If price rises:
Understanding how options stack up is critical for scoring high marks. Avoid mixing up your definitions by referencing this quick breakdown: Definition HKCEE Application Example The highest-valued option forgone when a choice is made. The salary lost by choosing to study full-time. Monetary Cost The actual cash outlay required to execute an option. Out-of-pocket tuition fees paid to a school. Sunk Cost
If you are choosing among options A, B, and C, and you choose option A, your opportunity cost is only option B (assuming B was your second choice), not option B plus option C combined. Step-by-Step Problem Solving Framework
: A decrease in dividends from shares does not change the opportunity cost of choosing shares. Opportunity cost is defined as the value of the next best alternative forgone , which in this case is the investment in property. Since the return on property remains unchanged, the opportunity cost remains the same. Step-by-Step Review 1. Define Opportunity Cost
A price ceiling is a maximum legal price set by government.
Cross-reference your answers with Official Marking Schemes to understand why specific distractors are incorrect. Resource Links for Further Study
| Price ($) | Quantity Demanded (units) | Quantity Supplied (units) | |-----------|---------------------------|---------------------------| | 2 | 120 | 40 | | 4 | 100 | 60 | | 6 | 80 (Equilibrium) | 80 (Equilibrium) | | 8 | 60 | 100 | | 10 | 40 | 120 |
To solve this question efficiently, a student must completely understand how economists define costs and choices. The question challenges the common, non-economic misunderstanding of what a "cost" actually is. 1. The Real Meaning of Opportunity Cost
Staff can specialize in specific tasks (e.g., one person handles cashiering, another handles clothing racks). This allows them to become more skilled and faster, increasing total output. Reduced Time Waste:
: A resource facing scarcity requires a human sacrifice to obtain, making it an economic good . If it is not scarce, it is a free good . 2. The Nuances of Opportunity Cost
Remember that barriers to entry dictate long-run economic profits. If a question option mentions entry of firms, connect it immediately to the erosion of supernormal profits.
Mastering the foundational logic from questions like HKCEE 2010 Paper 2 Q2 ensures a seamless transition to scoring a Level 5** in the HKDSE Economics Paper 2. If you are currently reviewing this topic, let me know: