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Q & A - Basic Economic
 
 
1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Kyle, a Chemistry teacher, has won $10000 from the Mark Six Lottery. The folling are the possible ways to spend the monys :
 
First choice
: Buy a pentium-based computer
 
Second choice
: Enjoy a one-week tour in Japan
 
Third choice
: Buy a 50" high definition TV set
 
Fourth choice
: Buy a diamond ring
(a)
 
Define opportunity cost. Identify the cost of making the first choice.
(b)
 
Explain wheather the costs of the first and the third choice are the same.
(c)
 
Would there be any change in the cost of buying the computer if :
  (i) the tour in Japan was very boring?
  (ii) the computer has broken down after 3 days of purchase?
  Explain.
 
  Answer
 
 
2.
 
 
(a) Define free good.
(b)
 
Explain whether the fireworks display at Tsing Ma Bridge is an example of free good.
 
  Answer
 
 
3. Explan the relationship between scarcity and competition.
 
  Answer
 
 
4.
 
 
John and George pay the same amount of money for a ticket. Does it mean that their opportunity costs of attending the concert is the same? Explain.
 
  Answer
 
 
5.
 
 
Suppose Mr Chan runs his firm in his own premises. Explain under what condition will Mr Chan's opportunity cost of using the premises for the firm would rise.
 
  Answer
 
 
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