2010 高考經濟學 卷一 B & C 參考答案

The answers provided hereunder offer only the correct approach to the questions, rather than the points that should be included in the examination for scoring marks. Readers should not simply evaluate their scores in the live examination on this basis. (Readers in general may not know why it is so, although my students would definitely understand what I mean.)

Section B

Question 1

The useful version of the Coase Theorem states that the delineation of rights is an essential prelude for market transactions. This version is essentially a restatement of the theorem of exchange, except that it specifies fully (and clearly) the constraints subject to which the theorem of exchange becomes operative.

Another version of the Coase Theorem is the invariance theorem, which states that if private property rights are well-defined and if all costs of transactions are zero, then resource use will be the same regardless of who owns the property rights. The dual assumptions of private property rights and zero transaction costs are redundant, because if all costs of transactions are truly zero, any contractual arrangements would result in the invariant result as stated in this version of the Coase Theorem (and literally no property right system of any kind is necessary), and the existence of private property rights, itself an institution arises to reduce transaction costs, implies positive transaction costs. With this fallacy of the invariance theorem it is not very fruitful to compare the theorem of exchange with this version of the Coase Theorem.

[Students will definitely go into the efficient and invariant allocation of resources under the two theorems, and then discuss further the relevance of transaction costs (lump sum or per unit TC under the Theorem of Exchange, and therefore different results) as the differences between the two. Though trivial, these points would certainly score some marks.]

Question 2

The same goods produced at the same cost are charged different prices for different customers (or for different markets in case of price discrimination with market segmentation based upon different price elasticities). In a store where customers bargain for lower prices during equally busy hours of operation and end up paying different prices for the same goods is one example of price discrimination to the third degree. A hotel with vacant rooms charging different customers different room rates for rooms with the same quality when vacancy rate is the same is another example. [Students should have no problems with explaining further why these examples constitute price discrimination.] Price discrimination in the above cases is due to the existence of information cost instead of the difference in price elasticities of demand.

[Of course the MTR example of students and adult fares and the textbooks example of Asian and US edition are also examples of third degree price discrimination.]

Question 3

Firm arises to reduce the cost of using the price mechanism by adopting a time wage rate as a proxy (not measuring the contributions of each and every activities performed by workers). In Coase’s words it reduces the “cost of discovering the relevant prices”. [Definitely student should include also what Cheung had added with regard to why the use of visible hand in the coordination of economic activities reduces such costs.]

Although in legal terms firm size can be determined, the size of a firm cannot be determined in terms of contractual arrangements in production activities, because the various kinds of contracts, using visible hand, or invisible hand, or both at the same time, would make the identification of a Coasian firm difficult, particularly in the presence of sub-contracting which could literally chain up production activities of the whole economy.

Question 4

Wealth is income discounted. Wealth multiplied by the market rate of interest is equal to (annuity) income. With the generalized concept of capital, all incomes generated from capital assets are interest income, and therefore interest is the whole of income. Income is a cost as the highest-valued option forgone is typically the same income, and therefore the income generated from any capital assets is equal to its cost. As such interest is the whole of cost.

Question 5

Pareto condition is attained if it is no longer possible to reallocate resources to make someone better off without making others worse off.

Under simple monopoly pricing where a monopolist determines the price and output by equating marginal revenue with marginal cost, the marginal use value for the last unit of the good is higher than the marginal cost. This is said to violate the pareto condition because the maximum amount the consumers are willing to pay is higher than what the producer have to sacrifice for producing the good at the margin, meaning that the society as whole could have gained if the monopolist increases the output.

However, if transaction costs are negligible, the monopolist will practise perfect price discrimination to extract all consumer surplus, producing at the output level where MUV equaling MC. The pareto condition is satisfied in this case, and if the monopolist practises simple monopoly pricing, it implies that the transaction costs of adopting perfect price discrimination is higher than the deadweight loss. If these transaction-costs constraints are fully specified, the pareto condition is still satisfied in the case of simple monopoly pricing.

Section C

Question 6

[Demanding as it is, this question will surely challenge, and probably perplex, students as well as teachers. That said, students who found themselves incapable of understanding the analysis below need not be disappointed. Alternative answers with good reasons would definitely be awarded some marks. Brilliant students may take careful examination of the analysis below, as an intellectual exercise, until you fully recognize its invulnerability and the beauty of applying simple theories to complicated questions.]

