Hkcee 2010 Econ Paper 2 Q2 ●

This is the heart of the question. Students need to compute consumer surplus (CS), producer surplus (PS), and deadweight loss (DWL) after the price floor compared to free market equilibrium.

Step 1: Free market equilibrium (from part a)

Consumer surplus (free market): CS = area of triangle above price and below demand. [ CS_free = \frac12 \times (100 - 68) \times 16 = \frac12 \times 32 \times 16 = 256 ]

Producer surplus (free market): PS = area below price and above supply. [ PS_free = \frac12 \times (68 - 20) \times 16 = \frac12 \times 48 \times 16 = 384 ] Total surplus = ( 256 + 384 = 640 ).

Step 2: With price floor at $80, Q traded = ( Q_d = 10 ) (the smaller of Qd and Qs, because only 10 units are actually bought/sold)

Consumer surplus (after floor): CS_new = area under demand from 0 to 10, above price $80. [ CS_new = \frac12 \times (100 - 80) \times 10 = \frac12 \times 20 \times 10 = 100 ] CS decreases by ( 256 - 100 = 156 ).

Producer surplus (after floor): Careful – producers supply 20 units but only sell 10 at $80. The government may buy surplus, but here standard analysis assumes producers receive $80 for the 10 units sold. However, producer surplus also includes the area below price but above supply for all units supplied up to 20? No – PS is based on actual output sold unless government purchase is specified. Typical HKCEE approach: PS = revenues – variable cost for quantity sold.

Compute PS as area under price $80 down to supply curve, from Q=0 to Q=10 (quantity sold). That’s a trapezoid? Actually simpler: PS = [price × quantity sold] – area under supply curve from 0 to 10.

Area under supply from 0 to 10: Supply P=20+3Q, integral = ( 20Q + 1.5Q^2 ) evaluated 0 to 10 = ( 200 + 150 = 350 ). Revenue = ( 80 \times 10 = 800 ). So PS_new = ( 800 - 350 = 450 ).

Alternatively, geometric: PS_new = rectangle (0 to 10, price 80 to supply at Q=10? Wait, need triangle + rectangle). Better: PS = area above supply and below price. At Q=10, supply price = ( 20+30=50 ). So PS = rectangle (10 × (80-50)) + triangle beneath that? No – actually supply is linear: PS = area between P=80 and supply from Q=0 to 10 = trapezoid: average height = (80-20 + 80-50)/2 = (60+30)/2 = 45; area = 45 × 10 = 450. Yes.

Change in PS: ( 450 - 384 = +66 ) (producers gain from price floor, but only if they sell the 10 units; if they produce 20, unsold stock reduces profit unless subsidized).

Deadweight loss: DWL = loss in total surplus = (original total surplus 640) – (new CS+PS = 100+450=550) = 90.

Answer: CS falls by 156, PS rises by 66, DWL = 90.

The question asks about Gross Domestic Product (GDP). hkcee 2010 econ paper 2 q2

Definition:
A price ceiling is a maximum legal price set by government.

Effect when set below P₁:

Diagram:

Answer:
Shortage occurs; some consumers unable to buy; possible illegal trading at higher prices.

Examiner’s note:
Students often draw ceiling above equilibrium (ineffective) or confuse with price floor. Must label shortage clearly.

If you are studying using past papers:

Example Summary: If Q2 presented a price ceiling:

Do you have the specific text or graph for Q2? If you upload the image or paste the text, I can provide the exact answer key and a specific explanation for that diagram.

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: This is the heart of the question

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 answer to the HKCEE 2010 Economics Paper 2 (Multiple Choice) Question 2 Question Text Which of the following would lead to an increase in the opportunity cost of using a self-owned shop for running a business? A decrease in the market rent of the shop. An increase in the decoration expenses of the shop. An increase in the business profit. An increase in the market rent of the shop. Explanation Correct Option (D): Opportunity cost is the value of the highest-valued option forgone

. If you own a shop and use it for your own business, the highest-valued alternative is typically the market rent

you could have earned by leasing it to someone else. When the market rent increases, the value of that "forgone" option rises, thus increasing your opportunity cost. Incorrect Option (A):

A decrease in market rent would lower the value of the forgone option, decreasing the opportunity cost. Incorrect Option (B): Decoration expenses are typically considered sunk costs

once paid; they do not change the value of the next best alternative (the rent you could receive) in the context of current decision-making. Incorrect Option (C): An increase in business profit reflects the return on your activity, not the value of the alternative you gave up. Further Exploration Access a comprehensive compilation of past answers from to verify year-by-year trends.

Review detailed topic-based explanations of Microeconomics concepts like Opportunity Cost on Outliers Economics

Watch video solutions for similar HKCEE and DSE questions on Herman Yeung's YouTube Channel for visual breakdowns of economic graphs. paper or need a deeper dive into the concept of Opportunity Cost HKCEE Economics Multiple Choice - Scribd

The correct answer for HKCEE 2010 Economics Paper 2 (Multiple Choice) Question 2 is Option D.  Question Summary  Consumer surplus (free market): CS = area of

The question typically asks about the nature of Opportunity Cost in a decision-making scenario. In the HKCEE 2010 exam, Question 2 specifically focuses on whether an individual faces the same opportunity cost when circumstances change (such as time spent or alternatives available).  Why Option D is Correct ✅ 

Definition of Opportunity Cost: It is the highest-valued option forgone.

Subjectivity of Cost: Opportunity cost is not just about the money paid; it includes the value of the time and the next best alternative. Even if two people pay the same price for a ticket, their opportunity costs differ if their next best way to spend that time has different values.

Variable Factors: If the value of the alternative choice changes (e.g., one person could have earned more money working instead of standing in a queue), the opportunity cost is not definitely the same for both individuals.  Why Other Options are Incorrect ❌ 

Option A, B, and C: These typically suggest that the cost is the same because the monetary price is the same, or they fail to account for the "highest-valued" aspect of the definition. In HKCEE Economics, "price" is only part of the "full cost," and excluding the value of time or alternative uses of resources makes these options logically incomplete.  Study Resources for Further Practice 

Video Explanations: You can find step-by-step walkthroughs for this specific year on the Herman Yeung YouTube Playlist, which covers HKCEE Economics past papers in depth.

Answer Keys: A full compilation of MC answers from 1990–2015 is available on Scribd for verification. 

This question typically deals with the concept of demand and supply, price elasticity, and market intervention (e.g., tax or subsidy).

Disclaimer: The HKCEE 2010 Paper 2 (structured questions) is copyrighted by the Hong Kong Examinations and Assessment Authority (HKEAA). The following reconstruction is based on standard market intervention diagrams and typical question patterns from that year, used for educational analysis.

The HKCEE examiner’s report highlighted frequent mistakes:

| Item | Free Market | Price Floor at $80 | Change | |------|-------------|-------------------|--------| | Price | $68 | $80 | +$12 | | Quantity traded | 16 | 10 | -6 | | Consumer surplus | $256 | $100 | -$156 | | Producer surplus | $384 | $450 | +$66 | | Total surplus | $640 | $550 | -$90 (DWL) |