (units)

1 20

2 50

3 90

4 140

5 200

Use the above data to illustrate the law of diminishing

marginal returns.

b. Illustrate with examples whether a monopolist faces

competition.

With the aid of diagram, explain / illustrate

Use a well-labelled

diagram to make

something clear

With the aid of a diagram, explain how an increase in the

number of children will affect the school fees of private

schools.

Calculate Find the answer and, if

necessary, show your steps

Country X has a labour force of 10 million in which 50,000

workers are searching for jobs in a particular year. Calculate

the unemployment rate in this country.

Prove/ Derive/Show that

Use what is given to reach

the conclusion specified in

the question

a. i. What are the price and quantity transacted before and

after the increase in supply?

ii. Base on the answer in (i), show that the demand for

Good A is inelastic.

Evaluate/ Comment

Give your assessment

based on your knowledge

or your answer to earlier

parts of the question

a. The following shows the labour requirement for one unit of

Good A and one unit of Good B in Country X and Country

Y, respectively.

Good A Good B

Country X 2 2

Country Y 4 10


Suppose the terms of trade are 1 unit of B to 2 units of A.

i. Show that both countries can benefit from trade.

ii. Trade between countries is impossible when

technologies differ among countries. Based on your

answer in (i), comment on the validity of the above

statement.

b. Globalisation only benefits developed countries. Evaluate t

his statement.


4. Keep answers concise and preciseThe length of the answer to a question should vary with the mark allocated to it.

Candidates should avoid writing too much for a question that has one or two marks.

5. Supply necessary detailsAs shown in the table in Point 3, many questions require more than just writing

definitions, listing factors, etc.:

a. In explanation or illustration-type questions, candidates are required to provide

reasons, data, etc., to support their answers.

b. In calculation-type questions, candidates may be required to show the steps involved

in arriving at the answers.

c. In proof or derivation-type questions, candidates are required to show in detail the

steps they used to reach their conclusions.

d. In evaluation-type questions, candidates are required to make a judgment based on

the information provided and their economics knowledge.

6. Draw diagrams carefullySome questions require candidates to supply diagrams to help explain or illustrate their

answers. Even if the questions do not require them to draw one, they should do so if

diagrams can help in their explanation. When diagrams are drawn, they should be drawn

with care:

a. Make sure details (e.g., vertical and horizontal axes, labels, shaded areas, etc.) are

correct.

b. Keep the diagrams clear and tidy. Since candidates may need to correct the

diagrams from time to time, they should draw them with pencils so that quick

corrections can be made. Also, don’t use colour to indicate the areas in diagrams.

7. Communicate effectivelyMake your answers easy to understand. This can be done by using simple words and

sentence structures. However, except in questions which require a listing of points,

point-form answers should be avoided. Stick to simple, complete sentences and short

paragraphs in writing your explanation.

Moreover, each paragraph should contain one main point only. Candidates can begin the

paragraph by stating this main point in the first sentence (the topic sentence). The topic

sentence is to be followed by supporting reasoning, examples, data, proofs, etc.

Furthermore, handwriting should be clear and easy to read to avoid confusion.


Last but not least, leave some blank space at the end of each part. This enables

candidates to conveniently add extra explanation or points at the end of their original

answer.


8. Attempt all questionsAn attempt is better than no attempt. Even if candidates think they cannot answer

correctly, they should still make an attempt. They can start by writing down relevant

definitions or theories. In such a case, partial credit may be given.


Chapter 1 What is economics?

I. Exam Trends

1.1 What is

economics?

1.2 Wants, scarcity

and choice

1.3 Opportunity cost 1.4 Goods 1.5 Types of economic

activity

1.6

Circular flows

of economic

activities

1.7

Positive statements

versus normative

statementsScarcity Definition of c

ost

Application of the concept

of opportunity cost

Economic goods

and free goods

Production,

exchange and

consumption

Interest

2004 CE II 1

AL I A1

CE I A2(a)-2

CE II 2

CE I A2(b)-2

CE I A2(c)-3

CE II 13

CE I A1-3

CE II 3

AL I B5-8

2005 CE II 1 CE I B9(b)(ii)-2

CE I B9(c)-3

CE II 3

CE II 2

2006 AL I A24 CE I A2(a)-2

CE I A2(b)-2

CE II 2

CE II 3 AL I A10

2007 AL I A3

AL I B6

CE I B10(c)(i)-2

CE I B10(c)(ii)-2

CE II 2

AL I B3

CE II 1

2008 CE II 1 CE II 2

2009 AL I A1 CE I A1(a)-2 CE I A1(b)-2 CE II 1

NSS Exploring Economics (2nd edition)Exam Kit (Sample) 11 © Pearson Education Asia Limited 2014