(a) Given the differences in food ingredient costs between expensive and cheap dishes, if the gross-profit margins across different dishes are the same, the marginal product of labour among different dishes, and therefore among seats and among tables, would not be the same, and it would be inconsistent with the maximization of the net worth of the restaurants. The marginal products of labour for different dishes served could be equalized (condition for wealth maximization) only if the gross-profit margins across different dishes with different food ingredient costs are different. (In the presence of transaction costs, such condition may not be achieved even with varying gross-profit margins, but the difference between marginal productivities will be narrower than the case where gross-profit margins are the same across different dishes.)

(b) Without adjustments in the food ingredient costs, some restaurants may not be able to survive if they have to maintain the restricted gross-profit margins, and in such case they would have to impose additional service charges (e.g. lump sum fees, extra fees measured by time etc). Of course restaurants could also change the relative costs of food ingredients so that the gross-profit margins align with the restricted level. As different restaurants have different comparative advantages (i.e. comparative costs in different dishes), some restaurants may reduce their food ingredient costs and do swankier cooking while some may raise their food ingredient costs and render cooking of lower quality. When this happens restaurants will have a higher degree of specialization with regard to the types of dishes served.

(c) With a sharp rise in the rents for restaurant premises, the prices of various types of dishes would have to rise, implying a rise in the gross-profits (as well as the gross-profits margins) for all dishes. Given a lower gross-profits margins for more expensive food, the difference between the gross-profits margins for expensive and cheap dishes will fall, though the cheap dishes will have a larger percentage increase in prices. As the consumption of both expensive and cheap dishes occupies the table for a certain period of time and there is a limit on the rise in the price of cheap dishes, the gross-profits margins of expensive dishes will get closer to that of cheap dishes in order for the restaurants to survive with a sharp rise in the rents for premises.

The above does not include the possibility of charging a fee according to the time customers occupying a table. If this can be practiced, the gross-profits margins would fall instead, and the divergence between the gross-profits margins will be wider than when no such fee is charged.

Question 7

(a) Under the fixed-quantity-free-ticket arrangement, the cost of entering the museums will rise, independent of whether visitors obtain the tickets by queuing or by buying the tickets from somebody else. A rise in the cost of entering the museums will raise their expected cost of entering the museums next time. Therefore, they will tend to stay longer because the price per unit of time will have a larger fall when they stay longer, given a higher expected cost of entering. Compared to the situation where admission fees are charged, the same reasoning applies so long as the restricted daily quantity is smaller than the number of visitors with admission fees.

(b) When overcrowding occurs in certain museums (as stated in the question) when free entrance is allowed to all, some consumer surplus is necessarily dissipated. Restricting the number of visitors will reduce rent dissipation (in terms of consumer surplus dissipated) and therefore may increase the total consumer surplus. If the fixed daily quantity is set equal to the number of visitors when an admission fee is charged to maximize the value of the museums, the total consumer surplus will also be maximized, and the total consumer surplus will definitely increase. In the case of there being no overcrowding when free entrance is allowed to all, restricting the quantity of visitors will reduce the total consumer surplus.

(c) Practicing perfect price discrimination, for example, by charging different entrance fees for each and every visitor would maximize the rental value of the museums. When charging different entrance fees involves prohibitive transaction costs, charging a price where the price elasticity of market demand is equal to one will maximize the total revenue, and therefore the rental value of the museums when the marginal cost of serving an additional customer is zero.

Question 8

(a) If the 25% tariff in the third year would make the prices of automobile tyres from China in the US market comparable to those manufactured in the US, the 35% tariff in the first year may have deterred the US importers from importing tyres from China. This, however, may not lead to significant expansion of the tyre industry in the US, as the American tyre-markers have more or less given up making low-end tyres at home, and firms will simply import cheap tyres from other low-cost places like India and Brazil.

If the tariff is not imposed immediately after the announcement, US importers will import a substantial quantity of tyres before the tariff is imposed, piling up inventory in their warehouses. The sharp increase in inventory of tyres will definitely hurt the US tyre industry.

(b) A per unit tax will lower the relative price of higher quality tyres to lower quality tyres, and thus an improvement in the quality of tyres exported from China.

(c) Students may arrive at the conclusion that if the total quantity of tyres exported to the US under the quota system is the same as that under the per unit tax, the fall in the relative price of higher quality tyres will be the same in either case, so would the quality of tyres. A more complete analysis should consider also the fact that existing Chinese tyre manufacturers holding the quota would be able to earn a quota rent (monopoly rent), allowing room for raising production cost in the improvement of tyre quality, therefore resulting in higher quality of tyres than in the case of per unit tax.