Hkcee 2010 Econ Paper 2 Q2

Distributional concerns matter: pollution often disproportionately affects vulnerable communities, so policies may need compensation measures or targeted investment in local mitigation. Politically, firms may resist taxes or caps; phased implementation and stakeholder engagement reduce opposition. Where measurement of the marginal external cost is feasible, a properly set Pigovian tax is recommended; where uncertainty or heterogeneity is large, tradable permits with strong monitoring are preferable. In practice, combining market-based instruments with regulation and support for cleaner technology provides a balanced, implementable approach.

Economics Level: HKCEE (Secondary 5) Paper: Paper 2 (Multiple Choice Questions) Topic: Demand and Supply / Market Intervention

In the 2010 paper, Question 2 likely presented a scenario where a resource (such as clean air, sea water, or a specific gift) is discussed to determine if it is a "free good" or an "economic good." hkcee 2010 econ paper 2 q2

While the exact wording varies across translated versions, Question 2 in the 2010 Paper 2 (Multiple Choice) typically presents a scenario involving a "free" service or product to test the definition of an .

He then looked at his textbook. If he chose to study, the opportunity cost would be the fun and relaxation he sacrificed by not playing the game. If he chose to study, the opportunity cost

: The opportunity cost is only the value of the highest-valued option forgone . It is never the sum of all other options.

To correct the market failure, the government could impose a Pigovian tax equal to the marginal external cost per unit. This raises the firm’s marginal private cost to MSC, internalizing the externality and restoring the social optimum. The tax is economically efficient and raises public revenue but requires accurate estimation of the external cost and effective enforcement; misestimation leads to inefficiency. Alternatively, the government can set emission standards or limits (regulation). Standards guarantee pollution reduction but can be less cost-effective because firms face different marginal abatement costs. Tradable permits (cap-and-trade) combine certainty about total emissions with cost-effectiveness: firms with low abatement costs sell permits to high-cost firms. Downsides include administrative complexity, initial permit allocation issues, and the need for robust monitoring. Downsides include administrative complexity

When analyzing past papers across platforms like Herman Yeung Blog or Outliers Economics , candidates are reminded that opportunity cost consists of two parts:

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.

Economics – F40102 Basic concepts – Short Questions (2009-2015) – Marking Scheme. 1. 2009.Q1. (a) Opportunity cost is the highest- Opportunity Cost Exam Questions | PDF - Scribd