DSE Past paper_ Competition and Market Structure

Question 1 (PP#11c)
The prices of textbooks for senior secondary education have increased sharply because textbook
publishers have to publish new textbooks for the new curriculumIn Hong Kong, to which type of
market structure do the publishers belong? State TWO features of this type of market structure.
Oligopoly (1)
Features:
− a few dominant sellers (1)
− interdependence of policies (1)
− non-price competition (1)
− barriers to entry (1)
− Any other relevant point (1)
[Mark the FIRST TWO points only.]
OR
Monopolistic competition (1)
Features:
− many sellers (1)
− heterogeneous goods (1)
− imperfect market information (1)
− free entry and exit (1)
− Any other relevant point (1)
[Mark the FIRST TWO points only.]

Question 2 (12#12ab)
a) Most private housing is constructured by several major property developers in Hong Kong.State
the market structure of the private housing market and list TWO features of such kind of market
structure.
a) Oligopoly
 a few dominating firms
 price searcher
 interdependence of pricing policies
 product can be heterogeneous
 non-price competition
 not easy to enter the industry
 imperfect information
 any other relevant point, mark the first two points only
DSE Past paper_ Competition and Market Structure
Question 3 (13#1)
In Hong Kong, there are many travel agencies providing tour groups and booking services for air
tickets. Give TWO reasons to explain why the market structure of travel agencies in Hong Kong is not
perfect competition.
Reasons
 sellers provide heterogeneous services,
 market information is imperfect, e.g. information about routes and services
 sellers engage in both price and non-price competition e.g. advertisement
 any other relevant points, mark the first two points only

Question 4 (14#2c)
Ah Wing runs a store selling mobile phone accessories in Mong Kok. Identify the market structure of
mobile phone accessories retailers in Hong Kong. Give reasons to support your answer.
 Monopolistic competition
 Reasons
 many sellers/ no dominant sellers
 sellers selling heterogeneous products
 free entry into the market
 any other relevant point . mark the first two points only

Question 5 (15#9a)
McDonald’s is a private limited company in Hong Kong. State ONE advantage and ONE disadvantage of
forming a private limited company over forming a public limited company. (2 marks)
Advantages
 lower risk of being taken over
 no need to disclose accounting information to the public
 any other relevant point , mark the first point only
Disadvantages
 owners cannot freely transfer their stocks
 the firm cannot raise capital by issuing stocks the general public
 any other relevant point, mark the first point only
DSE Past paper_ Competition and Market Structure
Multiple choices
18. If a firm is a monopolist in the market, (2012)
A. its monopoly power may come from the government
B. its return will be positive
C. it faces no competition
D. it bears no risk

17. The market structure of the electric power industry in Hong Kong is (2013)
A. an oligopoly because there are two dominating companies in the market
B. an oligopoly because the pricing strategies of the companies are interdependent
C. a monopoly because the companies can increase the price without losing customers
D. a monopoly because there is only one electric company providing electricity in any district

17. The table below shows the distribution of market share of supermarkets in Hong Kong in 2012
Name Market share (%)

Wellcome 39.8

Parknshop 33.1

Vanguard 7.8

Others 19.3

Total 100

From the above table, we can conclude that the market of supermarkets in Hong Kong is an example of
________________ because _____________.(2014)
A. oligopoly ...... sellers are interdependent in their marketing strategies
B. oligopoly ...... a few major sellers are in control of the total sales of the market
C. monopolistic competition ...... sellers can affect the market price as their products are
heterogeneous from the consumers’ viewpoint
D. monopolistic competition ...... there are many sellers adopting non-price competition in the
market
DSE Past paper_ Competition and Market Structure
20. Which of the following statements about the theme park industry in Hong Kong is correct? (2015)
A. Hong Kong Disneyland is a monopolist because its average cost of production drops when there are
more tourists.
B. Hong Kong Disneyland guarantees a profit because it is protected by the government.
C. Hong Kong Disneyland and Ocean Park Hong Kong have no competition with each other as tourists
may
go to both theme parks.
E. Hong Kong Disneyland and Ocean Park Hong Kong are interdependent in their marketing
strategies.

2012 18A
2013 17D*
2014 17B
2015 20D