1. a There are, on average, 150 new migrants entering Hong Kong from the mainland every day. Use a diagram to explain how this affects the equilibrium wage and quantity of labour in Hong Kong.

b Substantial foreign capital has been flowing into mainland China since the early 1980s. How has this affected the wages and workers employed in China? Explain with a diagram.

2. ai) Under the responsibility scheme proposed by the Hong Kong government, households will be charged for solid waste disposal. Is this charge justifiable from an economics point of view? Explain your answer with a diagram.

aii) Is it fair to charge all households a flat rate for waste disposal? Why or why not?

bi) Are common resources public goods? Why?

bii) Are OUHK television programmes broadcast on television public goods? Briefly explain.

biii) Professor Paul Romer of Standard University argues that market mechanism and private property rights are excellent ways to preserve common resources, but not so good at encouraging production of new ideas or inventions. Do you agree with Professor Romer? Why or why not?