# 14Mkt intervention Q&A

.pdf
School
Hong Kong Polytechnic University **We aren't endorsed by this school
Course
ECON 1001
Subject
Economics
Date
Apr 21, 2023
Pages
14
Uploaded by MateHeat12139 on coursehero.com
FORM 4 NSS ECONOMICS MARKET INTERVENTION A. Price ceiling and Price floor 1. (90.1b) Suppose the Hong Kong Government drastically increases the minimum wage rate of Filipino maids. With the aid of a diagram, explain why the total wage earnings of Filipino maids in Hong Kong might decrease. (8m) 2. (94.3) The following diagram shows the supply and demand curves of a certain product: If the government imposes a 'price - ceiling' at P1, what will be the market price and quantity transacted? Explain your answer. (4m) 3. (06.1) Figure 1 shows the market supply and market demand curves of good X. Suppose the government lowered the price ceiling from PA to PB. Unit price S D 0 Quantity (a) Explain whether the initial price ceiling PA is effective or not. (2m) (b) Explain how a fall in the price ceiling to PB would affect consumers' total expenditure on good X. Indicate the change in consumers ' total expenditure in Figure 1. (4m) FORM 4 NSS ECON - MARKET INTERVENTION 1 P A P B
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4. (Sample paper) Some Hong Kong politicians have demanded for the introduction of a minimum wage law for low income earners, such as security guards and cleaning workers. (a) Consider an industry in which the market wage rate is at its equilibrium. With the aid of a diagram, explain how the introduction of an effective minimum wage would effect. (i) the number of workers employed in that in that industry. (4m) (ii) the total wage earnings of the workers in that industry. (7m) (b) 'A minimum wage should be introduced to protect the interests of low -income workers.' Evaluate this proposal. (7m) 5. (2013 DSE # 10c) The Hong Kong government has introduced an effective minimum wage. Subsequently, many restaurant owners claim that they are unable to employ enough workers for their restaurants at the minimum wage rate. With the aid of a demand-supply diagram, explain why the above phenomenon may arise. (9m) 6. (2018 DSE #10) Foreign domestic helpers are paid with a minimum wage at HK \$4 410 per month for a two-year contractual period in Hong Kong. Figure 2: Foreign Domestic Helpers in Hong Kong Wage rates S D Quantity It is reported that the Mainland market is about to open its doors to maids from the Philippines, offering them a salary several times higher than the minimum wage for foreign domestic helpers in Hong Kong. (d) Some employers in Hong Kong claimed, " Even if we offer higher wages to foreign domestic helpers, there will still be insufficient foreign domestic helpers in Hong Kong after the opening of the Mainland market to maids from the Philippines. " With the aid of Figure 2, explain why the above claim may be correct. (6m) (e) Other than insufficient foreign domestic helpers, suggest ONE phenomenon that may be observed in the market of foreign domestic helpers in Hong Kong after the opening of the Mainland market to maids from the Philippines. (1m) FORM 4 NSS ECON - MARKET INTERVENTION 2
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