Econ MC

1. Answer D
a) her expenses on transport will be zero
Not true. Siu Fan has to pay MTR fare.

b) her expenses on transport will increase
No information on this.

c) bus and MTR services are complements
Not true. Bus and MTR services are substitutes.

d) her expenses for bus services will be zero
True. Siu Fan does not take bus.

2. Answer A (i) and (ii)
the wages of workers making mobile phones decrease
==> costs of producing mobile phones decrease
==> supply of mobile phone increases
==> price of mobile phones decreases

(i) if the demand for mobile phones is elastic, the producers' total revenue will increase
True. With elastic demand, price fall leads to increased revenue.

(ii) the use of mobile phone networks will increase
True. Mobile phones and mobile networks are complements.

(iii) the total wages of workers producing mobile phones will decrease
No information on the elasticity of demand for mobile phone workers.

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1. B
It must be MTR is cheaper than bus BEFORE, now she uses MTR, ie, more expensive than the ORIGINAL bus fare.


2. A
Lower the cost, increase in supply (right-shift of the SS curve);
--> lower the mkt price and increase in transaction quantity;

1) d) her expenses for bus services will be zero
2) d) all of above