Basic Economic Concepts
3. Explain whether each of the following statements is true, false or
uncertain.
(a) ‘Whenever there is scarcity, there is competition.’
(5 marks)
(b) ‘Whenever there is competition, there is discrimination.’
(6 marks)
(a) Consider whether scarcity
exists in a society and a
one-man economy.
(b) Consider the aim of
adopting competitive
criteria.
Ans. (a)
Yes, since competition is a necessary result of scarcity.
1
Scarcity and competition in
society are considered, but
the situation in a one-man
economy is not considered.
Whether competition follows scarcity in a one-man economy and
a society has to be considered.
Uncertain.
1
In a society, when at least two people want to have more of the same
economic good,
1
competition arises.
1
But in a one-man economy, even though the unlimited wants of the person
cannot be fully satisfied so that scarcity exists,
1
there is no competition because there is no one to compete with.
1
Ans. (b)
Yes, since discrimination is a result of competition.
An explanation on why competition is needed in society is
expected. High marks will be awarded if the discriminatory nature
of any competitive criterion is explained.
• State the situations in a
society and a one-man
economy respectively.
• E x p l a i n t h e r e a s o n s
for the appearance of
competition in a society,
and state the concept
of scarcity by taking an
economic good as an
example.
• Analyze the reason why
scarcity, not competition,
exists in a one-man
economy.
1
Simply states the relationship
between competition and
discrimination.
23
Economics: Key Notes and Exambuilder 4A
Study the following report on the sale of urn niches by a temple.
A01 Local news
DAILY NEWS
2 September 2009
People complain over lottery for urn niches
Over 100 people who queued up outside a Taoist temple in Tuen Mun for urn niches complained after the
temple changed the allocation method from ‘first-come-first-served’ to a lottery.
About 1,000 people queued up outside the Ching Chung Sian Yuan after the temple announced that one or
two types of urn niches would be allocated to the first 140 in the queue each day until Saturday.
However, most of the crowd left when the temple suddenly changed the allocation method to a lottery.
‘The temple changed the arrangement after receiving complaints about people feeling unwell due to the hot
weather,’ a temple staff explained.
A 69-year-old woman, who had been waiting for over 30 hours at the front of the queue, demanded that the
temple return to the original arrangement. ‘The new arrangement is unacceptable and unfair. It’s like good
students getting full marks by working hard, while others also get the same result by luck’, she said.
(a) What is competition? Hint 18
(2 marks)
(b) (i) What are the TWO competitive criteria mentioned in the news article? Who will most probably be
(6 marks)
the winners and the losers respectively under the two competitive criteria? Hint 19 (ii) ‘It is inappropriate for the temple to change the allocation criterion suddenly.’ Do you agree?
(3 marks)
Consider how the winners and losers change when the
allocation criterion changes.
30