Economics – F406 Enterprise, integration and merge – Short Questions (2009-2015)

1. 2009.Q2
In 2007, the HKSAR Government bought a quantity of the shares in the Hong Kong Exchanges and Clearing
Limited (HKEx) on the stock exchange.
To what type of business ownership does HKEx belong? List TWO features of this type of (3 marks)
business ownership.

2. 2010.Q9(a)(b)
Ocean Park Hong Kong is undergoing a major redevelopment plan.
(a) Ocean Park will expand to double the number of its attractions. Explain TWO (4 marks)
economies of scale that it may enjoy after expansion.
(b) In addition, Ocean Park is planning three themed hotels (the Spa Hotel, Ocean Hotel, and (2 marks)
Fisherman’s Wharf Hotel) in the area for an expected increase in visitors. Name this type
of expansion and explain your answer.

3. 2010.Q10(a)
A large pharmaceutical company in Hong Kong issued shares to the public in order to raise capital.
(a) From the viewpoint of the existing shareholders of a public limited company, state ONE (2 marks)
advantage and ONE disadvantage of issuing shares over bonds.

4. 2011.Q2
ABC Company Limited is a private limited company in Hong Kong.
(a) Define limited liability. (2 marks)
(b) List TWO features, other than limited liability, of a private limited company. (2 marks)

5. 2011.Q11(b)
A local property agency opened more branch offices when expanding its business.
Name this type of expansion and give TWO motives for it. (3 marks)

6. SP.Q9(d)
Patrick is one of the owners of ABC Electronic Watches Manufacturing Ltd. He cannot transfer his shares of
the company to others in the stock market.
(i) What kind of business ownership does ABC Electronic Watches Manufacturing Ltd (1 mark)
belong to?
(ii) As one of the owners of ABC Electronic Watches Manufacturing Ltd, does Patrick need (2 marks)
to use his own property to repay the debts of the company if the company goes bankrupt?
Explain.

7. PP.Q2
A Chinese car manufacturer acquired a Swedish car manufacturer in 2010. Explain which type
of integration was involved in this case and state THREE possible motives for this type of
integration. (5 marks)

HKDSE Economics Past Examination Paper Page 1 of 2

Economics – F406 Enterprise, integration and merge – Short Questions (2009-2015)

8. 2012.Q3
A telecommunication service provider starts a credit company which offers loans to the public.
(a) Explain what type of expansion this is. (2 marks)
(b) List THREE possible motives for the above expansion. (3 marks)

9. 2012.Q12(b)
Chinachem Group is one of the property developers in Hong Kong. Unlike other major (4 marks)
developers, Chinachem Group does not list its shares on the stock market. State TWO
advantages and TWO disadvantages of being a private limited company instead of a listed
company.

10. 2014.Q4
Tai Fai Lok Group operates a chain restaurant providing Chinese food.
(a) Tai Fai Lok Group has recently started Fai Lok Institute, which provides professional (2 marks)
training for chefs and managers for Chinese restaurants. To what type of expansion does
this belong? Explain your answer.
(b) Explain TWO advantages of such an expansion. (4 marks)

11. 2015.Q9(a), (b)

McDonald’s is one of the major fast food chains in Hong Kong.
(a) 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)
(b) McDonald’s has expanded its business by operating McCafé, which sells premium coffee
like other coffeehouses such as Starbucks. To which type of expansion does this belong?
Explain. (2 marks)

HKDSE Economics Past Examination Paper Page 2 of 2