Question 1

The statement 'The increase in oil price will decrease the demand for traditional cars' is an example of a ___ statement.

Accepted Answer

positive

Question 2

The statement 'When firms are maximizing their profit, the society’s well-being should be maximized as a whole' is an example of a ___ statement.

Accepted Answer

normative

Question 3

Economists use simplifying assumptions in their models to ___ complex realities.

Accepted Answer

simplify

Question 4

The slope of the production possibilities frontier is negative because it represents the trade-off between ___ and ___.

Accepted Answer

two goods

Question 5

When both a decrease in demand due to expectations and an increase in supply occur simultaneously, the equilibrium price of Hong Kong residential property is likely to ___ while the equilibrium quantity is likely to ___.

Accepted Answer

decrease, increase

Question 6

How would you predict the supply planned by the Arch, the actual demand from potential tenants, and the outcome of the management’s plan for the Arch Rental if priced at HK$80 per square foot?

Accepted Answer

At HK$80 per square foot, the planned supply would be 50,000 sq. ft., while the actual demand would be 40,000 sq. ft. This would result in a surplus of 10,000 sq. ft., indicating that the management's pricing strategy may not attract enough tenants.

Question 7

If residents expect a further decrease in property prices, the demand for Hong Kong residential property will likely ___ due to decreased buyer confidence.

Accepted Answer

decrease

Question 8

A ___ cost is a cost that has already been incurred and cannot be recovered.

Accepted Answer

sunk

Question 9

Is the statement 'When firms are maximizing their profit, the society’s well-being should be maximized as a whole' normative or positive?

Accepted Answer

This statement is normative because it expresses a value judgment about what ought to happen.

Question 10

What would happen if the government set a rental cap of HKD 70 per sq. ft.?

Accepted Answer

If the government sets a rental cap of HKD 70 per sq. ft., it would create a situation where the quantity demanded exceeds the quantity supplied, leading to a shortage in the market.

Question 11

The market demand schedule shows that at a price of HKD 60 per sq. ft., the quantity demanded is ___ sq. ft. per month.

Accepted Answer

150,000

Question 12

Is the statement 'The increase in oil price will decrease the demand for traditional cars' normative or positive?

Accepted Answer

This statement is positive because it can be tested and validated through empirical evidence.

Question 13

What is the equilibrium price and equilibrium quantity of Service Apartment, the Arch Rental in the market?

Accepted Answer

The equilibrium price is HKD 70 per sq. ft. and the equilibrium quantity is 70,000 sq. ft. per month.

Question 14

With property developers able to bid for government land at a ___ price, the supply of residential properties in Hong Kong is expected to ___.

Accepted Answer

lower, increase

Question 15

If the Arch Rental’s management prices the property at HKD 80 per square foot, the actual demand from potential tenants would be ___ sq. ft. per month.

Accepted Answer

50,000

Question 16

How does a lower bidding price for government land by property developers affect the Hong Kong residential property market?

Accepted Answer

If property developers can bid for government land at a lower price due to increased supply, this can lead to an increase in the supply of residential properties. As supply increases, the equilibrium price may decrease while the quantity of properties available in the market increases.

Question 17

Johnny is considering selling his commercial office for a peak house priced at HKD ___ million.

Accepted Answer

50

Question 18

If Johnny chooses to run his own restaurant, the opportunity cost is the value of the ___ he could have earned from renting the office.

Accepted Answer

rental income

Question 19

Has the unexpected increase in demand for the VR site changed Johnny's opportunity cost for the restaurant?

Accepted Answer

Yes, the increase in demand for the VR site has raised the estimated income, which changes the opportunity cost of choosing to open a restaurant instead of pursuing the VR site.

Question 20

Why is the slope of the production possibilities frontier negative?

Accepted Answer

The slope of the production possibilities frontier is negative because it reflects the trade-off between two goods; as you produce more of one good, you must give up some of the other good.

Question 21

What are the predicted changes in equilibrium price and quantity of the Hong Kong residential property market if both a decrease in expected property prices and lower land bidding prices occur simultaneously?

Accepted Answer

If both events occur simultaneously, the decrease in demand due to expectations of lower prices and the increase in supply from lower land costs will likely lead to a significant decrease in equilibrium price and an uncertain change in quantity, depending on the relative shifts in demand and supply.

Question 22

An example of a simplifying assumption is assuming that all consumers have ___ preferences.

Accepted Answer

homogeneous

Question 23

How can the new opportunity of selling the commercial office for the peak house change the opportunity cost of Johnny's restaurant choice?

Accepted Answer

Selling the commercial office for the peak house introduces a new potential income stream, which may increase the opportunity cost of opening the restaurant, as the value of the house could represent a more lucrative alternative.

Question 24

What is the opportunity cost for Johnny if he chooses to run his own restaurant in the office?

Accepted Answer

The opportunity cost for Johnny is the rental income he would have earned if he chose to rent the place out instead of running his own restaurant.

Question 25

If the government sets a rental cap of HKD 70 per sq. ft., it would likely create a ___ in the market.

Accepted Answer

shortage

Question 26

What is the definition of sunk cost?

Accepted Answer

A sunk cost is a cost that has already been incurred and cannot be recovered.

Question 27

Before Johnny decorates the place for the restaurant, the demand for the new VR theme game unexpectedly increases, changing his ___ cost for the restaurant.

Accepted Answer

opportunity

Question 28

At a price of HKD 70 per sq. ft., the quantity supplied is ___ sq. ft. per month.

Accepted Answer

70,000

Question 29

Why do economists use simplifying assumptions in their models?

Accepted Answer

Economists use simplifying assumptions to make complex real-world situations more manageable and to focus on the most relevant factors. For example, assuming that all consumers have the same preferences simplifies the analysis of market demand.

Question 30

What happens to the property price of Hong Kong if residents expect a further decrease in property price?

Accepted Answer

If residents expect a further decrease in property prices, the demand for properties will likely decrease as buyers anticipate lower prices in the future. This shift in demand can lead to a decrease in the equilibrium price and quantity in the market.