economics

A local travel agency organises a series of $25 budget tour for the celebration of its 25th anniversary, attracting a large group of people that queue up overnight in order to apply.

a. With the aid of a demand-supply diagram, explain why a large group of people would queue up overnight in order to apply for the tours.

b. (i) Explain why the travel agency's organisation of travel tours at a price lower than the cost may NOT necessarily violate the aim of maximising profit.

(ii) State ONE objective of firms apart from profit maximisation.

7a. Explain why the long-run aggregate supply curve is vertical at the potential output.

b. suppose the government gives a $2000 electric fee subsidy to each household. Explain whether this would affect the long-run aggregate supply.

9. Firm A is a clothing chain.

a) Mr Cheung purchases the stock of Firm A through the Hong Kong Stock Exchange.

i) Explain which stage of production clothing retailing belongs to.

ii) Which market structure do clothing retailing in Hong Kong belong to? Explain.

iii) suppose Firm A is planning an acquisition of another clothing chain. Explain possible motives for such kind of expansion.

b) With the aid of a diagram, explain the conditions under which an increase in the price by Firm A would lead to an increase in its total revenue.

c) Explain whether an increase in the price by a firm would necessarily lead to an increase in profit.

4. On a remote island, people exchange their goods for rice and use rice to exchange for other goods they wants.

a) Explain whether money exists in this economy.

b) Explain TWO difficulties these people may encounter when they use rice in the exchange of goods.

4. Fixed-line services in Hong Kong were solely provided by Hong Kong Telecom before 1995. Today, several other companies also provide this service.

a) State the change in the market structure of fixed-line services.

b) Give TWO economic reasons to explain why it is NOT desirable to have more than one firm providing fixed-line services in Hong Kong.

3. In late 2008, about 20,000 Hong Kong people working in Macau lost their jobs because of the economic downturn brought by the financial tsunami. Suppose all of these workers came back and looked for jobs in Hong Kong, and that all of them were unable to find jobs.

Explain how this would affect the unemployment rate of Hong Kong for that period.

a) i) Suppose there is technological progress in the production of food and clothing in economy A. Explain how the production possibility frontier would be affected. Illustrate your answer in Figure 1.

ii) Which economic phenomenon is illustrated from such a change in the production possibility frontier?

iii) Apart from technological progress, explain ONE factor that would lead to such a change in the production possibility frontier of economy A.

b) Explain TWO government policies that would promote the technological progress of an economy.