Exam Paper

Section Question

CE II 2

AL I B4-8

2010 CE II 1 CE B11(c)-5

CE II 2

CE II 4

2011 CE I A1(a)-2 CE I A1(b)-2

CE II 2

CE I B9(c)-3

CE II 1

2012 DSE I 2

DSE II B11(c)-2

DSE II A1-3 DSE I 3

2013 DSE I 2 DSE II B9(b),(c)-

5

NSS Exploring Economics (2nd edition)Exam Kit (Sample) 12 © Pearson Education Asia Limited 2014

Mark

II. Additional Exercises Multiple Choice Questions

1. Which of the following is NOT a correct description of economics?A. There is no need to study economics if scarcity does not exist.B. Distribution of income is one of the topics studied in economics.C. Every disagreement in economic issues can be settled by checking with facts.D. Economics is a study of human behaviour.

2. If we have unlimited resources and limited wants,A. we have to make choices.B. some goods must be economic goods.C. we will not have the problem of scarcity.D. None of the above

3. Christopher is a Form 3 student in a secondary school in Hong Kong. Recently, a school in Britain has agreed to admit him in the coming school year. He may stay at his current school to study the DSE curriculum if he chooses not to study in Britain. Which of the following situations may increase his opportunity cost of going to study in Britain?A. His best friend will study in that British school.B. The DSE curriculum has been fine-tuned and become easier for Christopher.C. His favourite teacher will leave his current school after this school year.D. Textbook prices in Hong Kong decrease.

4. Amy is deciding between a visit to Tokyo and Osaka. Which of the following will decrease her cost of visiting Osaka?A. The Japanese Government increases the general sales tax, leading to a rise in

prices in most goods and services.B. Her favourite singer will have a concert in Tokyo.C. A large new megastore has opened in Osaka.D. It is expected that the weather in Tokyo will be bad during her trip.


5. Daniel is a young Brazilian footballer. The youth teams of three Spanish football clubs are willing to offer him a position. His preference for the teams is shown below:

1st choice: Atlético Madrid2nd choice: Real Madrid3rd choice: Barcelona

If Barcelona’s youth team performs badly this season, how would Daniel’s opportunity cost of joining Atlético Madrid change?A. IncreasesB. DecreasesC. Remains unchangedD. Uncertain

6. William has won a bicycle in a lucky draw. He then gives the bicycle to his nephew. Which of the following statements is correct?A. For William, the bicycle is not a free good.B. For William’s nephew, the bicycle is a free good.C. If William does not know how to ride the bicycle, the cost of giving the

bicycle to his nephew is zero.D. There is no cost in producing the bicycle.

7. Which of the following about a free good is correct?A. It is something provided by the government free of charge.B. People already have a lot of.C. People do not want to have it.D. Its price must be zero.

8. Which of the following is most likely a free good?A. Salt water in the Pacific Ocean B. Clean water in the Yangtze River DeltaC. Tap water in Hong KongD. Flushing water in public toilets


9. Which of the following activities belong to production?A. Wilson, a baker, bakes custom-made bread for his client.B. Jess, a waitress, has dinner with her boyfriend in the restaurant where she

works.C. Priscilla, an actress, enjoys a movie with her best friend.D. Jason, a singer, sings his girlfriend a love song and proposes to her.

10. Which of the following is consumption?A. A teacher voluntarily teaching primary students at a non-profit making tutorial

centre B. A teacher developing a new IT teaching tool for himself C. A teacher taking a swimming course after school for his own enjoymentD. A teacher correcting his students’ exercises after school

11. Refer to the following circular flows of an economy:

Flow A most likely refers toA. factor services.B. goods and services.C. wages.D. revenue.

12. Which of the following is a normative statement?A. Friendship is the most important thing in the world.B. People with higher income live longer.C More students go to cinema in summer than in winter.D. In Hong Kong, an increase in the Hang Seng Index is followed by an increase

in property prices.


