HKDSE Economics in Life – Microeconomics 1

Chapter 5 Factors of Production

Exam Kit
Extra practice questions (Suggested answers)

Exam Kit
Chapter 5
Extra practice questions (Suggested answers)

Paper 1 Multiple-choice questions

1. D
2. C
3. B
4. C
5. D
6. D
7. A
8. C
9. B
10. D
11. B
12. B
13. C
14. A

Paper 2 Short questions and structured/essay-type questions

1.
(a) Entrepreneurship. (1)
As the owner of the motor company, Mr. Wong needs to bear risks in running the
business. (1)
(b) Labour. (1)
The staff of the motor company provides human effort (sale service) in
production. (1)
(c) Capital. (1)
These cars are man-made resources that are used to facilitate production. (1)

2.
Labour supply of factory A per month = (80  200) man-hours = 16,000 man-hours
(1)
Labour supply of factory B per month = (100  180) man-hours = 18,000 man-hours
(1)
Therefore, factory A does not have a greater supply of labour than factory B. (1)

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HKDSE Economics in Life – Microeconomics 1
Chapter 5 Factors of Production
Exam Kit
Extra practice questions (Suggested answers)

3.
(a) Decrease. The number of total working hours provided will decreases. (2)
(b) Increase. Relaxing the rules of importing talents leads to an increase in the
number of talents imported. More working hours will thus be provided. (2)
(c) Decrease. Offering more places for associate degree programmes implies that
fewer people will enter the labour market. Fewer working hours will thus be
provided. (2)

4.
(a) Average labour productivity in June = 54,000 units / (60  200) man-hours
= 4.5 units/man-hour (1)
Average labour productivity in December = 60,000 units / (75  150) man-hours
= 5.33 units/man-hour (1)
(b) - Workers received more education and training.
- Working conditions improved.
- There were more attractive rewards and benefits.
- More advanced producer goods were used.
- Organisation and management of labour improved.
- Workers became healthier.
- any reasonable answers
(Mark the FIRST TWO points only, 1 mark each)

5.
(a) Bank A: time rate (1)
Bank B: piece rate (1)
(b) An advantage to the bank owner:
- Labour productivity is higher.
- The promoters have a greater incentive to work hard.
- The cost of supervising the promoters is lower.
- any reasonable answer
(Mark the FIRST point only, 2 marks)
An advantage to the credit card promoters:
- The promoters can earn more by working harder.
- any reasonable answer
(Mark the FIRST point only, 2 marks)

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HKDSE Economics in Life – Microeconomics 1
Chapter 5 Factors of Production
Exam Kit
Extra practice questions (Suggested answers)

6.
(a) From the viewpoint of employers, an advantage of basic salary plus commission
over a basic salary only:
- The financial planners have a greater incentive to work hard.
- The cost of supervising the financial planners employed is lower.
- any reasonable answer
(Mark the FIRST point only, 2 marks)
(b) From the viewpoint of financial planners, an advantage of basic salary plus
commission over a commission only:
- A basic salary ensures financial planners to have a stable income.
- any reasonable answer
(Mark the FIRST point only, 2 marks)

7.
(a) An advantage:
- It is easier to maintain a static team.
- The cost of measuring cashiers’ output is lower.
- The cost of monitoring cashiers’ output quality is lower.
- any reasonable answer
(Mark the FIRST point only, 2 marks)
A disadvantage:
- Cashiers tend to have less incentive to work hard.
- The cost of supervising cashiers’ performance is higher.
- any reasonable answer
(Mark the FIRST point only, 2 marks)
(b) Higher. (1)
As the monetary reward of a cashier is usually lower than that of a manager, the
opportunity cost for a cashier to change his or her occupation is lower. Thus, the
occupational mobility of a cashier is higher than that of a manager. (2)

8.
Measure 1 raises occupational mobility of labour. Increasing the subsidy on retraining
programmes helps workers acquire the skills demanded by other industries. People are
thus easier to change occupations. (3)
Measure 2 raises geographical mobility of labour. With a more convenient transport
network, people will be more willing and able to work in different places. (3)

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HKDSE Economics in Life – Microeconomics 1
Chapter 5 Factors of Production
Exam Kit
Extra practice questions (Suggested answers)

9.
(a) Average labour productivity of factory A= 720 units / 8 man-hour = 90
units/man-hour (1)
Average labour productivity of factory B = 720 units / 5 man-hour = 144
units/man-hour (1)
Therefore, factory B has a higher average labour productivity. (1)
(b) - Factory B provides more education and training.
- The working condition in factory B is better.
- Factory B provides better rewards and benefits.
- Factory B uses more advanced producer goods.
- The organisation and management of labour in factory B is better.
- Workers of factory B are healthier.
- any reasonable answers
(Mark the FIRST TWO points only, 1 mark each)
(c) (i) It will increase because (1)
division of labour allows workers to specialise in producing what they are
good at / allows workers learning by doing / saves time in training / saves
time in moving around different tasks. (1)
(ii) It will decrease because (1)
workers are only trained in the skills required for their jobs and lack of other
skills. It is thus more difficult for them to change occupations. (2)

10.
(a) Complex division of labour. (1)
Reasons:
- Different teachers are good at teaching different subjects.
- Practice makes perfect.
- It saves time in training.
- any reasonable answers
(Mark the FIRST TWO points only, 1 mark each)
(b) They are labour because (1)
teachers provide human effort (education service) in production. (1)

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HKDSE Economics in Life – Microeconomics 1
Chapter 5 Factors of Production
Exam Kit
Extra practice questions (Suggested answers)

(c) Time rate. (1)

An advantage to schools:
- It is easier to maintain a static team.
- The cost of measuring teachers’ output is lower.
- The cost of monitoring teachers’ output quality is lower.
- any reasonable answer
(Mark the FIRST point only, 2 marks)
An advantage to teachers:
- Teachers can earn a more stable income.
- any reasonable answer
(Mark the FIRST point only, 2 marks)
(d) It will decrease because teachers’ opportunity costs (the monetary rewards that
they can get from their present occupation) of changing occupations increase.
(3)

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