Real flow

Money flow

Flow AHouseholds

Firms

Short Questions

1. Susan’s preferences on the way to spend Sunday with her family are shown as follows:

1st priority: Victoria Park2nd priority: Hong Kong Wetland Park3rd priority: Hong Kong Park

a. What is Susan’s opportunity cost of choosing Victoria Park? (2 marks)b. Explain how each of the following affects Susan’s cost of choosing Victoria

Park.i. Hong Kong Wetland Park has fewer birds than before. Susan and her

family members are bird lovers. (2 marks)ii. Victoria Park has introduced some new facilities. (2 marks)iii. Hong Kong Park has been closed for maintenance and repair. (2 marks)

2. John is a handsome, successful businessman. He decides to send a love letter to his dream lover, Regina. He has spent ten hours writing the letter although he can earn at least $10 million per hour. a. John says to his girl, ‘The letter is costless but filled with my love.’ Explain in

what sense the letter is NOT costless. (2 marks)b. John continues to say, ‘Oh, my lovely girl! Do you know how many girls want

to receive my love letter? Many thousands! But they can get nothing even if they want to pay for it. However, I’ve written it for you free-of-charge.’ Regina has accepted the love letter. Based on what John has said, explain whether his love letter is a free good. (5 marks)

3. Tiffany is a music lover who likes to go to concerts. Three concerts will be held next month but Tiffany has money to buy a ticket for one concert only. The following shows her preferences for the three concerts.

1st choice: Katy’s concert2nd choice: Johnny’s concert3rd choice: Dave’s concert

a. What is an opportunity cost? What is Tiffany’s opportunity cost of choosing to go to Katy’s concert? (3 marks)


b. Explain whether the following will lower Tiffany’s cost of choosing to go to Katy’s concert.i. Tiffany’s friend has given her a free ticket to Johnny’s concert and she has

time to go. (2 marks)ii. Johnny becomes less popular. Tiffany is not as much of a fan as she was

before. (2 marks)iii. Johnny has invited Blue, Tiffany’s favourite band, to be the guests at his

concert. (2 marks)

4. Kenny decides to watch the final match of the Football Association Challenge Cup. He spends $600 for a ticket.a. Explain whether the cost of watching the match is equal to $600. (3 marks)b. After 90 minutes, the score between the teams is 2-2. Hence, an extra 30

minutes is needed to decide the cup champion.i. Should Kenny consider the $600 spent on the ticket when he decides

whether to stay until the end of the match? (3 marks)ii. Suggest a situation in which Kenny would leave and not stay for the extra

time. (2 marks)

5. To tackle the problem of water scarcity, a new technology, namely reverse osmosis (逆滲透), has been developed to purify seawater into drinking water. However, scientists still have to find ways to improve the technology to reduce the energy consumed during the process.a. Explain whether seawater in an ocean is a free good. (3 marks)b. Based on the evidence given in the question, explain whether drinking water

obtained from reverse osmosis is a free good. (3 marks)

6. Country I has been recently struck by a tsunami. Many countries send relief (援助) materials to Country I. Every day, thousands of victims spend hours queueing for the free materials.a. The relief materials are free-of-charge. Explain whether they are free goods.

(3 marks)b. Explain why victims may have to pay the cost to

i. obtain the relief materials. (2 marks)ii. use the relief materials. (2 marks)


7. Leon has a grape farm in France. He is also a vintner (釀酒師), so he makes wine from his grapes.a. Explain why making wine is an activity of production. (2 marks)b. When Leon harvests grapes, he can sell the grapes immediately. But he

chooses to use them to make wine so he can sell the wine at a higher price later. The process of making wine takes many years.With respect to this case, define interest. Hence, what is the interest involved?

(4 marks)

Structured Questions

1. Tat is deciding to learn to play a music instrument by himself in the coming summer vacation. He can choose to learn to play either the violin, erhu (二胡) or guitar. Suppose the prices of the three instruments are the same. Tat’s preferences for the instruments are as follows:

1st choice: Violin2nd choice: Erhu3rd choice: Guitar

a. i. Define opportunity cost. (2 marks)ii. What is Tat’s cost of choosing to learn to play the erhu? (1 mark)

b. Suppose Tat later finds that playing the guitar is less interesting than he expected. Explain whether this will affect his cost of choosing to learn to play the guitar. (3 marks)

c. Tat’s cousin gave him a violin, an erhu and a guitar before summer vacation.i. Define scarcity. (2 marks)ii. ‘Tat does not have to face scarcity any more as his wants for a violin, an

erhu and a guitar are all satisfied.’Do you agree? Explain. (3 marks)

d. Classify the following items into consumption or production. Explain your answer.i. Tat plays violin for pedestrians in a subway to earn income. (3 marks)ii. After examinations, Tat plays violin to relax. (3 marks)


2. Roland is planning to buy a flat in Tseung Kwan O. However, he does not have enough money. Therefore, he has to borrow money from a bank.

a. What does Roland need to pay to motivate the bank to lend him money? Why is Roland willing to pay it? (3 marks)

b. Suppose Roland has bought the flat. The government announces it is expanding the landfill site which will be closer to Roland’s flat in future. The market price of Roland’s flat decreases. Explain how this would affecti. Roland’s cost of buying the flat; (3 marks)ii. Roland’s cost of owning the flat. (3 marks)

c. As the landfill site emits a strong odour (臭氣), Roland has to install an air purifier at his home. Explain whether clean air is an economic good at Roland’s home. (3 marks)


Answers to ‘Additional Exercises’

Chapter 1 What is economics?Multiple Choice Questions1. C2. C3. B4. D5. C6. A7. D8. A9. A10. C11. D12. A

Short Questions1. a. The forgone option of going to Hong Kong Wetland Park. (2 marks)

b. i. The cost decreases as the value of the best option forgone (i.e., going to Hong Kong Wetland Park) decreases. (2 marks)

ii. The cost remains unchanged as this will only increase the value of choosing Victoria Park, without affecting the value of going to Hong Kong Wetland Park. (2 marks)

iii. The cost remains unchanged as this will not affect the value of going to Hong Kong Wetland Park. (2 marks)

2. a. John’s cost of writing the letter is the highest-valued alternative use of the ten hours spent. He can earn at least $100 million in ten hours. (2 marks)

b. A free good is a good whose available quantity is sufficient to satisfy all human wants for it. (2 marks)

John’s love letter is not a free good. (1 mark) One of the following reasons or any other reasonable answer (2 marks)

It cannot satisfy everyone’s wants at a zero price. Someone wants to pay for it.


3. a. Opportunity cost is the highest-valued option forgone (or the best alternative forgone) in making a choice. (2 marks)

The cost of choosing to go to Katy’s concert is to give up going to Johnny’s concert. (1 mark)

b. i. Yes. (1 mark) The highest valued option forgone (i.e., the opportunity cost) will

change to Dave’s concert as Tiffany does not need to forgo Johnny’s concert now. (1 mark)

ii. Yes. (1 mark) This will lower the value of Johnny’s concert. (1 mark)

iii. No. (1 mark) This will raise (rather than lower) Tiffany’s cost of going to Katy’s

concert as the value of Johnny’s concert has increased. (1 mark)

4. a. No. (1 mark) The cost of watching the match is $600 plus the highest-valued alternative

use of the time spent watching the football match. (2 marks)b. i. No. (1 mark)

The $600 is a cost which has been already spent. It cannot be recovered if Kenny leaves without watching the extra time. (2 marks)

ii. Kenny would leave if his cost of watching the extra time (i.e., the value of the alternative use of the 30 minutes) is higher than the value of staying for the extra time. (2 marks)

5. a. • Yes. (1 mark)• Seawater in an ocean is sufficient to satisfy all human wants for it.

(2 marks)b. • No. (1 mark)

• Obtaining drinking water from reverse osmosis involves costs as the process requires energy which has alternative uses. (2 marks)

6. a. • No. (1 mark)• There are costs involved in producing the materials. Also, people prefer to

have more of them. (2 marks)b. i. Victims have to pay a time cost (i.e., the best alternative use of the queuing

time) to obtain the materials. (2 marks)ii. The materials may be used by victims for many different purposes, so cost

is involved in using the materials. (2 marks)


7. a. This is because raw materials (e.g., grapes) are used to produce goods (i.e., wine). (2 marks)

b. • With respect to this case, interest is the compensation for deferring the use of resources. (2 marks)

• In this case, the interest involved is the difference between the price of wine and the price of grapes. (2 marks)

Structured Questions1. a. i. Opportunity cost is the highest-valued option forgone (or the best

alternative forgone) in making a choice. (2 marks)ii. His cost of choosing to learn to play the erhu is to give up learning to play

the violin. (1 mark)b. No, since the value of the highest-valued option forgone (i.e., learning to play

the violin) remains unchanged, the cost remains unchanged. (3 marks)c. i. Scarcity means we want more than we have. When our resources are

insufficient to produce goods and services to satisfy our unlimited wants, scarcity exists. (2 marks)

ii. No, because he has other wants that are not being satisfied or he may want to have more musical instruments. (3 marks)

d. i. • It is production. (1 mark)• Because he uses his effort and violin to provide musical performances

for pedestrians. (2 marks)ii. • It is consumption. (1 mark)

• Because he satisfies his want by playing the violin. (2 marks)

2. a. • What Roland needs to pay is interest. (1 mark)• He is willing to pay interest because he can buy a flat earlier. (2 marks)

b. i. • This would not affect Roland’s cost of buying the flat. (1 mark)• The cost of buying the flat was the past price paid by Roland, which is

not related to the current market price. (2 marks)ii. • Roland’s cost of owning the flat would decrease. (1 mark)

• When Roland owns his flat, he forgoes the market price that he can get from selling the flat. (2 marks)

c. • Yes. (1 mark)• Roland has to pay a cost to obtain clean air at his home. (2 marks)


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